bpost Group’s first quarter 2020 impacted by COVID-19

bpost Group’s first quarter 2020 impacted by COVID-19

Monday, May 4 2020 - First quarter 2020 results

First quarter 2020 highlights

  • Our key priority is to protect the health and safety of our employees and customers.
  • Group operating income at EUR 934.6m, +3.1% compared with the same period last year and driven by Parcels BeNe and E-commerce logistics growth in both Parcels & Logistics Europe & Asia and North America.
  • Group reported EBIT at EUR 71.0m. Adjusted EBIT at EUR 75.6m (margin of 8.1%).
  • Mail & Retail
    • Total operating income at EUR 500.0m (-5.2%) driven by COVID-19 impact on Advertising mail and on retail and by the deconsolidation of Alvadis.
    • Underlying mail volume decline at -9.9% driven by cancelled advertising campaigns due to COVID-19.
    • Reported EBIT at EUR 64.6m. Adjusted EBIT at EUR 65.2m (13.0% margin), down by -29.6% from COVID-19 mail evolution and additional opex to guarantee continuity of service. M&R COVID-19 impact estimated at EUR -14.4m.
  • Parcels & Logistics Europe & Asia
    • Total operating income at EUR 213.5m (+8.5%) mainly driven by Parcels BeNe (+19.8%). Significant negative impact in Cross-border business of COVID-19.
    • Organic Parcels BeNe volumes at +20.5%, higher than +17.9% volume growth observed year-to-date February 2020, and driven by increased online sales since the March 18, 2020 lockdown.
    • Reported EBIT at EUR 16.2m. Adjusted EBIT at EUR 16.9m (7.9% margin), up EUR 4.5m (+31%) operationally excluding 1Q19 VAT recovery, year-over-year negative evolution of terminal dues settlements and COVID-19. PaLo Eurasia COVID-19 impact estimated at EUR -1.8m.
  • Parcels & Logistics North America
    • Total operating income at EUR 261.3m (+14.3%, +11.2% at constant exchange rate), driven by E-commerce logistics, in particular growth at Radial from existing customers and new business signed in 2019.
    • Reported EBIT at EUR -10.8m. Adjusted EBIT at EUR -7.4m (-2.8% margin), up EUR 0.4m driven by positive evolution of E-commerce logistics, mainly Radial, to a large extent offset by continued margin pressure in International mail. PaLo NA COVID-19 impact estimated at EUR -0.3m.
  • Total COVID-19 impact on Group EBIT estimated at EUR -16.7m for the first quarter 2020. Excluding this impact, first quarter 2020 results were above expectations as mail volume decline was trending better than guided.
  • Outlook for 2020 is overruled by COVID-19. Updated full-year guidance will be issued as soon as the full quantitative impact of COVID-19 can be accurately and reliably estimated. bpost Group is not in position to do so to date.
  • The current dividend policy of minimum 85% of BGAAP net result is suspended. A new dividend policy will be decided by the Board of Directors when the longer term impact of the COVID-19 crisis becomes clear. As a consequence, there will be no announcement tomorrow before market opening regarding a new capital allocation policy.

 

CEO & Chairman quote

Jean-Paul Van Avermaet, CEO of bpost Group:

We are experiencing an unprecedented global crisis. Facing these exceptional circumstances, bpost Group is more than ever conscious of the social role it plays by providing a vital link between people and preventing the isolation of the most vulnerable. The considerable efforts made by our employees to guarantee the continuity of bpost Group’s services are not made at the expense of their and our customers’ health and safety. This is of critical importance and our number one priority. We have implemented many measures on the field to protect our employees and our customers.”

“In a very short time, thanks to the unbridled efforts of all postmen and women, we have succeeded in structurally accommodating and processing the large influx of parcels within our current infrastructure in an agile and flexible manner. This proves once again that the Belgian economy can count on bpost more than ever as an essential link between companies and customers to support the change in online consumer behaviour.


As expected, bpost Group is not immune to the current global crisis. The Belgian Federal government has imposed a lockdown on Belgian citizens since mid-March 2020, and this has unavoidably impacted our first quarter results. Our key priorities remain to guarantee the safety of our employees, the continuity of operations and the sound financial situation of the company. We continue to closely monitor the impact of the COVID-19 virus on our operations and financials. Given the uncertainties and ongoing developments, we are not in a position to date to accurately and reliably estimate the full quantitative impact on full year 2020 results and will communicate as soon as this assessment can be made.”

François Cornelis, Chairman of the Board of Directors, continues:

Meanwhile, tough but well-considered decisions had to be made to strengthen the balance sheet and safeguard cash reserves of the Group for the long-term. Therefore, the Board will propose to the ordinary General Meeting of Shareholders to limit the dividend on 2019 results to the interim amount paid in December last year. In the present exceptional circumstances, prudence is warranted given the uncertain length and severity of the COVID-19 crisis.”

Jean-Paul Van Avermaet, CEO of bpost Group:

“Also capital expenditures will be limited to urgent and strategic needs only. Based on our continuous assessment of the situation, we will take any further actions deemed necessary.”

“Besides COVID-19, our first quarter results are marked by growing EBIT contributions from our Parcels & E-commerce logistics businesses both in Europe and the US. This confirms that the business transformation we embarked on is the right track towards a viable future. Since our first quarter results were hampered by significant EBIT churn from our domestic and international mail activities, we need to further accelerate the development of our growth activities. Meanwhile, we want to remain an efficient mail operator in Belgium, and for that purpose, the successful nation-wide introduction of our alternating distribution model mid-March has been a major step forward.

 

Outlook for 2020

Outlook as issued on March 17, 2020 excluding and overruled by COVID-19

Group total operating income for 2020 was expected to increase by a low single-digit percentage, while Group adjusted EBIT was expected to range between EUR 240 and 270m.

For the business units, bpost Group was expecting:

Mail & Retail:

  • Total operating income decline up to -5% with underlying Domestic Mail volume decline expected between -9% to -11% the effect of which will be partly compensated by an approved mail pricing increase of +5.1%.
  • 8-10% adjusted EBIT margin

Parcels & Logistics Europe & Asia:

  • Low teens % growth in total operating income
  • 6-8% adjusted EBIT margin

Parcels & Logistics North America:

  • Mid-single-digit % growth in total operating income
  • Adjusted EBIT margin positive up to 2%

Gross capex was expected to amount up to EUR 200m.

Updated full-year guidance will be issued as soon as the full quantitative impact of COVID-19 can be accurately and reliably estimated. bpost Group is not in position to do so to date.

First quarter 2020 COVID-19 impacts observed in March 2020 since start of lockdown

Mail & Retail:

  • Advertising Mail volumes down more than 60%, smaller impact on Transactional mail volumes
  • Additional costs for safety and premium to operational employees of around EUR 5.0m on a monthly basis
  • Higher absenteeism, the rate at bpost Belgium doubled at the start of the crisis in March

Parcels & Logistics Europe & Asia:

  • Additional volumes at Parcels BeNe, with volume growth surpassing 20% year-over-year and strongly trending upwards
  • Cross-border significantly impacted by reduced air freight capacity and closure of international borders
  • Additional costs for safety, premium, absenteeism and transport of around EUR 1.5m on a monthly basis

Parcels & Logistics North America:

  • So far, client volumes met expectations. There are limited operational disruptions.
  • Additional costs for health and safety are currently less than ~EUR 1.0m/month, might go up going forward

We strive to reduce gross capex by at least EUR 50m to EUR 150m maximum (from up to EUR 200m).

The current dividend policy of minimum 85% of BGAAP net result is suspended. A new dividend policy will be decided by the Board of Directors when the longer term impact of the COVID-19 crisis becomes clear.

 


The full press release of the first quarter 2020 results can be found in the PDF file below.

Press release Q1 2020 Interim Condensed Financial Statements Q1_2020_EN.pdf - 717 KB

 

 


About bpost

bpost is Belgium’s leading postal operator and a parcel and e-commerce logistics provider in Europe, North-America and Asia. We deliver mail and parcels to millions of doorsteps and provide logistic services to businesses and consumers. With over 34,000 employees in Belgium and across the globe, bpost's total operating income amounts to 3,837.8 million EUR, while reducing our impact on the environment and the communities around us.

bpost
Centre Monnaie, 1000 Brussels