Earnings call transcript: Post Holdings Q4 2024 beats EPS forecasts

Post Holdings Inc. reported its fourth-quarter 2024 earnings, showcasing robust financial performance with an earnings per share (EPS) of $1.73, surpassing the forecasted $1.55. Despite a slight revenue miss, the company’s strong operational results drove a 7.38% increase in the stock price during after-hours trading, closing at $112.55. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, with management actively buying back shares to enhance shareholder value.

Key Takeaways

• Post Holdings reported an EPS of $1.73, beating the forecast of $1.55.
• Revenue slightly missed expectations, coming in at $2 billion against a forecast of $2.01 billion.
• The stock surged by 7.38% in after-hours trading following the earnings announcement.
• The company continues to expand its e-vehicle fleet and digital banking platform.
• Market sentiment is moderately positive, driven by the earnings beat.

Company Performance

Post Holdings demonstrated resilience in the fourth quarter of 2024, with significant growth in its earnings per share. The company has effectively navigated a challenging macroeconomic environment in Europe, maintaining stable revenues despite a decline in mail volumes. The Parcel and Logistics segment showed notable growth, reflecting the ongoing e-commerce boom. InvestingPro data reveals the company’s strong financial health with a current ratio of 2.39, indicating excellent liquidity position. The company’s overall financial health score stands at GOOD, supported by robust operational metrics.

Financial Highlights

• Revenue: $2 billion, slightly below the forecast of $2.01 billion.
• Earnings per share: $1.73, exceeding the forecast of $1.55.
• EBIT grew by 9% to €207 million.
• EBITDA margin stood at 13.5%.

Earnings vs. Forecast

Post Holdings’ EPS of $1.73 exceeded the forecast by 11.61%, indicating strong operational efficiency. However, revenue fell slightly short, at $2 billion compared to the expected $2.01 billion, a minor miss that did not significantly impact investor sentiment due to the substantial earnings beat.

Market Reaction

Following the earnings release, Post Holdings’ stock rose by 7.38% in after-hours trading, closing at $112.55. This increase reflects investor confidence in the company’s ability to exceed earnings expectations and manage operational challenges effectively. The stock’s current price of $114.37 indicates continued positive momentum.

Outlook & Guidance

Looking forward, Post Holdings has set a modest revenue growth target for 2025, with an EBIT target of around €200 million. The company plans to invest approximately €150 million in capacity expansion and aims for its digital banking platform, Bank99, to reach breakeven. Long-term, the company targets €4 billion in revenue by 2030. InvestingPro subscribers should note that 8 analysts have recently revised their earnings expectations downward for the upcoming period, though the company maintains a favorable P/E ratio relative to its near-term earnings growth potential. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Walter Blin stated, "We have delivered stable revenues and earnings in at least three crises," highlighting the company’s resilience. He added, "We want to continue our profitable growth path," indicating a focus on sustained growth and profitability.

Risks and Challenges

• The challenging macro environment in Europe could impact future performance.
• Declining mail volumes remain a concern, with an expected decline of 6-7% in 2025.
• The company must navigate potential market saturation in its core segments.
• Supply chain disruptions could pose operational challenges.
• Economic volatility in Eastern European and Turkish markets could affect growth.

Q&A

During the earnings call, analysts inquired about the expected decline in mail volumes and the company’s strategies to mitigate this impact. Management emphasized their focus on expanding the Parcel and Logistics segment and international market presence as key growth drivers.

Full transcript - Post Holdings (POST) Q4 2024:

Conference Moderator: Ladies and gentlemen, a warm welcome to the Full Year twenty twenty four Results Analyst and Investor Conference of the Osterreichische Post AG. At this time, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Harald Hagenauer, Head of Investor Relations.

Harald Hagenauer, Head of Investor Relations, Austrian Post AG: Good afternoon, ladies and gentlemen. Welcome to this conference call of Austrian Post, where we want to discuss the results and trends of the fourth quarter and also the year full year 2024. Here with me in the room is our CEO, Walter Blin, and for the first time, our new CFO, Baba Poudic Ebensteiner. Walter, I would love to hand over directly to you. Please go on, sir.

Walter Blin, CEO, Austrian Post AG: Good afternoon, ladies and gentlemen. It’s a pleasure to have the opportunity to present to you our full year results 2024. And as Harald said, allow me to introduce Barbara to you. Barbara has joined us January 1 this year as new CFO. She has a long time experience, multi year experience, both as a CFO in private as well as public corporations before Austrian Post.

We are delighted to have her on the board. And so we are now complete. And apart from myself and Barbara, Peter Umond, who has been member of the management board since 2011, completes the board. Let me now get into the results and into the contents. Before I start with the environment, let me briefly summarize what we present to you over the next half an hour.

I think we are pleased to present to you quite strong results in a challenging environment. We have delivered double digit growth last year, and we’re also able to increase our EBIT from a good level already in 2023. Starting with the environment. The environment in Europe as a whole and for postal companies continues to be challenging. Austria is going through the longest recession after the Second World War.

Fortunately, we also have exposure to Eastern European and the Turkish market where GDP growth has been better than in Austria. In Turkey, on the right side of this chart, we have a good growth with 3.2%. However, the combination of inflation and the FX rate continues to provide volatility into our results last year, more on the favorable side as inflation has been high and FX rate almost stable. In the middle of this chart, the core trends that continue to dominate our business, e commerce continues to grow, in particular, a strong inflow of e commerce parcels from Asian e commerce platforms over the last eighteen months. At the same time, letter mail volumes continue to decline.

However, it is still relatively moderate rate in Austria and also the consolidation in the stationary Austrian retail business continues. In this environment, we are a strong international group covering a region consisting of Austria, Southeastern Europe, Turkey and Azerbaijan. Since last year, this is a region where we operate parcel networks in 11 countries in which those parcel networks are able to cover a population of 150,000,000 citizens. We believe a value proposition in particular vis a vis large global e commerce platforms that is very that gives us relevance and strength and scale in the parcel business. With this footprint, moving to Page five, twenty twenty four has been a strong year for Austrian Post.

We not only were able to stabilize our revenues on the mail side, yellow part of these columns, but in particular to strongly grow our parcel revenues In total revenues last year across the threshold of EUR 3,000,000,000 for the first time in Austrian Post history, total revenues of EUR 3,100,000,000.0, double digit growth 14%. And also our smallest segment, Retail and Bank, has shown a positive development. Page six summarizes the results across the and the major developments across the group and the core divisions. Group revenue already mentioned, group EBIT at $2.00 $7,000,000 a good growth of 9%. Mail, we are pleased to show here a positive revenue development for mail despite a continued mail volume decline, a strong election year and a stronger price increase at the end of twenty twenty three have supported this revenue development.

Parcel and logistics continues to be the growth engine with a growth of 21%, strongly supported by a favorable Turkish lira, but also by good volume growth in Austria and Eastern Europe. And in the Retail and Bank segment, favorable interest rate environment as well as good organic growth have supported a revenue growth of almost 20%. Let me dive a little bit deeper now into the three segments. Mail, you see here over the last three years, we were able to keep revenues relatively stable. Mail continues to be a strong and profitable pillar in our portfolio.

And I think we have made good progress in coping with the declining volumes. Volumes on Page eight continue to decline. Last year addressed letter mail around 6%, given a stronger tariff increase, I’ve already mentioned, at the end of twenty twenty three and a strong elections year with three countrywide elections. Mail revenues also addressed letter mail revenues were positive at plus 3.4%. Austria continues moving to Page nine, continues to be one of the cheapest mail countries across Europe and effective January effective May 1 this year, we will implement a product and price reform in the Austrian market where we make one more step in moving volumes to the slower economy product.

Already today, more than 80% of our volumes are in the slower economy product. And this product reform will make the economy product the standard product and transform the priority product into a premium service on top of the economy product. And with that, we also adapt prices with to the inflation since our last price increase, roughly 5% price increase. Moving to Page 10, Direct Mail and Media Post was $445,000,000 continues to be an important business segment. Again, here, of course, also a declining volume.

Our products continue to be very relevant. The Kubera, the cover for the leaflets that we distribute twice a week continues to be the advertising channel in Austria with the highest reach with more than 3,000,000 households twice a week. The next best product, the biggest newspaper in Austria only has a reach of 21%. Europe volumes minus 4%. In particular, it has been the consolidation in the retail sector, in particular in the non food sector where customers have exited, have gone bankrupt has contributed to this decline.

Also here, revenues given price changes up at almost 6%. Let me now come to our growth engine, the Parcel and Logistics division. You see here over the last three years, a quite strong revenue increase of almost EUR 500,000,000.0, again supported by a favorable lira exchange rate. Our portfolio consists here of 11 countries in which we operate parcel networks Austria, Eight Eastern European, South Eastern European countries, Turkey and since last year a small footprint in Azerbaijan. Page 12 shows you the development in the Austrian parcel market here In our view, a very good growth of 12%.

We have gained market share. We’ll come to that on the next chart, plus 12% also a strong Q4 at plus 10%. And on the revenue side, you see that we have also been able to implement some price increases with revenues growing at 15% and total revenues getting close to the EUR 1,000,000,000 threshold. Our market shares, this was just published two weeks ago, Page 13 by an independent market research company, who publishes market share in the parcel market every year. Our market share has been slightly growing.

We were able to defend our clear leadership in the Austrian parcel market for the total parcel market, which is around 400,000,000 parcels big, we command 56% of the market. And in the growing B2C segment, we hold around 65% market share, which is a plus in both numbers of two percentage points. Moving to Eastern Europe, here also good volume growth plus 12%. And given certain mix changes and a quite competitive environment on the pricing side translated into a revenue growth of 8%. Asian customers have contributed to this growth and with them also comes a certain volatility.

Moving to Turkey on Page 15 here, I think the summary is strong euro revenue development given the mentioned asymmetry between local inflation and the FX rate development. So in euro terms, plus 46%, locally a strong revenue development of 63%. So that is mostly price driven. Volume wise, we are relatively flat given the continued insourcing of the biggest customer. And at the same time, our Turkish company generates strong margins and contribute substantial profits to the group.

Across the portfolio moving to Page 16, we push a strong growth of our out of home network. We have been pioneers in Austria starting with self service facilities around thirteen to fourteen years ago. We have in Austria by far the strongest self-service footprint, the strongest local footprint across the country. And last year, we’ve more than doubled that. And across the portfolio, there is an ambition to double the number of out of home points from around 10,000 end of 20 20 three to around to more than 20,000 by the end of twenty twenty fivetwenty six.

In particular, this is driven by a almost quadrupling of our postal stations in Austria and our lockers across the portfolio, where the ambition is to have around a network of around 10,000 lockers by 2026. Moving to our Retail and Bank division, let me start with the development of Bank ninety nine on Page 18. Almost five years ago, on 04/01/2020, we launched Bank ninety nine out of the home office into a full lockdown on April 1 at the peak or at the beginning of the pandemic. Since then, I think we have made good progress in building up a small focused retail bank that builds upon the postal platform consisting of a strong brand of the retail network of the non customer frequency in our postal branches and of a strong trust of Austrian post in the Austrian consumer market. You see on this page that we were able to ramp up customers to a total of almost 300,000 retail customers.

We have a balance sheet total balance sheet size of $4,100,000,000 so we passed this $4,000,000,000 dollars threshold. We were able with substantial tailwind from the interest rate environment to substantially grow our interest rate income. And also in a challenging Austrian credit market, we were able to grow credit volume by 10%. So good developments. The target for Bank ninety nine this year is to breakeven.

This is still there’s still ten months to go, but we think we are on a decent track record towards breakeven. And with that said, I close now the overview of the three divisions and hand over to Barbara, who will dive deeper into our financials.

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: Thank you, Walter. As you already heard, it was a good year for Austrian Post with an revenue increase by about 14% to $3,100,000,000 Also a great EBITDA margin of 13.5% and an EBIT margin of 6.6%. And we were also able to increase our earnings per share from 1.96% to 2.04 Cash flow, and this is only the cash flow we are showing for the logistics about €254,000,000 financial debt, 167,000,000, slight increase and equity ratio also of the logistic business of 29%. So what has happened on the revenue side, Ward already showed that we were able to grow in all segments starting with the mail business. Despite the falling business on the volume side, we were able to increase the revenues driven mainly by the elections, but on the other hand, also by pricing effects.

Pricing effects were also necessary to cover our inflation on the cost side. The Basel business also very strong growth, not only driven by Turkey, but also by Austria with a strong and healthy growth of 15.2. And we’re also happy that we were able to increase our revenue on the retail and bank side already shown by Davelta. More important for the CFO is the EBIT increase from NOK190 million to NOK207 million. Where does it come from?

Additional contribution from the mail business plus 6,800,000.0, the pricing effect and of course the elections. The parcel business, not only the positive impact of the Turkey business, because there we also had a negative impact of the revaluation of our put option for the second shareholder of the company. This had an impact of EUR 14,900,000.0. And is up to certain extent also eating up some positive EBIT effects we were gaining out of the price increases on the Turkish business. Retail and bank also there a positive contribution of 1,900,000.0.

This then results in 207,300,000.0 EBIT. And if we compare year on year Q4, also there we see the increase from EUR 59,500,000.0 up to EUR 62,500,000.0. Let’s come now to the income statement. I only want to go into some of the positions. As already said, there was inflation not only in Turkey, but there was also inflation in Austria and CE due to this price increases, but on the other hand also cost increases.

EBITDA went up from CHF391 million to CHF422 million and EBIT ending up in CHF107.3 million, profit for the period BRL146 million up to BRL139 million. What are the key messages out of our divisions? Already shown the increase on the revenue side and the EBIT side. I think the good news on the Mail division side is a stable EBIT margin of 12.8. If we get to the Parts and Logistics division, then I think the interesting thing is Q4 on the Parts Turkey side.

So if you take Q4 twenty twenty three and you take Q4 twenty twenty four, you see the increase from 95,330,000.00 up to 171,500,000.0 on the revenue side, and this is also driving then the results on the Turkish results. The EBIT margin on the Arsenal and Logistics division side, 6%. Getting deeper into the Turkish business, we show you the quarter on quarter development. And there you see on the one hand side, as already mentioned by Walter, that we had a quite stable Turkish deal. On the other hand, there was a positive impact from Q3 to Q4, getting from 38.27% to 36.74% and this is also driving the good Q4 on the Basel side.

Retail and Bank division, there we were growing due to the ramp up of the bank and also due to the better interest rates. So the revenues went up to $201,500,000 EBIT still negative, but there we had some costs from the migration of the core banking system. So this is a onetime effect and we are really aiming breakeven this year in the bank. Getting now to the balance sheet, which is a quite solid one. The growth of our total balance sheet is driven by Bank ninety nine because Bank ninety nine has already reached a balance sheet of SEK 4,100,000,000.0 and this is also driving our balance sheet the group balance sheet.

The logistic equity ratio, we I already mentioned was 29. The equity ratio with the bank is about 12%. Coming to the cash flow now, excluding the core banking assets. So the cash flow from operating activities were was very close to SEK360 million. Then as we’re always showing, maintenance CapEx was SEK121 million.

Then we had some interest gains on the investment cash flow and ending up in the operating free cash flow of more than $250,000,000 Then we had about $22,000,000 of growth CapEx, some acquisitions divestments, and we are ending up then very close to $230,000,000 of free cash flow, excluding the core banking assets. The CapEx of EUR143 million is a lower one because what we did in the last years was invest doing a lot of investments in Austria, not only into our logistic infrastructure, but also in the decarbonization of the Austrian entities and also of our vehicles. Also a lot of solar panels were done. Now we are aiming more for the transformation and some CapEx in CE and also in Turkey. So what you can expect for the coming years is a CapEx of about 150,000,000 On the right hand side, you should see the CapEx mix, where you see that 30% of our CapEx went into the decarbonization, about 43% went into the maintenance and about 27% was driven by gross CapEx.

Coming to the ESG indicators and there are at the moment a lot of discussions regarding sticking to decarbonization targets and so on. We are very much committed to our targets. We will go on on this path. This, I think, we committed already in the past and this we are still committing because we see also the economic feasibility for Austrian Post and also the value contribution. If you take our logistic rate admissions, then you see that we were able to reduce them by more than 20%.

In Austria, if you take the whole group by about 5%, if you take then all or if you consider also then the scope three emissions of Bank ninety nine With the financing for households, it’s really increasing. This is driven by construction of homes. And I think this we cannot avoid as long as we are driving our business on the banking side. The e vehicles fleet went up to very close to 5,000 vehicles. E vehicles in Austria.

And on the group side also in CE and in Turkey, we were able to increase the e vehicle fleet. As we are celebrating the International Women’s Day tomorrow, I also want to show you one figure on the women in leadership position side that we were also able in 2024 to increase the rate from 35% to 35.4%. Next slide, decarbonization roadmap in Austria. As we already showed, we are growing on the parcel volume side more than 30%. At the same time, we were really able to decrease our carbon footprint coming on the one hand side by non fossil fuels.

On the other side, also from vehicles and also the solar panels on our buildings. Now I want to hand over to Walter again to give you an outlook and also some flavor on the dividend policy.

Walter Blin, CEO, Austrian Post AG: Thank you, Barbara. Let me continue on Page 32 with our dividend proposal to this year’s AGM. We propose a dividend of per share, which is an increase of dollars and which is in line with our dividend policy, which has been in place since the IPO to distribute at least 75% of group net profit. Also a clear signal that the management is committed to grow the dividends going forward. And with that dividend proposal and the results that you have seen now over the last half an hour, We continue moving to Page 33, a fifteen year positive development of Austrian Post, where I think we have delivered now over fifteen years against the proposition to be a defensive dividend stock.

We have delivered stable revenues and earnings in at least three crises, the financial crisis of two thousand and nine, twenty ten, the pandemic and over the last years in a prolonged crisis starting with the Ukraine war with strong inflation, high paper and energy prices and so on. And we, at the same time, as Baba showed, were able to substantially decarbonize our logistics network and we’re able to decrease the footprint per shipment volume by around 75% from 48 to 11 kilograms. Looking ahead, we are in the process of a strategy update of the process that the new board team has started in fall last year. We will conclude this strategy process with our supervisor report meeting beginning of May, and we’ll communicate the results in our earnings call early May. I think the direction is clear.

We want to continue our profitable growth path. We have defined the target of $4,000,000,000 revenues by 02/1930 at a decent margin. So the transformation of Austrian Post was a strong focus on growth in international e commerce in our region consisting of Austria, Eastern Europe and Turkey and beyond will continue. And let me now conclude this call with the outlook for the year 2025 for the current year. We do expect a challenging macro environment to continue.

Also the core structural trends are declining. Mail and direct mail volume on the one hand and on the other hand, continued growth in e commerce. We expect to continue on that basis. Our objective for 2025 is to generate modest revenue growth. Revenue growth will clearly be smaller than last year as the strong tailwinds on the one hand, strong inflation in Turkey combined with a favorable FX rate, the strong election impact and high inflation that was the basis for strong price adjustments in the mail segment end of twenty twenty three.

Those tailwinds will not be present in this magnitude in 2025. Still, our objective is to generate modest revenue growth. We plan to continue to invest at a level of around million into capacity expansion in our international networks in continued change transformation towards an electric fleet and in maintenance CapEx. And on the earnings side, we target stability with an EBIT target at an order of magnitude of around million. And of course, we will stick to our dividend policy and remain committed to being an attractive dividend stock.

Thank you for your attention, and we are now happy to take questions.

Conference Moderator: Thank you very much. So the first questions are incoming already. The first one is from Othmane Breeter of BofA. Over to you.

Othmane Breeter, Analyst, BofA: Hello. Hi. Good afternoon and thanks for taking my questions. I have a few ones. Maybe we can do them one by one.

First, on the mail reform, can you quantify potential cost savings from moving more mail into the economic service?

Walter Blin, CEO, Austrian Post AG: Yes. We’re talking about a mid to higher single million digit euro figure.

Othmane Breeter, Analyst, BofA: Mid to high single digit million euros. And as it starts in

Walter Blin, CEO, Austrian Post AG: This is not a sorry.

Othmane Breeter, Analyst, BofA: This is

Walter Blin, CEO, Austrian Post AG: not a huge step, but it will allow international flows to be moved to the economy stream. And we already today have around 80%, eighty five % of mail volumes in the economy product, which we only deliver twice a week. But this product reform will add and support that development.

Othmane Breeter, Analyst, BofA: Okay. Thank you. Then on advertising mail, I think you had good momentum in Q4 with volume decline, I think, of only minus 2%. Going already into 2025, how do you see volumes and also pricing for this segment?

Walter Blin, CEO, Austrian Post AG: Yes. I think on the pricing side, we should expect pricing to come in line with inflation as inflation has come down to around 2%, two point five %, three %. I think that will be roughly the order of magnitude of price changes. On the volume side, we have to expect a continued Meldig sign in, I would say, in the lower single digit figures given consolidation in the stationary retail and a continued move from retailers to digital advertising at the same time, in particular, on the food with the food retailers, our leaflets, our Courbea product remains a very strong element of their advertising mix, and we do expect these volumes to be relatively stable.

Othmane Breeter, Analyst, BofA: Thank you. And then on CapEx and investments with heightened focus towards Eastern Europe and Turkey. Could you elaborate more on which areas in the business are you investing in?

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: Yes. So it’s mainly on parcel business. And for example, what we are planning for this year in Hungary is to build up a logistics center in Budapest. And we are also thinking about investing more on the docker business side in Eastern Europe and also in Turkey. Turkey, we have to further invest in the parts business.

Walter Blin, CEO, Austrian Post AG: And in general, I would like to add that our international logistics network are substantially more asset light than our Austrian network. In Austria, we tend to own most of the real estate and most of the fleet, whereas in Eastern Europe, we rather rent real estate and work with subcontracted delivery partners.

Othmane Breeter, Analyst, BofA: Okay. And on Turkey parcels, how do you see volume growth in 2025? And do you expect any continued impact from customer insourcing their volumes?

Walter Blin, CEO, Austrian Post AG: Yes. I think we should not expect substantial growth in Turkey. I would we continue to see a growing market, but we continue to work with large e commerce platforms that where some of them continue to grow their insourced share. And as a result, I would expect volumes to be somewhat flattish.

Othmane Breeter, Analyst, BofA: Okay. Thank you. And last question, which is on interest income, which was quite strong this year at EUR 28,000,000. How should we think about interest income for 2025?

Walter Blin, CEO, Austrian Post AG: Yes. I think what so are you talking about the bank interest?

Othmane Breeter, Analyst, BofA: No, no, I’m not talking sorry, I’m not talking about the bank. I’m talking about the income the interest income at the end of the P and L.

Walter Blin, CEO, Austrian Post AG: Okay. So about our financial result? Yes,

Othmane Breeter, Analyst, BofA: exactly, yes.

Walter Blin, CEO, Austrian Post AG: Yes, I think that is hard to forecast as we have here a combination of

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: Turkish lira

Walter Blin, CEO, Austrian Post AG: put option valuation impact and with the fluctuation of the Turkish lira and hyperinflation and all the drivers, please bear with us that we’re not in a position to provide a reasonable forecast there.

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: So if you take 2023, we had a positive impact of SEK 3,500,000.0. This year we had it the other way around. So the swing is quite high on the Turkish lira side only for the put option, yes? And it’s really very difficult to predict it.

Othmane Breeter, Analyst, BofA: Okay. Thank you very much.

Conference Moderator: Thank you. Next question is from Patrik Stena of Odudero BHF. Over to you.

Patrik Stena, Analyst, Odudero BHF: Good afternoon. It’s Patrik Stena speaking. Thank you very much for the presentation also for answering the questions. I would have a few. Let’s take them one by one, I would suppose.

Firstly, in I mean, in 2024, we saw mail volumes declining in most of the categories despite the special effects from the elections. Can you give us a number for this positive volume effect from the elections in 2024?

Walter Blin, CEO, Austrian Post AG: Yes. So I think the impact of the election is more on the revenue side than on the volume side as we’re talking about registered large letters that are used for mail voting. So but there has been some volume impact, I would say around 1% is probably a reasonable number.

Patrik Stena, Analyst, Odudero BHF: Okay, perfect. Thank you very much. And thinking about 2025, I mean, based on further expected organic maybe later volume decline and also lack of an election effect, what kind of volume development would you expect for 2025?

Walter Blin, CEO, Austrian Post AG: I would expect somewhere 6% to 7% as an order of magnitude.

Patrik Stena, Analyst, Odudero BHF: Okay. Great. Perfect. The next one is a bit more theoretical, I would say. First, given that volume losses in mail trigger higher pricing per item in the form of tariff adjustments.

And this in turn should theoretically again reduce demand and so on. Do you think that the decline or the end of physical mail could come early than we would generally assume? I would be just be happy to hear your thoughts on that.

Walter Blin, CEO, Austrian Post AG: I don’t think so, to be honest. I’ve been now in this industry for around sixteen years. The question of is there a cliff ahead of us has been constantly in the room over the last fifteen, sixteen years. I think in reality, we’ve always seen certain more disruptive changes in individual customer segments, but across the whole portfolio, they have resulted in a more linear decline, which in Austria has always been in this range, somewhere between 47%. And given what we see with customers, with the public sector, we would not expect a disruptive development ahead of us.

And we have a good diversification of our mail volumes across different sectors, applications and so on. So I think, yes, we have seen some acceleration, but still relatively modest and we don’t see any disruptive changes in the near future.

Patrik Stena, Analyst, Odudero BHF: Okay. Thank you. Very helpful. On Bank ninety nine, very good customer growth again in 2024. How should you think about growth over the next two to five years roughly?

What are your expectations, your thoughts?

Walter Blin, CEO, Austrian Post AG: Yes. I think we of course, we the immediate focus is on the breakeven. So I would say a more qualitative growth is ahead of us. Also the interest rate environment, given that in our group P and L, we show gross interest income and netted with the second line. So we don’t show net interest income, I think, so the interest income will come down just because interest rates are coming down.

But overall, we see further growth potential with zinc. We’re still in a very early phase of Bank ninety nine development. And one clear focus will also be to stronger penetrate the customers that we have. Many of them are still single product customers, which are either only working with us on the current account side or on savings products. And we think there’s a lot of potential by offering them the full product range that we have in the meantime with consumer credit, mortgage loans, investment products, insurance products and so on.

Patrik Stena, Analyst, Odudero BHF: All right. Thank you. Last one from my side. If I understood this correctly, you increased your 2025 revenue guidance slightly, while keeping the EBIT target unchanged. Does this imply a lower margin expectation compared to Q3?

Walter Blin, CEO, Austrian Post AG: I don’t think this is an intention to now signal a stronger confidence on the revenue side. What we do in November is typically some rough leaning out of the window for the next year and with increasing visibility, we try to build a little bit more specific. Maybe the starting point, the end of year revenue has made some changes that you have interpreted now. But there is no margin dilution that we expect. Yet the reality is we are competing in a challenging environment.

Market fossil market remains competitive. But we also think we focus primarily on absolute earnings and less on a margin guidance.

Patrik Stena, Analyst, Odudero BHF: All right, perfect. Thanks for that. Have a good weekend. I’ll get back in line. Thank you.

Conference Moderator: Thank you very much. The next question is from Henk Slotboom from The Idea. Please go ahead.

Henk Slotboom, Analyst, The Idea: Good afternoon. Thanks for the presentation and thanks for taking my questions. I’ve got three, if I may. The first one relates to Asia. You said Asian volumes have grown nicely.

I did some quick and dirty calculations on the Austrian parcel side

Marco Limite, Analyst, Barclays: and

Henk Slotboom, Analyst, The Idea: I see that the average price per parcel has gone up. And it is quite in contrast to what we see from peers. Just look at PostNL, for example. Can you give me any idea about what the growth was in Asian parcels into Austria and what volume share it accounts for now? And how do you manage the yields per parcel?

Walter Blin, CEO, Austrian Post AG: So last so the total share of let’s focus on large Chinese e commerce platforms is in the mid to higher single digit order of magnitude. So we’re talking about 6%, seven %. They have contributed disproportionately to growth starting from a relatively low base. They are of course very quite sensitive customers, but we try to make sure that we burn decent margins also with these customers. And across the board, I think our good market and quality position in the Austrian market has helped us to both gain market share, but also to execute price increases given also the strong inflation we’ve had.

Henk Slotboom, Analyst, The Idea: Okay. That’s clear. Thank you. The next question relates to the green investments. I’m pleased with the overview you provided on slide 28.

Now if you invest in e mobility, often e vehicles are more expensive than call it traditional fuel powered vehicles, moreover, because you have to invest in infrastructure as well. How does it affect your cost price per unit? Is it manageable? And you mentioned also in the drive to go to more out of home touch points. Is that counterbalancing the effect of the higher costs of investments in greening?

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: So what we can say is, if you compare how long that the EVK starts driving, then we see that they’re driving absolutely fine. Skip hand. Are you still there?

Henk Slotboom, Analyst, The Idea: Yes, I’m still here. Yes.

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: Sorry. There was some interruption on our side. So the EV is running up to ten years. What we saw on the Falsal side, it was between six and seven years. So this is already increasing the economic feasibility of the EV vehicles, yes?

We also got subsidies in the past. Also this helped us to do this transformation.

Henk Slotboom, Analyst, The Idea: Stu as well. And then my final question is

Barbara Poudic Ebensteiner, CFO, Austrian Post AG: And also one thing in addition, but you also see the maintenance on the maintenance side, it’s also more favorable to go into EVs than to go into the normal cost.

Henk Slotboom, Analyst, The Idea: Okay. Understand.

Walter Blin, CEO, Austrian Post AG: So there is a positive total cost of ownership, yes? So it’s we are doing it because we take responsibility, but also because it’s economically favorable.

Henk Slotboom, Analyst, The Idea: Yes. For a Dutch guy like me, that sounds like music in the ears. Then my final question is on out of home. What proportion of your parcels in Austria, for example, is currently delivered via the out of home channel? And where do you see this in, let’s say, five years’ time or so?

Walter Blin, CEO, Austrian Post AG: Yes. We’re still talking about a quite low percentage. In the past, this was only more or less deposited parcels, so puzzles where the delivery at the door was not successful. In the meantime, we have, I would say, a low single digit percentage of direct to local parcels coming from two sources, either the consumer, which we like even more, asks us to directly deposit it into a desired locker as we don’t have to share the reduced cost with the consumer. And the other sources, of course, the senders that use a direct locker product.

We do expect this to increase substantially, but I think it’s hard to project what percentage that will achieve. I think the market in Austria is still in a very early phase. We try to be clearly the number one in offering a dense network with enough capacity to offer also to our large customers a direct to locker product. But we also have to observe how quickly Austrian consumers accept this type of product.

Henk Slotboom, Analyst, The Idea: Okay. Well, that’s all my questions. Thank you very much and have a nice weekend.

Walter Blin, CEO, Austrian Post AG: Thank you.

Conference Moderator: Thank you also from my side. So the next question is from Marco Limite of Barclays. And before we move on, I’ll just like to quickly remind you that the combination to state your question is nine Antastaki. Over to you Marco.

Marco Limite, Analyst, Barclays: Hi, good afternoon. Thanks for taking my question. So I’ve got one question back on the outlook for 2025. So your outlook for 2025 is for, let’s say, about SEK 200,000,000, which is a small step down year over year. But on top of that, you are also guiding for the bank to go to breakeven.

So if you normalize for that, actually, you are guiding for quite a step down on the line when you exclude the bank division. Now I was just wondering if you would be able you’re in the position to quantify again back to your question that was asked before, but if you are able to quantify the EBIT tailwind in 2024 coming from the elections, number one. And number two also was the tailwind from favorable FX from Turkey. Yes, just to understand whether the EUR 200,000,000 guidance is maybe extra conservative. And the second question is on your strategy for 02/1930, while you’re showing today a revenue ambition for 02/1930.

Just wanted to make sure that I’m getting this right. And the idea of that target is also that you are growing a lot more into international expansion. So it’s not the growth is not only coming from Austria, but you want to become bigger in CE and internationally? Thank you.

Walter Blin, CEO, Austrian Post AG: Right. So let me maybe start with the second question. Yes, you’re right. The revenue aspiration that we shared with you today implies that we grow substantially across the whole portfolio, that we also grow our regional footprint. Most of that growth, we believe, can be done organically, but we will continue to look out also for opportunities to strengthen our portfolio, both in adding additional regions as well as gaining market share within our regions.

To the first question, you’re right. The ambition is to break even on the bank. So that should provide some uplift on the EBIT side. At the same time, we will lack the tailwinds on the mail side that have supported us last year. Let me remind you, we had three countrywide elections, EU election, national parliament election and chamber of labor elections.

Those big nationwide elections will not be present this year. So we on the mail side, we have to expect mail volumes to continue to decline as already discussed multiple times in this call. And at the same time, the tariff increase that we also shared will not fully compensate. And so we will see some decline on mail profits clearly. And overall, also, please understand that we’re still early in the year.

And in some areas, visibility is not is still a little bit foggy. And we’ll try to get more precise and clearer over the course of the next quarters.

Harald Hagenauer, Head of Investor Relations, Austrian Post AG: Okay. Thank you.

Conference Moderator: Thank you very much. As there are no more questions in the queue, I would like to hand over back to the host.

Harald Hagenauer, Head of Investor Relations, Austrian Post AG: So thank you, ladies and gentlemen, for participating in this call. If you do have more questions the next days, please don’t hesitate to call us up the next days. We are ready. Thank you, and have a nice weekend.

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