Postnl Nv

Good morning ladies and gentlemen, welcome to the PostNL Trading Update Q3 2026 results call. At this moment all participants are in a listen only mode and after the presentation there will be an opportunity to ask questions. Now I would like to hand the conference over to Miss Inge Laudy, Manager Investor Relations. Please go ahead madam.

Thank you operator and welcome to you all. We have published our Q3 trading update this morning and with me in the room today are Linde Jansen our CFO and also Pim Berendsen CEO. Linde will guide you through a short presentation and then both Pim and Linde will take your questions. Please go ahead Linde.

Thank you, Inge. Let's start with the highlights of the third quarter of 2026. I will then give you more color on the main volume and revenue developments per segment. Please note that like in quarter one, this is a trading update. So we will explain on strategic progress and the drivers behind volume and revenue. No EBIT or free cash flow will be disclosed. Overall our revenue came in at 768 million compared to 762 million in the previous quarter last year. So a slight increase despite the challenging market conditions. Although we will not quantify normalized EBIT and free cash flow for this quarter, I can mention you that normalized EBIT developed in line with our expectations and followed the usual seasonal pattern. For free cash flow, we see a favorable development that is supported by our proactive working capital management. Our disciplined strategy execution supports this performance and free cash flow development in challenging market conditions. With that, we confirm our outlook for 2026 and the free cash flow to come in at zero for the full year, at around zero for the full year. On execution, we successfully implemented the standard mail delivery framework of within two business days, or how we say it D plus two. Our other main strategic initiatives are progressing according to plan. We continue to deliver on our cost savings plans and are agile in adapting capacity to the volume developments. These measures continue to support our performance. Let me now take you through the progress in our businesses and the external development that affect us. In the quarter we again made tangible progress on our strategy while external challenges continued. The geopolitical uncertainty is still there. Furthermore, in July, the new customs regulations for import outside the EU came into force and that impacts the e-commerce. Large agent webshops are adjusting their commercial propositions and logistics processes. This is resulting in shifts in market positions and a strong decline in market volumes. We also see new low-cost entrants in the e-commerce chain. For the e-commerce segment, we continue to execute our volume to value strategy. We are sharpening our customer segmentation and differentiating our propositions, with a disciplined approach to volume steering. Our targeted yield measures continue to gain traction, as demonstrated by the increase in the average price per parcel. We also see an improving trend in domestic volume development quarter over quarter. We will look at these drivers in more detail when I will discuss the segment figures. At platforms, our strategy remains to accelerate international growth through the asset-light models of Spring and MyParcel, which we see materialising in strong growth in our European e-commerce activities. So, we continue to make progress on the priorities we set out earlier this year, focusing on what we can control. Let me now turn to mail on slide 5 and our commitment to securing a sustainable postal service. As we explained before, a long-term viable postal service requires a delivery framework of within three business days, as well as compensation for the net USO costs in the transitional years. The D plus 3 framework also means no delivery on Saturday. Clear and timely political decisions to amend the Postal Act remain crucial. As these decisions have been delayed again, this has a direct consequence for the implementation timetable of D plus 3. The transition of this scale requires one year of careful preparation. We are therefore forced to postpone the implementation to 2028. As a consequence, we have filed our application for net cost compensation for 2027, an amount of 80 million euros. This brings the total amount requested for 2025 to 2027 to 148 million. These are requests for compensation, with legal proceedings for 2025 and 2026 still in progress. The legal proceedings concerning the withdrawal of our current USO designation also continues. But our commitment remains unchanged, securing a sustainable postal service. To achieve that, the necessary regulatory changes and compensation for the transitional years remain essential. Let's move to slide 6. This slide provides an overview of the key reported figures per segment. As mentioned in the beginning, volume and revenue are the metrics that we disclose and explain in this trading update. In short, for the group as a total, we saw a slight increase in revenue in a challenging market environment. But let's have a closer look per segment. and I will start with e-commerce. At e-commerce we see the transition from volume to value gaining traction. Domestic volumes are stabilizing and average price per parcel is up around 7%. The revenue amounted to 478 million compared to 466 million last year. with overall volumes up 2.4%, which includes the transfer of the D plus 1 letterbox parcels. Excluding these letterbox parcels, we report an overall volume decline of 7.1%. This overall volume impact can be split in domestic and international. Starting with domestic volumes, we see the good news that domestic volumes were broadly flat compared to last year and are showing an improving trend quarter over quarter. This reflects market developments and a limited loss in market share as anticipated following our targeted yield measures. Looking at the international volumes, mainly from Asian webshops, they were down almost 32%, predominantly explained by the new customs regulations that came into force in July. Higher prices due to targeted yield measures and fuel surcharge, which amounted to around 5 million, resulted in an 18 million step-up in revenue compared to last year. In line with our expectation, the mixed effect is negative. And that is almost fully explained by the D plus one letterbox parcels that are now being delivered in our e-commerce infrastructure instead of via mail. At the same time, a mixed effect between domestic and international was positive due to lower Asian volumes. And that together brings our revenue to 478 million. in this quarter. Let's move to platforms on slide 8. Revenue was down to 173 million compared to 188 million in the same quarter last year, with volumes down 13.1%. This 13% volume decline has two angles. On the one hand, we see our European volumes up again, growing by over 40%. This is in line with our strategy to expand our intra-European businesses. On the other hand, as already explained at the e-commerce segment, volumes from Asian webshops showed a sharp decline, falling almost 50% in the quarter, due to the customs regulation introduced in July. For price-mix effect, also at platforms, prices increased and were supported by a small favorable mix effect. The other revenue showed a slight decline. And then the last segment, mail, on slide 9. Revenue was broadly in line with last year, mainly explained by the impact from volume development and tariff increases. Adjusted for election mail, the volume decline was 3%, bringing the year-to-date structural decline to minus 6.3%. This was more than offset by a positive price mix effect, mainly driven by pricing coming from higher stamp prices as well as higher tariffs for our business meal. Stamp prices were up almost 7% as of the 1st of January of this year. Finally, good to note that we recently announced that we have been granted the largest lot in the government mail tender, effective 1 January 2027. With that, we secure over 200 million items annually at improved commercial terms. Let me now turn to our outlook for the full year 2026, which, as said before, we confirm today. For normalized EBIT, we continue to expect between 40 and 70 million. For free cash flow, we now expect to come in at around zero. Our proactive working capital management supports this favorable development. Let me take you briefly through some of the assumptions underlying that outlook, which we published in February of this year. being a revenue growth of between five to seven percent and we continue to invest in our strategic focus areas with capex expected to be around 125 million. Lease payments remain unchanged at around 100 million. Organic cost increases remain high at around 140 million with price increases to expect to be more than offset these cost increases. At the same time we maintain a strong focus on cost control and further efficiency improvements. The current impact of the customs regulations introduced on the 1st of July does not change our outlook for 2026. However, the scope and timing of these regulations could further evolve over time and potentially affect future performance. It also brings opportunities, as we are well positioned to benefit from a recovery as the market adjusts to the new reality. Furthermore, our outlook excludes the risk that prolonged geopolitical uncertainty may increase inflationary pressure and affect consumer spending. So we confirm our full-year outlook with a favourable free cash flow development supported by our continuous focus on working capital. Let me conclude this presentation on slide 11. I repeat that we will continue our focus on disciplined execution in a challenging environment. We have shown that we can adapt our operations to volume developments and we are ready for the upcoming peak season. In e-commerce our volume to value strategy is delivering higher yields and we see an improving trend in domestic volume development. At platforms we see strong growth in European e-commerce while adapting to the impact of the customs regulations. For mail, we have successfully implemented D plus 2 and quality is improving. This is an important first step. Political decisions remain necessary to enable the transition towards a future proof and financially viable postal service. Against this background, we remain confident in delivering our full year 2026 outlook with a favourable free cash flow development.