PostNL today reported a drop in operating profits in the first quarter of 2012 due to lower mailvolumes and mixed parcels results but international subsidiaries improved their results.
The Dutch postal operator’s revenues dropped 4 per cent to €1.07 billion, with underlyingrevenues down 4.6 per cent. It reported a 3.2 per cent fall in operating profits to €121 million,although the profit margin improved slightly to 11.3 per cent. On an underlying basis, however,operating profits were 2.5 per cent higher at €123 million, and the margin improved to 11.6 percent.
The net result was skewed by a €570 million upward revaluation of its 29 per cent stake inTNT Express, which left it with a Q1 net profit of €641 million compared to last year. Excludingthe TNT stake, which was valued at €1.5 billion at the end of Q1 following the sharp rise in theTNT share price, net profit was flat at €70 million.
PostNL has committed itself to selling the stake to UPS as part of the latter’s €5.16 billiontakeover offer for TNT Express. The company reiterated today that it would use the proceeds toreduce debts, restore its suspended cash dividend policy, invest in portfolio extension andde-risking pensions or redistribute excess cash to shareholders.
Herna Verhagen, who took over as CEO of PostNL following last month’s shock resignation oflong-serving Harry Koorstra, commented: “Overall the start of the year was slightly weaker thananticipated. In the Netherlands, the volume decline in addressed mail was in line with ourexpectations. Stability and clarity are very important in these challenging times. The priority forthe coming period therefore is to focus on continuing the existing strategy and itsimplementation.”
The core Dutch mail business suffered a 5.4 per cent drop in underlying revenues to €579million in the first quarter while its operating profit declined 32 per cent to €52 million.Underlying address mail volumes dropped 7.9 per cent.
Over the last few months, PostNL started to restructure its sorting facilities with theclosure of various smaller locations and the opening of new central sorting locations staffed bypart-timers. But the switchover was hit by various problems relating to processes, quality andstaffing.
Verhagen explained: “We experienced difficulties adapting to the peak / off-peak model andthe implementation of the new processes at the central preparation locations resulting in atemporary delay in the further roll-outs. This has its impact on both our clients and ouremployees. Improvements are being worked on together with the works council and we remain focusedon our quality. We are confident that the reorganisation will result in the long-term savings wehave announced previously.”
The Parcels business, mostly active in the Netherlands but also in Belgium, increasedunderlying revenues by 5.2 per cent to €161 million thanks to a 4.6 per cent volume increase butits operating profit declined 15 per cent to €22 million.
Verhagen said: “Within Parcels volumes were up. The average price per parcel was lower due tothe mix in revenues. With our recent acquisition of Trans-o-flex, Parcels gains a strong marketposition on the Belgian and Dutch market for multi-colli shipments.”
PostNL said that the new parcels depots at Den Bosch and Hengelo would go into operation inQ2 while construction of other new depots at Breda, Sittard and Amersfoot was progressing to plan.
International, incorporating the mail businesses in the UK, Germany and Italy, contributedpositively with underlying operating income of €5 million compared to a €2 million loss in thefirst quarter of last year. Its revenues were 5.4 per cent higher at €391 million.
UK revenues grew 11 per cent to €166 million thanks to higher tariffs, Germany was flat at€131 million but is now “clearly on track to break even in 2013” and Italy revenues were level at€52 million.
