Earnings Call: PostNL Projects €80 Million in Normalized EBITDA for 2024

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Earnings Call: PostNL Projects €80 Million in Normalized EBITDA for 2024

In the recently held Q3 2024 Earnings Call, Dutch postal company PostNL (ticker: PNL) reported a normalized EBITDA loss of €80 million, and CEO Herna Verhagen announced she would step down in April 2025, with CFO Pim Berendsen set to take over leadership. Despite the loss, the company saw a revenue increase in its Parcels segment of up to €569 million, alongside a volume growth of 7.4%. However, postal-related activities recorded a total loss of €19 million year-to-date due to a 6.3% decline in volume, falling short of expectations. PostNL remains optimistic about the future, expecting a strong peak season and targeting approximately €80 million in normalized EBITDA for the year in line with analyst expectations.

Key Points:

  • CEO Herna Verhagen will depart in April 2025 after 12.5 years; CFO Pim Berendsen has been named as her successor.
  • PostNL reported an €80 million normalized EBITDA loss in Q3, with the Postal segment underperforming.
  • Parcel revenue rose to €569 million, with a 7.4% volume increase recorded.
  • The company plans to transition 70% of USO-exempt Post to a two-day delivery service to enhance efficiency.
  • PostNL anticipates a strong peak season and targets approximately €80 million in normalized EBITDA for the year.
  • Strategic focal points include sustainable growth in Parcels, value-focused management of mail, and digitalization efforts.

Company Outlook:

  • PostNL targets approximately €80 million in normalized EBITDA for the full year.
  • The company expects a 7-10% parcel growth and a 7-9% decline in postal volume for 2024.
  • It plans to maintain its dividend policy despite financial challenges.
  • Ongoing transformation of the Postal business through service level and pricing adjustments for sustainability.

Negative Highlights:

  • Postal segment revenue declined to €2.95 million due to a 6.3% volume decrease.
  • Free cash flow dropped to negative €68 million, and adjusted net debt rose to €592 million.
  • Competitive market pressures affect the ability to increase prices.

Positive Highlights:

  • The Parcels segment shows improvement through revenue growth and volume increase.
  • Cost savings of €10 million were achieved in the Postal segment, contributing to €30 million in savings year-to-date.
  • Projected cost increases for the year have been revised downward due to lower labor, fuel, and energy costs.

Underperformers:

  • The €80 million normalized EBITDA loss was primarily due to underperformance in the Postal segment.
  • Cumulative losses in mail have reached €19 million year-to-date, stemming from significant volume declines.

Q&A Notables:

  • Expected cost savings of €50 million from transitioning USO-exempt Mail to D+2 service.
  • The forecast indicates lower EBITDA for Q4 due to various factors, including the impact of a new collective labor agreement.
  • Continued losses in the USO segment suggest a slight loss or breakeven point for cash operating income in 2024.
  • Discussion regarding challenges in hiring and retaining delivery personnel alongside market dynamics affecting SMEs.

PostNL is undergoing a transition period marked by significant leadership and strategic changes. The company’s focus on efficiency and cost savings, particularly in the Postal segment, serves as a response to ongoing declines in mail volumes. As PostNL prepares for a strong peak season, balancing growth in the Parcels segment with the challenges facing the Postal business will be crucial for achieving financial targets and maintaining shareholder value.