PostNL Q2: mail volumes declined more than 7%

PostNL has published its Q2 results revealing “steady progress” with parcels volumes up 6%.

Highlights Q2 2024

• Outlook 2024 reconfirmed
• Parcel volumes up 6.0%, with domestic volumes modestly up and continued strong growth from international customers
• Mail volumes down 1.3% (adjusted for election mail: -5.9%, mainly due to ongoing substitution)
• Continued high organic cost increase of €38 million, mainly labour-related, largely mitigated
• Free cash flow improved
• 17% further improvement in average carbon efficiency year-to-date
• Successful issuance of €300 million sustainability-linked notes due June 2031
• PostNL Belgium fully acquitted in case involving delivery partners, no appeal
• Interim dividend set at €0.03 per share, in line with dividend policy

Herna Verhagen, CEO of PostNL, said: “We are making steady progress on the strategic initiatives announced in February. To solidify our position in current difficult circumstances, we are continuing to adjust our operations and offerings with a consistent focus on customer excellence, strict cost control and capacity management, aiming at a step-by-step margin expansion. We are also proud that we have been able to successfully issue €300 million of sustainability-linked notes. As expected, the half-year result was in line with last year’s. I would like to thank all our people for their hard work and commitment.

“In the first half of the year, mail volumes declined more than 7% and the shift towards non-24-hour mail services continued. Along with high labour costs, this has led to a result of just €1 million at Mail in the Netherlands. This underpins the urgent need for transformation. We aim to adjust the service level for standard mail to delivery within two days, moving towards three days over time. Our commitment to cost savings initiatives remains strong and we will sustain these efforts also when adjusting the service level. Currently, we are also exploring a smooth transition for non-USO mail to standard delivery within two days. The USO (Universal Service Obligation) is already loss-making, putting further pressure on the stability of postal services in the Netherlands. Bridging measures are deemed necessary by government and are currently being explored. In addition, in our view, a financial contribution should be included in these measures. All these steps are essential to safeguard a reliable, accessible and affordable postal service, which is vital for Dutch society and provides job security to thousands of people.

“At Parcels, overall volume growth is steadily picking up, trending towards our full-year growth projections. In general, weather conditions had a negative impact on the e-commerce market, especially for the considerable fashion industry. At the same time we are gaining some market share in the Netherlands. Domestic volumes were only slightly up in the quarter. Volumes from international customers continued to grow significantly. This resulted in a volume growth of 6.0%, however the shift in mix was more unfavourable than we had expected. Cost increases put pressure on our results as anticipated. Our strategic actions to better balance volume and value are progressing as expected and will contribute to our results in the course of 2024 and beyond.

“We are confident in the long-term growth potential of the e-commerce market, driven by growing online penetration and better economic conditions over time. Reflecting the assumption of a gradual improvement in the economic environment, we confirm our 2024 outlook for normalised EBIT between €80 million and €110 million and free cash flow of between €0 and €40 million.”