PostNL provides update on Q1 performance amidst Covid-19 pandemic
The Hague, 14 April 2020 - Today, PostNL provides an update regarding the impact of Covid-19 on its performance in the first quarter of 2020. PostNL is fully operational and has been able to continue its primary business activities during these unprecedented circumstances. It is serving consumers, customers and society at large by maintaining its vital infrastructure, allowing people to remain connected and to do business while staying at home.
Health and safety come first
PostNL applies all social distancing guidelines and health regulations to protect its people and consumers as much as possible. We have implemented additional measures in our operations and facilities to support social distancing and to ensure a safe and healthy working environment. We have introduced contactless delivery to ensure that our deliverers can keep the required 1.5 metre distance to customers. Flow patterns, protective plexiglass walls, floor stickers and other communications aim to raise awareness and to help people to stay safe.
Covid-19 impact visible in March
Governments in the Netherlands and Belgium took additional health and safety measures early in March. Since then, e-commerce growth has picked up and parcels volumes have increased, compared with low growth levels in January and February. With many retail stores forced to close, small and mid-sized webshops showed good growth in volumes, leading to a positive price mix effect at Parcels. At Mail in the Netherlands, people are sending considerably more greeting cards to pay attention to family and friends. However, bulk mail volumes declined significantly in March, as many direct mail campaigns were postponed. The additional volume decline will be partially offset by a positive price mix effect, which is expected to continue in the second quarter. Despite restrictions in certain countries and reduced air freight capacity, the impact of Covid-19 at Spring is expected to be limited in Q1.
Solid Q1 performance expected; strong financial position
Based on current developments, PostNL expects to report a solid normalised EBIT and strong cash flow development for Q1 2020. Operational measures to protect its people and clients, combined with an increased level of absenteeism, are expected to impact operational costs. Meanwhile, the combination of the two postal networks of PostNL and Sandd has progressed according to plan during the quarter. PostNL is on track to deliver the projected benefits and synergies of the consolidation. At 31 March 2020, PostNL had €485 million in cash (31 December 2019: €480 million) and a credit facility of €400 million, fully undrawn, with no covenants.
Limited visibility going forward
The duration and severity of the Covid-19 pandemic and its impact on the social and economic situation are difficult to predict. There are challenges, such as the impact of social distancing measures on efficiency as well as on our ability to realise planned cost savings in Mail in the Netherlands, and the negative impact on the overall business environment. At the same time, there are also opportunities, as e-commerce activity has picked up and consumer mail is more popular now. Building on its solid first quarter performance, PostNL continues to be committed to achieve the stated 2020 outlook for normalised EBIT between €110 million and €130 million. However, the uncertainties regarding the duration and severity of the Covid-19 pandemic may impact PostNL’s ability to achieve this result. Q1 2020 results will be published as scheduled on 4 May 2020.
This press release contains inside information within the meaning of article 7(1) of the EU Market Abuse Regulation.
Some statements in this press release are “forward-looking statements”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of PostNL’s control and impossible to predict, and that may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which PostNL operates and management's beliefs and assumptions about possible future events. You are cautioned not to put undue reliance on these forward-looking statements, which are only valid as of the date of this press release and are neither predictions nor guarantees of possible future events or circumstances. PostNL does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities law.
Use of non-GAAP information
In presenting and discussing the PostNL Group operating results, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. Non-GAAP financial measures do not have a standardised meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The main non-GAAP key financial performance indicator is underlying cash operating income.. As of 2020, the main non-GAAP key financial performance indicator is normalised EBIT. Normalised EBIT is derived from the IFRS-based performance measure operating income adjusted for the impact of project costs and incidentals.
We are PostNL, the mail and logistics solutions provider for all. With our mail and parcel deliverers who get everywhere, our over 4,800 PostNL locations and 11,000 postboxes, we are always nearby. We aim to be our customers’ favourite deliverer by making it as easy as possible for them to send and receive parcels and letters. Our over 37,000 people are right at the heart of society. On weekdays, we deliver an average 1.2 million parcels and 8 million letters across the Benelux region. Our focus is on quality for our customers, creating opportunities for our people and adding value for our stakeholders through growth, digitalisation and sustainability initiatives.
We optimise and support our physical networks by using smart digital solutions and launching new propositions that create value for our customers. We build long-lasting working relationships by acting as a good employer and client for everyone who works for and with us. To make our deliveries as sustainable as possible, we cover a lot of kilometres on foot or by bicycle or e-bike, provide innovative city logistics, use cleaner fuels, and use electric vans and light electric trucks. PostNL NV is a listed company with revenues of €3.5 billion in 2021. We provide deliveries of mail and parcels, logistics solutions for e-commerce, and cross-border solutions.