Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Parcel volumes increased by 6%, with significant growth from international customers.
- Strong improvement in cash flow compared to the previous year.
- Successful issuance of a sustainability-linked note.
- Positive outcome in the Belgian court case, freeing the company from allegations.
- Dividend payment of EUR0.03 per share.
Negative Points
- Mail volumes declined by 1.3%, with a significant shift from 24-hour to non-24-hour mail.
- Organic cost increases of EUR38 million in Q2, expected to reach EUR155 million for the full year.
- Normalized EBIT remained flat compared to the previous year despite a 3% revenue growth.
- Negative impact on margins due to an unfavorable product and customer mix.
- High sick leave rates and labor costs continue to pressure the mail business.
Q & A Highlights
Q: Why would EBIT be lower in Q3 and exceed expectations in Q4? Is it more top-line and volume-driven or cost-saving initiatives driven?
A: The phasing of the maturity of the measures taken is the main driver. Volume mix in Q3 might still be more reliant on cross-border. The full-year numbers on cost-saving initiatives are not a concern. (Pim Berendsen, CFO)
Q: Can you give more color on the parcel volume developments, especially the evolution throughout Q2 and the exit rates seen there?
A: The exit ratio rates on domestic were around 7% in March and continued into April and May, maybe even higher. However, June was significantly worse, mainly due to low fashion volumes. (Pim Berendsen, CFO)
Q: With the achieved EBIT in the first half and an indication of an EBIT loss in Q3, how might you achieve more than EUR80 million of profit in Q4?
A: A step-up in growth is expected, with measures to improve efficiency and utilize the network with the best possible yields. Additional cost measures on the indirect side will also contribute. (Pim Berendsen, CFO)
Q: What potential bridging measures are being explored for USO changes?
A: The ministry's letter in October will provide more guidance. We have made our view clear, advocating for a two-day delivery window and a financial contribution to bridging measures. (Herna Verhagen, CEO)
Q: Can you give more color on the bridge measures and what they consist of?
A: The ministry's letter in May mentioned changing the Universal Service Obligation to delivery within two days as an example. We advocate for a financial contribution alongside this change. (Herna Verhagen, CEO)
Q: What is driving the improvement in Spring's profitability?
A: Spring is leveraging more cross-border volumes and transitioning to a more e-commerce-related European business. (Pim Berendsen, CFO)
Q: Is the shift towards non-24-hour mail a consequence of the second price increase of the year?
A: The trend towards non-24-hour mail has been ongoing for the last 10 years and is not related to the recent price increase. (Herna Verhagen, CEO)
Q: Are there additional cost-saving measures on top of the already announced ones?
A: We consistently monitor top-line development and look for additional opportunities to further derisk the year-end result. (Pim Berendsen, CFO)
Q: Will there be extra costs in Q4 to prepare for the transition to a two-day delivery model?
A: The change will be gradual, with no significant one-off or project-related costs in preparation for the change within 2024. (Pim Berendsen, CFO)
Q: What makes you optimistic about consumer spending and the anticipated volume growth in the second half of the year?
A: The combination of market growth and stable or slightly positive market share, along with positive trends seen in previous months, supports the 2% to 4% domestic growth projection. (Pim Berendsen, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
