PostNL today unveiled a decline in underlying profits in the third quarter but stressed ahead of a strategy update tomorrow that it remains “on track” to achieve its outlook for 2015.
The Dutch postal group, which recently completed the management buyout of its former UK subsidiary Whistl and announced it would retain its Italian business, also confirmed that the review of its German subsidiary remains ongoing with “all options open”.
In Q3, 2015, PostNL’s overall revenues declined by 1% to €780 million due to weaker mail volumes. Underlying operating profit dropped 20% to €40 million and underlying cash operating income was down 26% at €23 million. However, reported EBIT improved 10% to €44 million and net profits rose to €18 million from €12 million one year earlier.
CEO Herna Verhagen stated: “Our performance in the third quarter is in line with our expectations. We are on track to meet our full year outlook. We expect a seasonally strong fourth quarter that will benefit from two extra working days.” PostNL expects full year underlying cash operating income of between €280 million and €320 million.
The Dutch mail business saw revenues slide by 5% to €426 million as addressed mail volume declined by 11.2%. Cost savings and price increases did not fully compensate for the volume decline and autonomous cost increases. Underlying operating income dropped to €30 million from €37 million while underlying cash operating income dropped by a third to €14 million.
In 2015 as a whole, PostNL expects its Dutch addressed mail volumes to fall between 9-12%. It is targeting cost savings of €75 – 95 million, which will initially cost between €25 – 45 million to implement.
The Parcels business continued its volume and revenue growth. Volumes were up 8.6% while revenues increased by 7% to €218 million. B2C volumes increased in line with e-commerce market growth but the increase in international volumes, especially milk powder to China, slowed down. But subcontractor costs rose following the strike action in July, pushing underlying operating income down slightly to €17 million.
The International segment, now comprising only Germany and Italy following the UK sale, increased revenues by 3% to €229 million while it made a small underlying operating profit of €2 million compared to a €2 million loss 12 month earlier.
Revenues in Germany dropped slightly to €115 million but the result improved due to a restructuring programme. “The strategic review of our German activities is still in progress,” the company said, adding that “all options (are) open”. Italian subsidiary Nexive increased revenue fractionally to €55 million, although the result was impacted by start-up losses of the parcels network, according to PostNL.
Verhagen added: “Looking forward, we reconfirm our full year 2015 outlook of underlying cash operating income between €280 million and €320 million. Tomorrow we will host a strategy update. We will then present our view on the market, insights in the future strategy of PostNL and a financial outlook.”
