Daniel Kretinsky’s Dutch postal group ‘no longer sustainable’

The Dutch postal operator backed by the Czech tycoon buying the Royal Mail has warned that its business model is “no longer sustainable” amid downbeat forecasts for the year and a dispute with ministers over state financial support.

PostNL is struggling with weak mail volumes, growing competition and increased parcel costs. It has made repeated calls for support from the Dutch government after a fall in its performance and a sliding share price.

The latest request, for €68 million, was rejected by the Dutch Ministry of Economic Affairs on Friday, adding to its difficulties after it warned on 2024 profits in January. The investment arm of EP Group, the conglomerate controlled by Daniel Kretinsky, owns about 30 per cent of PostNL and has been a shareholder since 2021.

Kretinsky’s empire, built on European gas interests, has investments in food, media, logistics and retail, including J Sainsbury and Footlocker, and is poised to complete the audacious acquisition of International Distribution Services, the owner of Royal Mail, by the end of March.

The £3.6 billion, 370p per share acquisition of IDS, which was recommended to shareholders by its board last May, has raised speculation over whether Kretinsky may explore options for PostNL and GLS, the Royal Mail owner’s European parcels business.

Similarly to Britain, where Ofcom is planning to relax Royal Mail’s so-called universal service obligation after years of lobbying from the former state-owned company, PostNL is pressing politicians to reform its obligations to allow it to have longer delivery times.

Alexander Paterson, an analyst at Peel Hunt, has said he did not believe there was “a lot of commercial logic” in merging PostNL and GLS.

Shares in PostNL are down by about a fifth over the past five years and weakened in Amsterdam on Friday when its request for government financial support was rejected. It had called for a temporary financial contribution towards universal service obligation costs of €30 million this year and €38 million in 2026.

The Ministry of Economic Affairs said it was exploring measures to support postal services and did not want to take any irreversible steps before parliament and regulators had made a decision.

“Temporary or definitive measures that PostNL is requesting, like government support, are not being considered at the moment,” the ministry said.

Traditional postal services in Europe are struggling with competition from parcel delivery firms and out-of-the-home locker services, such as Poland’s InPost and Amazon, at a time of a long-term decline in letters and high fixed costs.

PostNL, which delivers parcels and letters across the Netherlands, Belgium and Luxembourg, said it expected a volume decline of 8 per cent to 10 per cent at its Dutch mail business this year and aims to make cost savings of between €40 million and €45 million. It forecast growth of between 1 per cent and 3 per cent at its parcels business.

Herna Verhagen, the outgoing chief executive, said: “The financial performance strongly underlines that the current business model is no longer sustainable.”

Verhagen is due to step down after its annual meeting in April and will be replaced by the current chief financial officer, Pim Berendsen.