PostNL provides update on Q2 business trends and FY 2020 outlook
Q2 performance to show strong improvement, positively impacting FY 2020 outlook for normalised EBIT and free cash flow
PostNL today provides an update on current business trends, taking into account the continuation of the developments related to Covid-19 that started to have an impact during March and accelerated through April and May. PostNL now expects Q2 2020 normalised EBIT to come in strongly above last year (Q2 2019: €39 million) as a result of better performance in Parcels. Based on the expected performance over the first half year, coupled with the current trends, PostNL is adjusting its FY 2020 outlook for normalised EBIT to strongly above the previous guidance of between €110 million and €130 million. The increase in normalised EBIT is expected to translate into an improvement in free cash flow.
Limited visibility due to Covid-19 developments
It remains to be seen how the Covid-19 pandemic will develop in the course of 2020 and over the longer term, and how this will impact the economic environment. Longer-term visibility remains limited due to uncertainties about the duration and severity of the pandemic. The outlook for PostNL’s FY 2020 performance provided today could be impacted by such uncertainties.
Business trends in April and May following Covid-19 pandemic
Governments in the Netherlands and Belgium took health and safety measures early in March to contain the Covid-19 outbreak. Since then, e-commerce growth has picked up meaningfully across almost all segments and products, and e-commerce penetration has increased. At the same time, part of this growth relates to specific consumer spending as a result of the Covid-19 situation. The social distancing measures put upward pressure on costs across PostNL.
In Parcels, volume growth accelerated from close to 14% at the end of March to above 25% in April and May. To accommodate this growth, PostNL scaled up its network considerably. It is currently operating at almost optimal capacity, resulting in improved efficiency levels. The favourable price/mix development in Parcels as reported in Q1 is continuing, as is the positive trend at Spring.
The volume decline at Mail in the Netherlands in April and May was further impacted by a stronger than expected decline in bulk mail, explained by companies postponing direct mail campaigns. This was only partially offset by a slightly better trend in single items.
Health and safety remains first priority
PostNL applies all social distancing guidelines and health regulations to protect its people, partners and consumers as much as possible. It has implemented additional measures in its operations and facilities to support social distancing and to ensure a safe and healthy working environment.
Q2 and HY 2020 results will be published as scheduled on 3 August 2020.
About PostNL
We are PostNL, here for everyone, bringing it all together for 225 years. With an extensive network of nearly 5,800 PostNL points, 11,000 letterboxes, and over 900 automated, also open to various carriers, along with millions of users of the PostNL app, we're always close by. We aim to be everyone's favourite deliverer by making it as easy as possible to send and receive parcels and mail. With nearly 34,000 colleagues working with us, we are part of society. We offer a range of services, including mail and parcel delivery, logistic e-commerce solutions, and cross-border solutions. On an average weekday in the Benelux, we deliver 1.1 million parcels and 6.9 million letters. We are commitment to customer satisfaction, providing opportunities for our employees, and generating value for our stakeholders through growth, digitalisation, and sustainability.
We optimise and support our physical networks through the use of smart digital solutions and introduce new propositions that add value for our customers. And aim for sustainable employment relationships by being a good employer to all people working with and for us. We focus on sustainability, making many journeys on foot and by bicycle, increasingly using cleaner fuels and electric vehicles, and offering innovative city logistics. PostNL N.V. is a publicly traded company with a turnover of €3.2 billion in 2023, 62% of which e-commerce related.