bpost third quarter 2020 results
Continued strong Parcels & Logistics performance further accelerates the mix shift and drives outlook upgradeTuesday 3 November 2020
Third quarter 2020 highlights
- Group operating income at EUR 972.9m, +10.4% compared with the same period last year, fully driven by continued strong performance in Parcels & Logistics Europe & Asia and North America.
- Group reported EBIT at EUR 65.1m, +81.5%. Adjusted EBIT at EUR 69.5m (margin of 7.1%).
- Accelerated mix shift. Strong e-commerce driven performance in Parcels & Logistics Europe & Asia and North America further accelerates the mix shift with their combined adjusted EBIT contributions (EUR 38.5m) exceeding Mail & Retail adjusted EBIT (EUR 35.7m) for the second consecutive quarter.
- Mail & Retail reported EBIT at EUR 35.1m. Adjusted EBIT at EUR 35.7m (7.7% margin), down only EUR 2.7m explained by stellar growth in parcel volumes handled through the mail network for Parcels & Logistics Europe & Asia. Underlying mail volume decline proving resilient at -8.2% and better than pre-COVID-19 guided -9 to -11% range.
- Parcels & Logistics Europe & Asia reported EBIT at EUR 29.0m. Adjusted EBIT at EUR 29.7m (11.3% margin), up EUR 19.4m thereby nearly tripling. Strong margin improvement is driven by stellar growth in parcel volumes handled through the mail network. Parcels B2X volumes up +49.0% year-over-year.
- Parcels & Logistics North America reported EBIT at EUR 5.6m. Adjusted EBIT at EUR 8.7m (2.9% margin), up EUR 14.0m mainly driven by Radial North America, which recorded continued high growth from existing customers and clients launched in 2019 (E-commerce logistics operating income +25.2%), thereby benefitting from positive operating leverage.
- COVID-19. Key priority is to protect the health and safety of our employees and customers. As from this quarter, COVID-19 impacts are no longer separately disclosed since disentangling its effects from the observed business developments has become increasingly artificial and therefore less meaningful.
- Ransomware attack. On October 15th, 2020, Radial North America experienced a ransomware attack impacting some of its US operations. Meanwhile, Radial has managed to regain sufficient functionality to allow it to restart fulfilment operations at all of its locations. For more details, refer to note 22 (Events after the reporting period).
- Outlook 2020. Based on the current situation and facts and including the estimated financial impact of the ransomware attack, the previously reconfirmed 2020 group adjusted EBIT guidance of EUR 240-270m can be revised upwards to at least EUR 270m. Due to the second wave of the pandemic and lockdown measures taken, the visibility for the fourth quarter is however limited.
- Strategic update and revised capital allocation framework, including new dividend policy, will be communicated to the market on December 8th, 2020.
- S&P reaffirms the long- & short-term credit rating at A/A-1, outlook stable.
Jean-Paul Van Avermaet, CEO of bpost group
“I’m proud to announce excellent third quarter results of bpost group where operating profit nearly doubled from last year. This is in the first place thanks to our fully committed employees worldwide, who have contributed in the most outstanding manner and who also today in very difficult circumstances bring out daily the best of themselves for our customers worldwide. In light of this continued positive earnings momentum we can raise our full year 2020 group adjusted EBIT guidance to at least EUR 270m. The world is changing at an astonishing pace, where COVID-19 has boosted e-commerce affinity and adoption and fuelled strong performance in our European and North American Parcels and Logistics divisions. Parcels & Logistics Europe and Asia EBIT nearly tripled while being positive in North America for the second consecutive quarter, resulting in a higher combined contribution of these business units to the group EBIT than Mail & Retail. This demonstrates that our business transformation is the right way forward for a viable and sustainable future.”
“We continue to invest in additional capacity with a new fulfilment site announced in the US, 2 additional parcel sorting machines installed over the summer and now fully operational in Belgium as well as plans to expand Active Ants in our home country over 2021. As we continue to navigate the unknown with the second wave of the pandemic and new lockdown measures taken, we at bpost group are fully ready for the end of year peak to successfully meet our customers’ expectations during the most important season of the year. Of course, our key priority is to protect the health and safety of our employees and customers.”
“Since early this year, I’ve been working with the executive management team on the future strategic directions for bpost group. We’ll be happy to present the outcome of this exercise to you on December 8th, 2020.”
Activity update: Growth, sustainability and customer experience
bpost group continues to develop its activities in E-commerce logistics
- Active Ants
Active Ants inaugurated in Roosendaal its second site in the Netherlands. Deploying the most innovative technologies, the new site will process millions of packages per year for several hundreds of webshops. bpost group also plans on opening a first Active Ants center in Belgium in 2021.
- Radial US
To respond to growing E-commerce driven client demand, Radial North America will invest USD 40m, mainly over 2020 and 2021, in a new fulfilment center based in Locust Grove, Georgia, thereby creating 344 permanent full-time jobs.
In the third quarter, bpost group confirmed its strong commitment to reducing the impact of its activities on the climate and mobility:
- First Double deck trailers (DDT) for the transport of parcels and letters in Belgium: bpost group implements more than 320 double deck trailers by 2030, and up to an additional 550 in the following 20 years. These will replace the standard large trailers, leading to a 30% reduction in the number of journeys and kilometers covered by 2030. bpost group is also investing in trucks running on liquified natural gas (LNG) to replace all old trucks for long-distance journeys over the next few years.
- LED lighting in all sorting centers: As of February 2021, 4 sorting centers of bpost group will be equipped with LED lamps. These modifications will enable the company to save 51% on its electricity consumption for the lighting of sorting centers in Belgium and to reduce its CO2 emissions by 1,000 tons per year. The sorting center in Brussels was already equipped with LED lighting.
- bpost group joined the new Belgian Alliance for Climate Action (BACA), launched by The Shift and WWF. The BACA is a coalition of Belgian organisations that publicly demonstrate ambitious climate goals and have chosen the path towards Science Based Targets.
To better respond to customer expectations, bpost group develops and integrates new tools to substantially improve the customer experience.
- Launch in October of a more user-friendly bpost.be website based on customer needs.
- In parallel, bpost group rolled out in Belgium a new Mobi, a smart mobile tool for postmen, which allows to inform customers in real time about the status of their shipment and offer them the option to digitally pay shipments at their front door.
Outlook for 2020
The group adjusted EBIT for 2020 can be revised upwards to at least EUR 270m, including the estimated financial impact of the ransomware attack at Radial North America. Due to the second wave of the pandemic and lockdown measures taken, the visibility for the fourth quarter is however limited.
The contribution per Business Unit will differ from the initial outlook issued on March 17, 2020.
Gross capex will amount to EUR 150m maximum, compared to up to EUR 200m pre-COVID-19.
The updated capital allocation framework, including new dividend policy, will be communicated to the market on December 8th, 2020.
Full press release in attachment