PostNL’s share price crashed 19% today as analysts and investors were disappointed by its low-key medium-term strategy update and yesterday’s Q3 results.
The Dutch postal group’s share price closed at €3.65 yesterday (November 2), down 2.88%. But it quickly dropped to €2.90 in the first hour of trading on the Amsterdam stock exchange this morning before stabilising. The share was trading at €2.95, down 19.2%, mid-afternoon today, its lowest value to date in 2015.
So far this year the company’s shares rose steadily from just over €3 in early January to a high of €4.75 on April 14, before dropping down to €3.04 on October 1 and then rising again to €3.85 last week.
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.
The company reiterated yesterday that it was “on track” to meet the full-year outlook of underlying cash operating income between €280 million and €320 million.
In today’s strategy update, PostNL told analysts that it aims for underlying cash operating income of €220 – €260 million in 2016 (excluding the Germany business which is under review). This could be up to 20% lower than this year. By 2020, the company hope to recover to underlying cash operating income of €265 – €335 million, which is a broader but similar range to this year.
PostNL explained that the 2016 results would reflect the effects of regulatory measures as well as expected higher restructuring cash outs and implementation costs ahead of cost savings. “After 2016, results are expected to gradually improve towards 2020,” it added.
Overall, the company said it had transformed itself into “an efficient, flexible, customer oriented and financially healthy company” over the past few years, based on its three segments of Mail in the Netherlands, Parcels and International.
CEO Herna Verhagen stated: “We have made significant progress in transforming PostNL into an efficient, flexible, customer oriented and financially healthy company over the past few years. By building on our core competences, we are prepared for the continuously changing markets in which we operate. At the same time, we have strengthened our quality, customer satisfaction and employee engagement, creating an attractive place to work for our people and a company that is committed to making the lives of our customers easier.”
PostNL said that by 2020 its ambition is to be the best postal and logistics solution provider in its chosen markets, including Benelux, Italy and cross-border e-commerce, while expanding through new services in adjacent growth sectors such as ‘connected community’, ‘convenient shopping’ and ‘network logistics’.
Verhagen explained: “Our 2020 ambition is being the postal & logistic solution provider in chosen markets. This overall ambition is being supported by the focus within our segments. In Mail in the Netherlands we remain focussed on delivering a sustainable cash flow and we will balance the expected volume decline with an increased cost savings ambition and price increases well above inflation.
“In Parcels our focus is on creating further profitable growth by strengthening our position as a leading e-commerce logistics company in the Benelux. In International, we focus on further building Nexive’s position in the Italian market and capturing opportunities of accelerating global e-commerce growth, which will result in enhanced cash profitability.
“Furthermore, we see upward potential for our results beyond 2020 in three substantial growth domains which are close to our competences. By combining these ambitions with the strengthening of our financial health, we invigorate our commitment to restoring dividend and creating long term shareholder value.”
PostNL employs a total of approximately 56,000 people and had revenues of almost €4.3 billion in 2014.
