Financial highlights Q2 2018
- Revenue increased to €851 million (Q2 2017: €836 million)
- E-commerce related revenue increased to 44% YTD (YTD 2017: 36%)
- Underlying cash operating income of €25 million (Q2 2017: €46 million)
- Profit for the period of €(1) million (Q2 2017: €29 million)
- Net cash from operating and investing activities of €(56) million (Q2 2017: €(68) million)
- Consolidated equity position at €13 million (Q1 2018: €58 million)
Operational highlights Q2 2018
- Parcels volume increased by 22%
- Addressed mail volume declined by 10.8%
- Delivery quality at 95%
- €10 million cost savings realised
Divestment Nexive and Postcon initiated
- Preparations for divestment of Nexive and Postcon initiated
- Nexive and Postcon classified as discontinued operations as of Q3 2018 resulting in adjusted segment reporting: Mail in the Netherlands, Parcels (including Spring) and PostNL Other
- Anticipated impact on consolidated equity position in Q3 2018 of around €(40) million
- Adjustment of around €25 million on ambition 2020 for underlying cash operating income
Outlook 2018, ambition 2020 and dividend
- Expected full year 2018 underlying cash operating income of between €160 million and €190 million
- based on continuing operations following the decision to divest Nexive and Postcon
- no changes in revenue and margin outlook for the segments Mail in the Netherlands and Parcels (including Spring)
- subject to final implementation of SMP decision
- Ambition to maintain solid underlying cash operating income margin with growing revenue towards 2020 reconfirmed for Parcels (including Spring)
- Possible changes in Dutch postal market make it difficult to predict development financial results towards 2020 for Mail in the Netherlands
- Interim dividend 2018 set at €0.07 per share
- Aim for progressive dividend reconfirmed
Herna Verhagen, CEO of PostNL: ‘‘In line with our strategy to be the postal and logistic solutions provider and the focus on our core markets in the Benelux, we have decided to divest Nexive and Postcon. We have full confidence that the management teams in both countries will be able to realise their strategic ambitions, develop their activities and strengthen their position in Italy and Germany respectively. The preparations for the divestment processes have been started and we will update the market when appropriate.
Our Q2 results are in line with the development in the first quarter with no material changes in the underlying drivers, as we indicated when publishing our Q1 results. Year-to-date, 44% of our revenue is e-commerce related, evidencing our accelerating transformation. In Parcels, we again saw impressive volume growth translating into double-digit revenue increase. This confirms our solid position in the Benelux e commerce logistics market. As we guided earlier, the investments in growth continue to impact results. The construction of our new sorting centres is proceeding as planned. Three of these are expected to become operational and to contribute to efficiency improvement towards the end of the year.
Volume decline in Mail in the Netherlands develops in line with expectations, caused by the same drivers as we have seen before: particularly substitution, and increased competition, supported by regulation. We realised €10 million of cost savings, which is lower than anticipated, due to delays in the roll-out of the sorting code and other adjustments in our operational process. We are confident that these developments will improve. However, we expect to end up slightly below our indication of between €50 million and €70 million for 2018. The anticipated step-up in cost savings after 2018 is well supported by several projects, including further savings in overhead and the next phase of efficiency improvements in our sorting and delivery model.
We welcome the conclusions of the state secretary of Economic Affairs, Mrs. Keijzer further to the postal dialogue. The recognition that regulation should reflect the strongly declining postal market, is a crucial step. Adjustment of current regulation is mandatory to safeguard the accessibility and reliability of the postal delivery for everyone in the Netherlands for the years to come. As stated before, we consider consolidation of networks the best solution for an affordable postal delivery and to manage the volume decline in a socially responsible manner. Given the pace of the changes in the postal market, facilitating such consolidation will require swift political action.
Taking into account the decision to divest Nexive and Postcon, our outlook for underlying cash operating income in 2018 is between €160 million and €190 million. Furthermore, all other things being equal for our continuing operations, this will impact our ambition for 2020 by around €25 million. Having said that, we must acknowledge that implementation of the conclusions of the postal dialogue may impact the business drivers of Mail in the Netherlands, as well as the cost saving plans going forward. We remain confident that the run-rate in cost savings will increase based on the robustness of the underlying plans, but the possible changes in the Dutch postal market make it difficult to predict the exact numbers and phasing of the anticipated cost savings and related cash-out in the years towards 2020. More visibility on the possible financial consequences is expected before the summer of 2019, depending on the pace at which adjustment of regulation and other measures will be realised. For Parcels (including Spring) we remain fully focussed on achieving our ambition to maintain a solid underlying cash operating income margin with a growing revenue towards 2020.
We confirm our aim to paying progressive dividend, also over 2018, and expect our consolidated equity position to be positive again per year-end. In line with our dividend policy, we announce a 2018 interim dividend of €0.07 per share.”
Here you will find a full reconciliation of the historical numbers of the reported segment results and the restated segment results.
We are PostNL. The postal and logistic solutions provider. For our customers, we are the link between the physical and the online world. We facilitate communications between people and companies. We deliver parcels seven days a week and letters five days a week. On weekdays, we deliver, on average, 675,000 parcels and 8 million letters throughout the Benelux. We offer more and more new services through combinations of smart networks, digital applications and the right communications channels. In doing so, we aim to make the daily lives of our customers easier.
As the first listed postal company, we have the largest and most modern network for letters, parcels and e-commerce in the Benelux countries. In addition, we also operate in Germany, Italy and eight other countries across the world. PostNL employs a total of 44,000 people. With our loyal workforce, extensive networks and innovative drive, our ambition is to be the leading postal and logistics solutions provider in chosen markets. In 2017 our revenues reached €3.5 billion.