PostNL today unveiled a slump in operating profits, a heavy write-off in the value of its TNTExpress stake and plans to pay dividends in shares but also raised its outlook for full-year
profits.In the July-September 2011 third quarter, the Dutch mail operator reported operating profitsof €66 million, down from the previous year’s €106 million, which pushed down the operating marginto 6.7 per cent from 10.4 per cent. The underlying operating profit was 15.7 per cent lower at €70million. Reported revenues fell 2.5 per cent to €991 million while underlying revenues were 2 percent lower at €996 million.
PostNL also wrote off €337 million in the value of its 29 per cent stake in TNT Express,which now has a book value of €846 million. This resulted in a net loss of €313 million compared tothe previous year’s €75 million Q3 profit. The Q3 net profit without TNT Express fell to €27million from €60 million. The company said it would pay out dividends in shares rather than cashfrom next year.
CEO Harry Koorstra said: “Since our last results, the financial markets have been extremelyturbulent, leading to another impairment on the Express stake. Dutch interest rates are athistorically low levels. The coverage ratio of the main pension fund dropped well below the minimumrequired level, resulting in possible substantial recovery payments in the period 2012 – 2014. Inaddition, regular pension premiums will probably increase from next year. All this will impact ourcapability of paying cash dividend (in) the next few years.”
At an operational level, the Dutch mail business had a 3.4 per cent drop in underlyingrevenues to €545 million and the underlying EBIT fell to €17 million from the previous year’s €40million. Addressed mail volumes in the Netherlands declined 6.9 per cent due to electronicsubstitution.
The parcels business increased volumes by 7.5 per cent and revenues by the same figure to€143 million, and improved its operating profits by 14 per cent to €16 million. The unit gainedbusiness with new clients, delivered higher quantities of internet-generated volumes and continuedits network expansion programme.
PostNL’s international mail activities increased revenues by 6.4 per cent to €367 million andmoved into the black with a €4 million profit compared to last year’s €5 million loss. UK revenuesincreased by 11.6 per cent to €163 million thanks to higher volumes and prices, while Germanyrevenues rose 2.5 per cent to €121 million and the business is on track for break-even in 2013.
Koorstra commented: “The positive development in our operations was strongly continued in thethird quarter: addressed mail volumes have developed better than expected, OPTA approved new stampprices that will be effective as of January 2012 and step-by-step Master plan III is being rolledout. Parcels delivers as promised and shows good growth in volumes, revenues and results.International’s performance again improved and with the sale of the mailroom activities in Italy inOctober the focus on value realisation in International has been successfully concluded.”
For 2011 as a whole, PostNL now expects underlying cash operating income to be above €170million compared to the previous target of a €130 – 170 million range thanks to its betteroperational performance and the delay of mail restructuring costs from this year into 2012. Due toongoing substitution and competition, in this second year after full liberalisation, the expecteddecline in addressed volumes in 2011 in the Netherlands is 8 – 10 per cent. Master plan savings of€60 – 70 million are expected for the year, the company noted.
