Earnings call transcript: Austrian Post Q1 2025 sees slight revenue growth

Austrian Post AG reported its first-quarter 2025 earnings, revealing a modest revenue increase of 0.7% alongside a decline in EBIT by 7.6%. The earnings per share (EPS) stood at €0.56, slightly down from €0.59 a year earlier. The company’s stock remained stable at $111.52, trading near its 52-week low, reflecting a cautious market sentiment amid a challenging economic environment in Austria. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation, presenting a potential opportunity for value investors.

Key Takeaways

• Revenue grew by 0.7% in Q1 2025.
• EPS decreased to €0.56 from €0.59 in Q1 2024.
• Strong cash flow of €125 million due to a significant tax refund.
• Continued expansion into telecom and self-service locations.
• The company is adapting to declining mail volumes with strategic initiatives.

Company Performance

In the first quarter of 2025, Austrian Post AG experienced a slight revenue uptick, reflecting resilience in a tough market. The EBIT fell by 7.6%, indicating pressure on profitability. With a market capitalization of $6.3 billion and a P/E ratio of 16.87x, the company is navigating a third year of recession in Austria, with decreasing mail volumes and softening e-commerce demand. Despite these challenges, Austrian Post maintains a strong market position in Austria and Central/Eastern Europe, supported by its GOOD financial health score from InvestingPro, which offers 8 additional key insights about the company’s performance.

Financial Highlights

• Revenue: Slight increase of 0.7% year-over-year.
• Earnings per share: €0.56, down from €0.59 in Q1 2024.
• Cash flow: €125 million, bolstered by a €40 million tax refund.
• Equity ratio: Improved from 29% to 31%.

Outlook & Guidance

Austrian Post’s strategic "Lead 2030" initiative aims to drive growth with a revenue target of €4 billion by 2030 and an EBIT margin of at least 6%. The company expects modest revenue growth for 2025 and an EBIT target of around €200 million, focusing on expanding its international e-commerce presence and enhancing operational excellence. The company’s track record shows a 7.32% revenue growth in the last twelve months, and notably, it has maintained dividend payments for 19 consecutive years. For detailed analysis and comprehensive valuation metrics, investors can access the full Pro Research Report available on InvestingPro.

Executive Commentary

CEO Walter Oblina emphasized the company’s strategic ambitions: "We want to be a leading logistics and services group, reaching more than 50 million people in our region." He highlighted sustainability as a competitive edge and acknowledged the challenging environment ahead.

Risks and Challenges

• Continued recession in Austria affecting consumer demand.
• Declining mail volumes, with a loss of approximately 5% per workday.
• Softening demand in the e-commerce market.
• Need to adapt to rapidly changing market conditions.
• Potential operational challenges in expanding telecom services.

The earnings call did not feature a Q&A session, indicating a straightforward presentation of the company’s financial and strategic outlook. Austrian Post remains focused on navigating economic headwinds while pursuing growth opportunities in logistics and telecom sectors.

Full transcript - Oesterreichische Post AG (POST) Q1 2025:

Conference Moderator: Afternoon, ladies and gentlemen, and a warm welcome to the Usterreicher Post AG Q1 twenty twenty five Results Call. At this time, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Please keep in mind that to ask a question, you have to dial into the conference call. Let me now turn the floor over to your host, Harald Hagenauer, Head of Investor Relations.

Harald Hagenauer, Head of Investor Relations, Austrian Post: Good afternoon, ladies and gentlemen. Welcome to this conference call of Austrian Post. Today, we would like to give an update on the first quarter, plus an update on our strategic intentions, for the next years. Here with me in the room is Walter Oblina, our CEO, plus, Barbara Botiske Eibensteiner, our CFO. So I would actually like to hand over to you, Walter.

Walter Oblina, CEO, Austrian Post: Good afternoon, ladies and gentlemen. It’s a pleasure to have the opportunity to present to you our q one results, including an update on Austrian Post strategy in the marketplace going forward. As a summary upfront, I think we’re operating in a challenging environment. But in this challenging environment, we could deliver a solid, q one result. Let me start on page two.

The economic environment, continues to be challenging. Austria is in the third year of recession. Fortunately, we do have exposure to markets with more favorable economic development, in particular, our CE portfolio and Turkey. The core trends in our markets pretty much are unchanged, growing ecommerce and decreasing mail volumes. Still, we see some softening of demand in e commerce and some increased volatility of e commerce volumes from Asia.

And on the stationary retail side in Austria, consolidation is continuing with negative impact on our advertising mail on on our direct mail volumes. Turkey continues to be an interesting market, with strong but decreasing inflation. The exchange rate, deteriorated in q one, but economic growth is quite positive. In this environment, we delivered, I think, a solid, q one. The q one summary is a slight growth, point 7% revenue growth within a small EBIT decline of 7.6%.

This has to be seen in the context of a very strong q one, last year, with positive tailwinds. In particular, we had a strong countrywide election last year in our mail business. We had a substantial price increase effective late fall twenty twenty three that supported q one figures last year with a strong inflow of Asian volumes into Eastern Europe contributing in a 4444% growth in Eastern Europe, and we had a favorable development of inflation and exchange rate in Turkey. All these, positive, supporting effects, were not present, in q one. In addition, last year, we had two more working days than in q one this year.

And I think in the context of all these, rather, all these rather negative context, I think, the result is quite satisfying and as as we expected it. Page four, the usual summary of our three core segments. Mail, our Austrian declining, legacy business, still a strong and profitable business with last year’s revenues of €1,200,000,000 Parcel and Logistics, our growth engine, last year’s revenues, 1,700,000,000.0. In Retail and Bank, our Austrian retail network and our Bank ninety nine, Last year’s external revenue, 200,000,000. I think interesting on on the right side, the revenue distribution in q one this year, I think this shows you that we have, roughly 60% exposure to a growing e commerce parcel market, in the meantime, and, our declining, letter mail and direct mail business, in the meantime is less than 40%.

This was substantially different only a few years ago. Let me start with our core, mail business, Austria only. As you are aware, with 300,000,000 still a strong and profitable business in Austria. However, given the strong back wins, in q one last year, around 5% below last year. The negative volume trend, has continued pretty much unchanged rate of around 5% per per per workday.

So in in on a on a yearly basis, of course, which means that we have lost roughly 60% of volumes, since 02/2008. We are now in the eighteenth year of mail decline in Austria, and our mail business continues to be, quite significant in size and in profit contribution. We continue to adjust our, our operations to a declining, mail volume. In the meantime, 85% of mail volumes are in this lower economy product. And as of May 1, we have implemented a product reform that not only adjusts and increases prices, with the inflation since last, since the last price change, but this product reform also makes the economy product, the the new standard product.

So the lower, runtime now is the standard, product. Priority service is still available still available as an additional, service. Direct mail, again, similar to, addressed mail, a significant revenue contributor was last year 440,000,000 together with media post in q one, minus 6% revenue and minus 2% volume. Still, these products are strong, are relevant among the print media print advertising products with the highest reach in Austria. However, the, there is a trend towards digital marketing and the core customer base, which is the stationary retailers, continue to be in crisis mode.

Page nine, coming to our, growth field, Parcel and Logistics. First quarter revenue of 418,000,000, which is around, 4% plus compared to last year. In Austria, page 10, we, saw a volume increase of 5%, after a double digit volume growth in q one last year. So another growth year after a very strong growth last year. Revenue last year, $930,000,000, so with the 6% this year, if we continue to grow along this trajectory, a billion revenue is within within sight.

Page 11, Austrian parcel market. We are the clear market leader in the Austrian parcel market, have gained share, last year. We we we our aspiration is to be the clear leader in the Austrian market, not only in terms of volumes and market share, but also in terms of quality and service innovation. Sunday delivery pilot that we introduced in September of last year in four districts in Vienna, has proven to be well accepted by customers, and we are now starting with the rollout across Vienna. Page 12, Eastern Europe, a more difficult start into the year, in particular compared to a very strong q one last year.

Last year’s growth, 44%, driven by strong inflow of Asian parcels. These Asian parcels have a strong volatility both in terms of general volumes that come into our markets, but also we see here customers that tend to frequently switch suppliers. But if you look at Eastern Europe in a two year a two year time frame, we still have substantially higher volumes than, two years ago. But and and at the same time, we also, are working hard and and, have an expectation that we come back to a positive growth development, by the end of this year. Page 13, Turkey, growth in euro terms, around 11%, growth in, Turkish lira around 30%.

Turkish lira has deteriorated in combination with hyperinflation accounting. This has weighed on our revenues and EBIT this year, in particular to a more favorable q one last year, but still Turkey continues to be a strong generator of EBIT and and profits to the group also in q one. Retail and bank division, slight growth in q one. I think more importantly, a few very positive milestones for Bank ninety nine, over the past few weeks. Number one, we had a positive q one development where we are on a good track towards our plan to breakeven by the end of this year.

Second, we successfully harmonized two core banking systems into one. On Easter weekend, successfully migrated all ex ING, Austria customers to, the outsourced core banking systems that we, used, since the beginning in bank ninety nine. This was a very large, very complex, very challenging project, and we are, yeah, relieved and and positive that we now have this migration behind us and now have % of focus and energy for customers and and the market. And third positive milestone was that Moody’s has given us an initial rating at BAA two. So a positive investment grade rating, which I think is a confirmation that Bank ninety nine, after five years now, is becoming is growing up, is a relatively mature bank and has a strong credit quality across its portfolio.

So I think three positive milestones that confirm us that bank ninety nine is an important part of OSRAM Post future. Our self-service solutions continue to be well received by our customers, and we continue to aggressively expand them. End of q one, we had roughly 2,700, out of home locations in Austria as a sum of postal branches, postal partners, and, self-service locations comprising both self-service branches, but also postal stations. Last year, more than 32,000,000 items were either shipped or picked up, through self-service solutions, and we continue to roll out these stations with a target of more than 3,000, postal, locations across Austria. With that said, let me hand over to Barbara, which will give us more details on our financial results.

Barbara Botiske Eibensteiner, CFO, Austrian Post: Also welcome from my side. Let me lead you through our Q1 figures. Despite the challenging market environment, Austrian Post was able to increase the revenues by 0.7%. EBITDA margin, a slightly lower margin than in the Q1 twenty twenty four. There, we had, at the one hand side, a mix effect, more revenues on the parcel and logistics side, lower revenues on the mail side and also some other reasons for this.

EBIT margin in line with EBITDA margin declining from 6.9% to 6.3%. Earnings per share, 0.56 compared to 0.59 in in q one twenty twenty four. As as we already learned, q one twenty twenty four was a very strong one on on the mail side, due to the elections and and also other, positive, one timers. Very strong cash flow in q one twenty twenty five, with 125,000,000. So, this also, due to one specific item.

We had a tax refund, from the Austrian tax authorities, in the amount of 40,000,000 and some interest on this, and this has had a positive impact on the cash flow. Equity ratio also increased from 29% to 31% for the logistic business. If we then go to Page 19, the revenue development on the segment level. Business and on the, also the elections, which created in 2024 revenues, which directly dropped down the whole B and L into net profit. Also positive news from retail and bank.

There we are better than last year. What we see is that, bank ninety nine is not really on a good, way to to break even. And on the corporate, side, we were also able to to show some cost savings, which end up in a better performance of, €4,400,000. Coming now to the income statement. I already went through the revenues.

What you see in our p and l is the cost inflation, not only coming from Turkey, also the cost inflation we got out of labor cost increases and which is then which also had then the impact on our profitability. Financial result, there, we show better result compared to Q1 twenty twenty four. This is mainly coming due to from better cash flow and higher interest on the money we had on our deposits. The profit for the period, very close to 40,000,000 slightly below the profit of Q1 twenty twenty four. Earnings per share, I already mentioned.

So going into the segments. On the male side, I think already said everything. If you are going to parcel and logistics, I think that’s that’s, from higher interest because there we have a a different picture. We showed a rather healthy revenues on the Parcel Austria side in Q1 twenty twenty five with the increase of 6.4%. In Turkey, most of the growth is coming from the inflation.

What we saw is lower volumes. Parcel CEE, really suffering from lower Asian volumes coming, but we also have to say that we had a very strong Q1 twenty twenty four, on the Asian volume side in CE. So, EBIT of the Basel business, 18,600,000.0. Retail and bank division, as already stated, of minus EUR 1,100,000.0, minus EUR 700,000.0 coming from Bank ninety nine, which still had some costs on the migration side, on the IT migration side, but there we are really on a good way to breakeven. Coming now to our solid balance sheet, you’ll see a slight decrease.

On the balance sheet side, it’s mainly coming from volumes of Bank ninety nine. So the savings are slightly decreased and in line with this also, the loan side had a negative impact. We still have a very solid financial debt. It’s, about 93,000,000, and the debt factor, financial debt versus EBITDA is EUR 200,000.0. Considering also IFRS 16, then we are at EUR 1.1.

Operating free cash flow of 125,000,000 So the one reason for this is the onetime effect of the Austrian tax authorities. On the other hand, we also saw better cash in coming after the year end 2024, where some of our customers are optimizing their cash positions. And due to this, we saw higher cash flow in 2025. If we are coming now to investment, our guidance is still valid for this year. In Q1, we spent very close to 25,000,000 Where, did, the money, go to?

Technology and optimization, about 20,000,000, and, more than 3,000,000, still into the decarbonization projects, we are running. On the right hand side, you also see the CapEx mix, of 2022 until 2024, where you see that about onethree of our CapEx is going into the decarbonization. Now I would like to hand over to to Walter again, who wants to give us, the insight into our new strategy.

Walter Oblina, CEO, Austrian Post: Thank you, Barbara. Let me continue with an update on our strategy. We worked over the last months, within Austrian Post, in the broader leadership team, on a review of our strategy. We called this a project lead 2030. It should reflect that we have a clear ambition to be a leader in our markets, a clear conviction that to be profitable and to be successful, a leadership position in our businesses is relevant and important.

2030, this should be a strategy that should guide us over the next years, with a midterm horizon of 2030, a time horizon where we do expect the core trends, substantially changing, our market and our setup, both, the continuation of, the decline of mail revenues, but also the continued growth of ecommerce. We see a rapidly changing economic and technological environment. Page 29, six megatrends. I don’t wanna go, into detail. It’s clear technology is game changing our game in many ways.

The whole macroeconomic environment is becoming more volatile. Global trade and commerce is rapidly changing also given increasing geopolitical ruptures. Consumer patterns are shifting with the the most important trends in our markets, the digitization of communication leading to declining mail volumes and increasing share of online online shopping as opposed to stationary retailing, changing organization and demographics and sustainability, in a also rapidly and dynamic environment rapidly changing and dynamic environment to more relevant trends. Page 30 summarizes the core strategic directions that should guide us over the next years. Our ambition, our vision for 2030 is to be a leading logistics and services group, reaching more than 50,000,000 people in our region, consisting of Austria, Central And Eastern Europe, Turkey, and beyond.

Three core strategic thrusts, point one post and beyond in Austria. We want to continue to be a strong post, but we think there is more opportunity in the Austrian marketplace for us, as a provider of key services beyond post. We see bank financial services as an important pillar of our future portfolio in Austria, and I’ll come later to an announcement that also in the field of telecommunication, we see a more entrepreneurial growth opportunity for us. Strategic thrust number two, international ecommerce, that is our big, ecommerce, that is our big growth opportunity. Our aspiration is to be the leading e commerce partner for this region, Austria, Eastern Europe, Turkey, beyond.

This is a region where we are already today, covering 50,000,000 people with, high quality delivery networks. Our ambition is to grow in this region, to bundle our offering for the large ecommerce platforms of this world, to offer them a group service across this region, to continue to invest and to also, look for geographic, opportunities, that are not currently part of our portfolio. Number three, one group operationally excellent. We think there is opportunity for more integration, across our group, across regions, across businesses, and our aspiration is to establish operational excellence across the group. We think we have a quite high standard, in several countries already.

We think that to daily going into work and increasing efficiency, becoming even more innovative and efficient has become part of our DNA, across a large part of our, employees, and we wanna continue, with this ambition and to be technology focused and to be a leader in applying modern technology as part of that third thrust. In the middle, the green circle should express that three core values, three core overarching guidelines continue to be important. We want we continue to have the aspiration to be a leader in sustainable logistics. We have a clear aspiration to be a very customer focused, customer driven company, and, we wanna be the employer of choice, for our 20,000 employees in Austria and for roughly 30,000, employees across the group and an attractive, company culture, that we have been, working on, substantially over the last, two, three years and, where we will continue to work on is a very important element of this aspiration. Let me briefly lay out what this specifically means.

Post and beyond in Austria, clearly, we want to defend our market leadership in the Austrian mail and parcel market. We will continue the ongoing transformation of our networks, of our product offering to reflect a declining mail volume and the growing parcel volume, but, we see opportunities in a playing field that is mapped here, on page 31 beyond the pure postal services. We see several examples across Europe that postal companies with their strong platform, with a trusted brand, with their branch network that is one of the densest retail networks in the country with strong digital channels that postal companies have opportunities beyond postal services. We have proven that we can build new businesses on this platform with Bank ninety nine, where I think we’re in a very good way. We have a focused retail offering in our branches.

We have singular established singular services, in health care, government services, and energy in the past. And we have been in telco, throughout the history, of our company, and, we announced today that we will continue our presence in the Austrian telecommunication markets next year on a new level by entering the telecom market with an with an MVNO, with a mobile virtual network operator, in a new cooperation, with our current telecom partner a one. We will continue, our sales cooperation until the end of this year. And, in q two next year, we will start a an MVNO, so a mobile phone and Internet offering under an own brand. We think there is a strong opportunity in the Austrian marketplace given Austrian Post’s past history, in telecom, given our strong and trusted brand, given our strong branch network, and our digital channels, and we look forward to capturing this opportunity.

Moving to the second pillar of our strategy, international ecommerce, We are today already a strong group, in the ecommerce market in the region shown on page 33, covering 11 markets with strong logistics network, that reached 50,000,000 consumers. We expanded to Azerbaijan last year. We already communicated in our last quarterly call that we will make cautious steps to Georgia and to Uzbekistan this year in a very risk averse approach. We see white spots within this region. We see opportunities to strengthen our market position in some of the geographies and have a clear commitment and ambition to grow as e commerce partner for the, large and small, e commerce customers in this region.

We think this is an attractive region, showing above average growth given that the penetration in terms of profit per capita in most of these markets is still substantially below, the European or worldwide average. Moving to strategy pillar number three, one group operationally excellent. We want to develop a more much more integrated international group operating model capturing the synergies across our portfolio offering, our large international customers, one integrated product offering with integrated IT interfaces, through one Salesforce. I think a very substantial change, from the model we have been operating so so far. This combined with a strive for excellence excellence in our operations, and with an ambition to to to use modern technology, be it modern sorting equipment, modern IT solutions, or new technologies such as AI, robotics, or autonomous driving.

And last, our overarching guidelines, sustainability, customer centricity, and, an attractive corporate culture. On page 35, we, I think, have a very strong track record sustainability. We believe that sustainability gives us a competitive edge in our consumer markets, in our b to b customer markets, gives us a strong sense of purpose for our employees and also captures a a premium vis a vis investors and and capital markets. All these sustainability solutions that we currently, apply, be it electric mobility PV, also economically, advantageous solutions. Total cost of ownership of our electric delivery, fleet is already substantially, favorable compared to combustion engines, so we will continue, to roll out these technologies, across our geographies.

And as I said, being the employer of choice for our employees, is an important element of the strategy. We are in a service business where our postman, or the people working in our postal branches make the difference, for our customers, and, we will continue to work hard to be an attractive employer for our employees. With this strategy, moving to page 36, we want to deliver along our, value proposition to investors to be a defensive, attractive dividend stock also for the next years. We have a track record of sixteen years, successful development along this value proposition to defend. I think our management team consisting of, Barbara as as our new CFO, Peter Ummendung, our deputy CEO, and myself is highly committed to this strategy.

I think, stands both for continuity, as well as change and transformation. I’m delighted to inform you that, Peter Omidong yesterday was got a got the confirmation by our supervisory board, for another, contract period starting April, first, next year. So the continuity of the current management team, is confirmed for the next years, and I look forward to working with this team, to develop Austrian Post into the future. We also have clear financial goals, for our future. We already communicated the target of 4,000,000,000 in revenues by 2030 after we have achieved 3,000,000 3,000,000,000 faster than originally anticipated.

We also have a clear profitability goal with an EBIT margin of at least 6%. And with with these ambitions, and the outlook for 2025, I will close this presentation. Our outlook, pretty much not pretty much. Our outlook is unchanged and unchanged to the outlook that we communicated in March. We continue to see challenging a challenging environment ahead, letter mail volume declining, not very much economic growth support coming from our from the macroeconomic environment, but we stick to our target of a modest revenue growth for the full year and then EBIT target in the order of magnitude of 200,000,000.

Despite this challenging economic environment, we think q one is, well on track towards these goals, and we are committed to these goals also going forward. So thank you very much for your attention, and we’re now happy to take questions.

Conference Moderator: Thank you very much. So dear ladies and gentlemen, please dial into the conference call to state your question. The combination to state your question is nine and the star key. I repeat, the combination is nine star. So please press 9 now to state your question.

One moment, please. If you wish to cancel your question again, please press 3 and the star key. And to state your question, please press 9 and then star. One more moment. At the moment, there seem to be no questions submitted.

So since there are no questions incoming, I close the q and a session with that and hand the floor back over to the host.

Harald Hagenauer, Head of Investor Relations, Austrian Post: Yeah. Thank you, ladies and gentlemen, for participating in this call. It looks like everything is clear, Barbara and and Walter. So but, of course, if you do have some questions the next days, don’t hesitate to call us today or the next days. We are, of course, available for you.

And so I thank you once more and hear and see you hopefully soon. Bye bye.

Recording Technician: The recording has been stopped. Your conference call has come to an end. Thank you for attending. Goodbye.

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