Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Parcels segment reported positive and improved results despite challenging market conditions.
- Volume growth in parcels was strong, with a 10.7% exit rate in September, continuing into October.
- Carbon efficiency improved by 14%, aligning with the company's ESG goals.
- A new collective labor agreement was reached, providing clarity on labor costs for 2025.
- The company expects a significant step up in EBIT for Q4, driven by anticipated peak season performance.
Negative Points
- Q3 results were negative, with a normalized EBIT of minus EUR18 million, primarily due to mail-related activities.
- Mail in the Netherlands experienced a volume decline of 6.3%, with high organic cost increases.
- The business model for mail is unsustainable, relying heavily on seasonal mail to cover losses.
- Free cash flow was negative at minus EUR68 million for the quarter, worsening from the previous year.
- The company faces intense competition in the parcels segment, impacting pricing and margins.
Q & A Highlights
Q: Can you comment on the expected cost savings from the transition to D+2 delivery for business mail in 2025? Will these savings be realized quickly?
A: Herna Verhagen, CEO: The transition to D+2 delivery for business mail is expected to yield cost savings of around EUR15 million on a full run rate basis. However, these savings will phase in throughout 2025, starting with 70% of the volume at the beginning of the year and gradually increasing.
Q: Regarding your guidance, does achieving the current EBIT target require a significant step-up in Q4, and will this be driven more by volume or cost initiatives?
A: Pim Berendsen, CFO: The step-up in Q4 will be driven by several factors, including an acceleration in volume growth, improved cost efficiencies, and the full impact of cost-saving measures. Both volume growth and cost initiatives will contribute to achieving the EBIT target.
Q: Why are organic cost increases expected to be lower than initially guided, and why is there still a gap between cost increases and yield management?
A: Pim Berendsen, CFO: Organic cost increases are now expected to be around EUR140-145 million, lower than the initial EUR155 million guidance, due to slightly lower increases in fuel and energy prices. The gap between cost increases and yield management has reduced to EUR15 million, primarily due to competitive pressures limiting price increases.
Q: With the delay in postal reforms, when do you expect any financial remuneration or bridging measures to be implemented?
A: Herna Verhagen, CEO: We do not expect any bridging measures by spring 2025. The discussion in parliament will likely start after the ACM report in February, but the exact timing for any measures is uncertain.
Q: Can you clarify the impact of the new collective labor agreement on Q4 results?
A: Pim Berendsen, CFO: The new collective labor agreement includes a retroactive wage increase from July 1, which will impact Q4 results by approximately EUR12-15 million, covering both Q3 and Q4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
