The quarterly result for Bpost in the US is disappointing. It is clear that the company has reached an agreement with the Flemish publishers to distribute more newspapers and that they also hope to reach an agreement with French publishers. “We are doing our best,” said CEO Chris Peeters in the press release. The impact of lower government subsidies remained limited in the first quarter. Bpost will fully feel the impact from the third quarter.
The results in Belgium were, at least, decent. Mail volume fell 6.7 percent, but this was offset by a higher price and mix effect of 3.9 percent. This effect is determined by the price and type of parcels and letters delivered. In the parcels market, volumes increased by 2.9 percent with a positive price mix effect of 1.3 percent. Bpost managed to keep the increase in operating costs in Belgium almost constant (plus 0.7 percent). As a result, the operating profit came to a margin of 10.5 percent, which in total figures amounted to 59.4 million euros.
The bottleneck in Bpost’s results was again its logistics activities in North America. The two logistics services companies Radial, which was bought at the time because of the future, and the Canadian Landmark, saw their volumes shrink. As a result, revenue fell 15.5 percent. In total figures they are only about half of the income in Belgium.
Operating profit fell to a paltry 8.8 million, or a margin of 3.1 percent. According to Bpost, there was disappointing conversion development, but this was largely offset by cost control. It means that revenue development and profit contribution in North America has been low for several quarters. The challenge for Bpost is to attract new customers and turn them into profitable growth.
Radial was specifically bought at the time to offset the impact on profits from declining letters in Belgium. Bpost recently announced an expensive takeover in France of parcel company Staci – also in an attempt to tap into new sources of revenue. Of course, analysts will be keeping a close eye on whether the promises are kept. Bpost also says in the quarterly report that it recorded 7.7 million euros in “acquisition costs”.
Peeters says the planned acquisition of Staci is an important step in the organization’s transformation. “It will bring our growth strategy to life and allow us to renew and expand our service offering, address a completely new B2B segment and create new market opportunities.”
In Europe, there was a slight growth in logistics services, which generated an operating profit of 12 million, which is equivalent to a margin of 7.1 percent.
Bpost group profit fell 9.4 percent adjusted to 43.7 million.
2024-05-03 07:23:39
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