PostNL is reviewing its international activities and will announce an updated strategy later this year after a setback in the UK and ahead of €642 million proceeds from selling its TNT stake to FedEx.
The Dutch company’s plan to turn its British subsidiary Whistl into a joint venture with Lloyds Bank subsidiary LDC, which would have funded the rollout of an end-to-end delivery network, collapsed last week when LDC pulled out of long-running talks due to changes in market and regulatory conditions.
PostNL CEO Herna Verhagen commented today: “We regret that the joint venture in the United Kingdom did not succeed. Amongst other things, the continuous regulatory uncertainties in the three countries where we operate has led us to launch a strategic review of our activities abroad. We are scheduling a strategy update around the publication of our third quarter results.”
She also reaffirmed that the Dutch postal group supports the announced offer by FedEx to acquire TNT Express “which will have an additional positive impact on our financial position when completed”. PostNL has agreed to sell its 14.7% stake in TNT Express to FedEx for €642 million as part of the US group’s €4.4 billion takeover of the Dutch express firm. The acquisition is expected to complete next year after regulatory clearance in Europe and several other countries.
Meanwhile, PostNL increased revenues slightly to €1,058 million in the first quarter but its underlying cash operating income fell slightly to €68 million from €77 million in the first three months of last year.
The company’s addressed mail volume declined by 13.2% (adjusted for one fewer working day: 12.5%) but parcel volumes increased by 8% and there was a slight improvement in International results.
“Our performance in the first quarter is in line with our expectations. In Mail in the Netherlands, price increases and cost savings did not fully compensate for the volume decline. The volume development corresponds with fluctuations that come with substitution and phasing in working days,” Verhagen commented.
“Parcels continues its solid performance, with volumes up 8%, significantly driven by international growth. The result of International slightly improved, showing the first effect from our profit improvement program in Germany,” she added.
For 2015 as a whole, PostNL expects full year underlying cash operating income of between €280 million and €320 million.
“For the full year we expect the volume decline to be within the earlier guided range of 9% -12%. Cost savings are expected to be higher in the second half of 2015 due to phasing in the implementation of the restructuring plans. The outlook for cost savings remains unchanged,” Verhagen said. “We continue to expect the second half year to be stronger than 2014,” she added.
