PostNL to revamp parcels business strategy to cope with sluggish growth

(Reuters) -Dutch postal group PostNL is to refocus plans for its parcels business which is facing sluggish growth this year, including the expansion of its locker services and road network.

PostNL and other traditional postal services in Europe are struggling to keep up with competition from other parcel locker companies such as Poland's InPost as well as Amazon.

The group, which delivers parcels and letters across the Netherlands, Belgium and Luxembourg, said it expected a volume decline of 8% to 10% at its Dutch mail business in 2025, after a 10.5% decrease in the quarter ended December.

It said it expects growth of between 1% and 3% at its parcel division this year, lower than the assumed growth of 4% to 5% in the Dutch e-commerce market on which PostNL's parcel service relies heavily.

It expects annual operating income for 2025 to be in line with 2024.

"The financial performance strongly underlines that the current business model is no longer sustainable," CEO Herna Verhagen said in a statement, pointing to the need for a new business strategy.

PostNL had already warned on its 2024 profit in January.

"Another unsatisfactory year coming up," analysts at brokerage Degroof Petercam Degroof said in a note on Monday.

The analysts also said in the note they expect market share losses at PostNL due to price increases mainly caused by rising wages.

Its shares, which are trading near record lows, were up about 4% by 1325 GMT.

The company is discussing financial support with the Dutch government after calling for help on Friday to meet its universal service obligation costs which it estimated at 30 million euros ($31.41 million) in 2025 and 38 million in 2026.

"It's a cost coverage of loss-making activities", Verhagen told analysts, adding that the government agrees that delivering a public task cannot be loss-making.

The group aims to achieve cost savings of between 40 million and 45 million euros in 2025, with total savings of 160 to 200 million by 2029.

For 2024, it reported EBIT of 53 million euros, confirming the preliminary reading it gave in January, and proposed a dividend of 0.07 euros per share.

($1 = 0.9551 euros)

(Reporting by Johan Bodinier, Alessandro Parodi and Olivier Cherfan in Gdansk; editing by Milla Nissi and Jane Merriman)