PostNL: severe decline in mail volumes…has led to a negative performance by Mail

Highlights Q1 2024

• Parcel volumes up 4.6%, with domestic volumes resuming growth and continued strong growth from international customers
• Mail volumes down 12.5% (-8.3% adjusted for election mail), mainly due to ongoing substitution
• Continued high organic cost increase of €24 million, mainly labour-related
• 14% further improvement in average carbon efficiency
• Outlook 2024 confirmed

CEO statement

Herna Verhagen, CEO of PostNL, said: “We are making steady progress on the strategic actions that we announced in February and keep on adjusting our operations and offerings to adapt to changing market circumstances. In the first quarter we operated in a challenging environment with rising costs, mainly labour-related. In line with expectations, the result came in below last year.

“The combination of the ongoing severe decline in mail volumes and a further shift toward non-24 hour mail services, along with high labour costs, has led to a negative performance by Mail in the Netherlands. This underpins the urgent need for transformation. We aim to adjust the service level for standard mail to delivery within two days, moving towards three days over time, aligning with our customers’ and consumers’ needs. To achieve this, a modification in postal regulation is needed. The Minister of Economic Affairs is in the lead of this process. Our efforts to fill the vacancies for mail deliverers are showing good progress and will contribute to enhancing delivery quality. We are committed to keeping the postal service in the Netherlands reliable, accessible and affordable, providing job security to thousands of people.

“At Parcels, overall volumes grew, trending towards our full year growth projections. Domestic volumes resumed growth, and volumes from international customers have increased significantly, leading to a continuation of the shift to a less favourable mix. As expected, ongoing organic cost increases put pressure on our results. We are gaining momentum on our strategic actions to better balance volume and value and these will start contributing to our results in the course of 2024. Concrete steps are currently being taken to rationalise our products and services portfolio. We are committed to sustainable growth and recently added to our network a state-of-the-art sorting facility equipped with innovative solar energy storage.

“We are confident in the long-term growth potential of the e-commerce market, driven by online penetration and assuming improving economic conditions. Taking into account the developments in Q1 and the still volatile geopolitical and economic environment, we confirm our 2024 outlook for normalised EBIT between €80 million and €110 million and free cash flow of between €0 and €40 million.”