Bpost is aiming for stable profits this year, again driven by strong parcels growth, two international acquisitions, the planned acquisition of the Lagardère retail business and continuing cost reductions after achieving a clear improvement in the final quarter of 2015.
CEO Koen Van Gerven and CFO Koen Beeckmans told analysts last week at the release of the Q4 results that this year they expect an underlying domestic mail volume decline of 5-6% but double-digit volume growth for domestic parcels and a continued rise in inbound parcel flows from the USA. At the same time, there will be a strong focus on all cost items.
Overall, they hope for recurring EBITDA to be at the same level this year as in 2015, with organic growth offset by a drop in compensation from the Belgian state for USO cost obligations (SGEI).
“2016 will be challenging as we are facing a substantial reduction in CGEI compensation and mail volumes will continue to be under pressure,” Van Gerven said. “We will therefore pursue our growth and diversification strategy further, while stringently controlling our cost base. With the acquisition agreements for the Belgian activities of Lagardère Travel Retail and in our international parcels space we already took an important step towards our future profitable growth.”
International business will be boosted this year by two new subsidiaries. Last November, bpost bought the small Warsaw-based logistics firm Success Partners Europe, with revenues of €3.4 million, and has rebranded it to Landmark Global (PL). In February, it agreed to buy Australian firm Freight Distribution Management, which provides warehousing and distribution in Australia.
In 2015, bpost improved EBITDA by 2% to €584 million mostly thanks to €69 million worth of cost savings while lower mail revenues were nearly compensated by higher parcel revenues. Operating profits (EBIT) were up 2% at €494 million and net profit rose by 11% to €328 million. The group’s revenues dropped 2.3% to €2,407 million on a normalised basis as domestic transactional mail revenues dropped by 3% on a 5% volume decline.
Parcels remained the main growth business last year with a 17% rise to revenues of €341 million. Domestic parcel revenues (including flows to/from Belgium) increased by 9% to €161 million driven by e-commerce, with a 13% volume rise, including a 14% volume rise in the final quarter and a 16% increase in December.
International parcel revenues grew by a strong 22% to €170 million particularly thanks to flows from the USA and to/from China. There was a 14% rise in revenues in the fourth quarter. Volume trends were not disclosed.
Van Gerven commented: “The excellent results recorded in the fourth quarter prove once again that the disciplined execution of our strategy continues to bear fruit. Our parcels activities developed very strongly, especially during the end of year season.”
