PostNL calls for 'urgent' government action after 2024 profit warning

By Gianluca Lo Nostro and Alessandro Parodi

(Reuters) -PostNL's chief executive called for "urgent" government action to safeguard the Dutch postal service on Monday, after the group warned on 2024 profit partly due to what she called an unsustainable business model.

Shares of the postal operator fell as much as 8.4% in early trading, nearing their all-time low seen in March 2020.

Slow to expand their parcel networks and at times in financial trouble, traditional postal services in Europe are struggling to keep up with competition from other parcel locker operators such as Poland's InPost or Amazon.

In a statement, outgoing CEO Herna Vernhagen called again on the Dutch government to ramp up financial contributions as an inevitable step to "safeguard a future-proof and financially viable postal service".

Chief Financial Officer Pim Berendsen, who will become the CEO in April, said during a call with analysts that he expected the universal service in PostNL's home market to become structurally loss-making.

"A solution for margins to improve would be to better yield from bigger customers," he said, adding that different clients would require different kinds of measures, such as cost cuts and new pricing strategies.

PostNL will rethink its strategy and focus more on its international opportunities, he added, with more details to come in February when it reports its final yearly results.

One of the few European incumbent mail operators without any state participation, PostNL said its normalised 2024 operating earnings would be around 53 million euros ($54.64 million) based on preliminary readings. That was below its earlier forecast of around 80 million euros, last cut in November.

"4Q24 results disappointed due to an acceleration of existing trends, with the key driver for the outlook miss being the higher-than-expected client concentration at parcels in 4Q24," KBC analysts said in a note to clients.

The company, which delivers parcels and letters across Belgium, the Netherlands and Luxembourg, estimated its annual free cash flow at about 12 million euros, above the expected break-even, citing well-executed cash and balance sheet management.

($1 = 0.9700 euros)

(Reporting by Gianluca Lo Nostro and Alessandro Parodi; Editing by Milla Nissi)