bpost facing headwind this year after “strong” 2014

bpost has said it had a “strong” final quarter of last year thanks to a slower than expected decline in mail volumes. The Belgian national postal operator said some improvements in advertising mail and transactional volumes helped overall results, along with good growth in domestic parcels.

Chief executive Koen Van Gerven described the year’s performance as “solid”.

He said this year, the company will come under “substantial pressure” from the continuing decline in mail volumes, and a EUR 16.5m reduction in the government funding support for the universal service under its latest business plan.

“We will more than ever need to seize growth opportunities based on our unique assets, our proximity to customers through our 10,000 postmen and 1,300 postal service points,” he said.

“We will also continue to improve productivity and efficiency to have bpost fully responsive to the evolving expectations of our customers.”

Results

Revenues grew 2.2% in the fourth quarter, to EUR 655.3m, but while pre-tax earnings (EBITDA) grew 7.8% year-on-year, net profit slipped 3.8% year-on-year to EUR 50.7m.

The quarter’s 3.7% decline in domestic mail volume was an improvement on the previous three quarters with a boost to advertising volumes from food retailers and a slowing decline from catalogue firms.

Strong volume growth for domestic parcels, 7.7%, driven by e-commerce, particularly in December when growth was 15.6% year-on-year. International parcels saw growth in line with the previous quarter, with continued growth in shipments from the US, but growth in shipments to China slowed.

The quarter meant that for the full year, revenues were up 1.5% to EUR 2.46bn, with net profit up 8.1% compared to the previous year, to EUR 295.5m.

The year’s domestic mail volume declined by 4.4%, with revenue down 1.8% to EUR 1.52bn, while parcel revenues grew by 20% to EUR 307.2m on the back of a 24% volume growth helped by acquisitions, and a 7% growth in domestic parcel volumes.

Looking ahead, bpost said mail volumes are expected to remain under “substantial” pressure from e-substitution, with declines potentially above 5% year-on-year. The company said it had already seen a “soft” start to the year in this respect.

The company said it was expecting continued growth in parcel shipments from the US, despite greater competition, but shipments to China should slow and could decline.