Shares in PostNL dropped nearly 10% today after the Dutch mail operator announced weak Q3results and warned it might not be able to pay out a dividend for 2012.
The company disappointed the financial markets with a slump in profits and fast loss ofaddressed mail volumes, while CFO Jan Bos warned that the drop in the value of its TNT Expressstake could make it difficult to pay a dividend for this year. The book value of PostNL’s 29% stakein TNT Express fell from €1.5 billion at the end of Q2 to €1.32 billion at the end of Q3 due to thelower TNT Express share price.
Shares in PostNL were down 9.53% at €2.82 shortly before close of trading on the Amsterdam stockexchange.
PostNL reported a Q3 operating loss of €128 million compared to the previous year’s €66 millionprofit while the ‘underlying cash operating profit’ was just €4 million compared to €21 millionlast year, mostly due to lower addressed mail volumes. But revenues were 3.1% higher at €1,022million as parcels and international growth compensated for the declining mail business.
The Dutch mail business dropped into the red with a €1 million underlying loss on underlying Q3revenues of €513 million, down 5.9%. Addressed mail volumes were 10.1% lower during the quarter aselectronic substitution gathered pace.
CEO Herna Verhagen commented: “Following the slow start of the year, in this quarter theperformance in Mail in the Netherlands remained under pressure. The third quarter was marked by adecline of addressed mail volumes of 10.1%, mainly due to substitution.”
PostNL said that after stopping its network restructuring earlier this year due to qualityproblems it will test merging locations instead and thereafter decide on how to restructure thenetwork. It also said it expects the Dutch Parliament to approve a legal amendment before the endof the year that would allow it to cancel Monday deliveries.
The International business, covering the mail activities in the UK, Germany and Italy, increasedunderlying revenues by 7.5% to €389 million and nearly doubled its profit to €7 million. TNT PostUK increased revenues by 13.3% to €179 million with volumes up 7%, including “very strong” growthin packets and parcels. TNT Post Germany increased revenues slightly to €123 million, furtherreduced its operating costs and remains on track to break even in 2013.
PostNL Parcels increased its revenues by 28% to €183 million and improved underlying profits by19% to €19 million. Volumes were 4.5% higher. The unit has so far opened six of its new parceldepots and about 30% of volumes are now running through the ‘New Logistics Infrastructure’network.
Verhagen added: “Looking at the remainder of the year, we expect the addressed mail volumedecline to be between 8% and 10% for 2012. We reaffirm our underlying cash operating income outlookfor the year, although we expect that the full year result will be at the bottom half of the range.The outlook remains sensitive to further developments in the roll-out of Master plans and the saleof real estate.”
PostNL said the Dutch mail business is expected to have an underlying cash operating profitmargin of between 0% and 2%. The group’s overall underlying cash operating profit would be at thelower end of the €110 million to €160 million range, which would be a 2%-4% profit margin.
