PostNL profits up thanks to parcel growth
PostNL has said it had a solid final quarter of the year thanks to continuing good performances in its parcels business. The Dutch postal operator issued its latest results yesterday stating that a “strong” 2014 set a “solid base” for 2015.
The company was perhaps helped by selling off half its stake in troubled integrator TNT in December 2013. But, said its results were driven by cost-savings and reduced pension contributions, which more than offset declines in letter volumes.
Revenue grew to EUR 4.25bn in the year, with underlying operating income — excluding its UK mail business Whistl, assuming it becomes a joint venture with venture capital partners — was EUR 293m.
Chief executive Herna Verhagen said the results showed PostNL adapting to a changing environment.
She said: “The ongoing improvement of our mail operations resulted in EUR 127m of cost savings. This, together with the impact of price increases, more than compensated for the 10.7% decline in addressed mail volume in the Netherlands in 2014. At the same time, our delivery quality and customer satisfaction improved, as did our employee engagement.
“Parcels delivered good growth with a volume increase of 8.8%. This growth is the main driver for the improved performance, which also benefits from the strengthening operational efficiency. Subcontractor costs increased in line with our expectations. We continued to invest in the expansion of our service offerings, such as evening and Sunday delivery and rolling out parcel lockers. International volumes and revenues grew and the segment contributed positively to PostNL’s results, however underlying cash operating income was below last year.”
PostNL’s domestic mail business saw its revenue slip by 2% to EUR 2.01bn for the year as a whole, but underlying cash operating income nearly tripled to EUR 231m thanks to cost-cutting, new labour agreements and price increases.
The company’s addressed mail volume declined by 10.7% year-on-year in 2014, a slower decline than the 11.9% seen the year before.
Verhagen said further measures to help cut costs could come in July with legislation allowing a cut in the number of letter boxes and post offices.
But, PostNL is potentially facing moves to force it to grant regional postal players and resellers access to its network for business mail, under competition rules being reviewed by the postal regulator, ACM.
Parcels
PostNL’s parcels business saw its revenue up 6% year-on-year in 2014, to EUR 854m, with underlying cash operating income up 10% to EUR 98m.
Volume grew 8.8% compared to the year before, thanks largely to e-commerce.
Part of the improvement in results came from PostNL completing its investment in its new parcel depot network. Cost improvements have also come from redesigning delivery vehicles so that they can be used for both parcels and domestic mail delivery.
On the international side of the business, PostNL said its revenue grew 6% to EUR 1.71bn, with underlying cash operating income falling by 75% to EUR 8m, with results impacted by the roll-out of end-to-end delivery services in the UK by joint venture Whistl.
Looking ahead, Verhagen said: “For 2015 our focus remains on maintaining profitability for Mail in the Netherlands, where the pending regulatory files are a point of management attention given the potential impact beyond 2015. Being well-positioned to further benefit from the growing e‑commerce market, we expect Parcels to continue its growth and strengthen its market position. In International we will focus on improving our cash profitability. We will monitor the progress and take further actions if necessary.”
