PostNL “well on track” after Q2 profit

Dutch mail firm PostNL described its financial results for Q2 as “encouraging” after posting a profit of EUR 1.77bn. Results were influenced by PostNL’s gains on TNT Express, of which it holds a 29.9% stake after May’s demerger, however, the mail arm suffered from EUR 397m write down on the express company’s value. The stake was initially valued at EUR 1.583bn.

The stake will be sold as and when PostNL deems “advantageous and appropriate”, in line with the goal to maximise value for PostNL shareholders.

Revenues jumped from EUR 992bn to EUR 1.02bn – up 3.2% on the previous year. Furthermore, EBITDA rose by 462% to EUR 118m, with the company’s operating income standing at EUR 93m, compared to last year’s figure of minus EUR 5m.

As a result, the mail arm, said it expects underlying cash operating income to be at the top half of the guided range of EUR 130-170m in 2011.

PostNL added that due to ongoing substitution and competition, in this second year after full liberalisation, the expected decline in addressed volumes in 2011 in the Netherlands is 8 to 10%. Master plan savings of EUR 50- 60m are also being targeted for the year.

Underlying revenues increased by 4.1% compared to the prior year, but this included the effect of the different presentation of PostCon revenues in Germany (EUR 67m). Adjusted for this effect, revenues declined by 2.5%.

Underlying operating income decreased by 33.1% to EUR 89m, which represents an underlying operating margin of 8.6% (Q2 2010: 13.4%). This decline was due to the drop in mail volumes and price/ mix changes in Mail in NL (EUR 29m), higher pension expenses (EUR 26m), increased Master plan implementation costs (EUR 3m) and other items (EUR 18m), partly offset by Master plan savings (EUR 18m) and improved contributions from Parcels and International (EUR 14m).

The one-offs in Q2 2011 are resizing (EUR 7m) in International, and the book gain on the sale of De Belgische Distributiedienst (EUR 38m profit), demerger costs (EUR 23m) and rebranding costs (EUR 4m) in Mail.

In Q2 2010, the total one-offs amounted to EUR 138m, of which the main item was a net provision charge for Master plans of EUR 168m.

Underlying cash operating income was EUR 25m, down against the prior year, due to the combination of lower underlying operating income (EUR 44m), higher cash outflow from provisions (EUR 8m) and lower changes in pension liabilities (EUR 10m).

Net cash from operating activities was EUR 91m better than the prior year, mainly due to lower income taxes paid (Q2 2011: EUR 5m versus Q2 2010: EUR 138m).

At the end of the second quarter, net debt was EUR 925m, which compares to EUR 993m at the end of 2010.

Harry Koorstra, CEO of PostNL (pictured), said: “There is a positive development of all key parameters: the addressed mail volumes have developed in line with expectations, the process of consolidation in the Dutch market continues and the Enterprise Chamber has rejected all requests of the Works Council in their case against the reorganisations and as a consequence, we can now continue our Master plan implementation.

“Parcels delivers as promised and International’s performance further improved with Germany on track to become profitable supported by a positive outcome of our German court case.

“Looking at our performance during the first two quarters of the year, I am pleased to see that we are well on track towards the top half of our guided range.”

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