PostNL to focus growth on “niche” role in Western Europe

Dutch postal service PostNL said today that it was pushing to expand in Western Europe, but chief executive Harry Koorstra said his company could not become a pan-European or global player following last year’s demerger with TNT Express. Koorstra was speaking as PostNL revealed its latest financial results, for the fourth quarter and full year of 2011, affected broadly by a 7.2% decline in mail volumes during the year and the sale of TNT Express.

During the fourth quarter, PostNL saw its underlying revenues down 4.1% compared to the same quarter in 2010 to EUR 1.17bn, and underlying operating income down 25% to EUR 99m.

However, reported profit was up 24% for the quarter to EUR 161m, thanks largely to increased share prices at TNT Express, in which PostNL has a 30% stake. PostNL valued its TNT Express stake at EUR 936m at the end of the 2011 year.

For the full year, underlying revenues were up 0.3% to EUR 4.3bn and underlying operating income was down by 13.1% to EUR 417m, but net profit was EUR 1.7bn because of the sale of TNT Express.

Koorstra said of the results that addressed mail volumes had declined by less than the 8% to 10% forecast, and that parcel volumes had increased 4.1% in the last quarter, particularly in December, resulting in “good growth in revenues and results”.

Meanwhile, PostNL has been restructuring its business in the Netherlands to reduce its operating costs, for example with its plans to close 300 local delivery offices this year, consolidating operations into nine centralised regional sorting centres, along with a general move towards using part-time labour.

Koorstra said: “We continue to manage our company so that we are prepared for future changes. The complex implementation of Master Plan III in our Dutch mail organisation will continue and will show first results in 2012.”

Expansion

Speaking to analysts today, Koorstra highlighted his company’s interests in expanding its parcel business, its business-to-consumer business and activities abroad. He highlighted a planned pilot for end-to-end delivery services to be run later this spring in London.

During 2011, parcel services and international operations brought good growth for PostNL, with a 7.8% increase in parcel revenues and a 14% increase in underlying international revenues compared to 2010.

The PostNL CEO discussed today the recent move by UPS, the company currently in the market to buy TNT Express to shore up its European presence, to acquire a Benelux-based consumer parcel collection network Kiala as being a “logical” move considering the general effort in the market to build on e-commerce demand.

“Everybody is moving onto a next stage, ‘let’s focus on 2C’,” he said, explaining that this was the result of pressure from large customers.

However, discussing PostNL’s role in the whole of Europe, Koorstra said: “We are a strong niche player, we have a modest profile in the Benelux, our ambition is to expand that in western europe, but we have have to be realistic we can’t be a european player.”

The PostNL CEO then said, regarding business-to-consumer parcels: “We are very well positioned to develop ourselves further in that market. Of course we are looking at the competition, but we have a very strong start.

“We can be very interesting subcontractor or partner for a larger player, because as a niche player we will never be a competitor to a global player,” added Koorstra, perhaps hinting at interest in a partnership with UPS if the US integrator was to buy TNT Express.