bpost NV/SA (BPOST) Earnings Call Transcript & Summary

Ladies and gentlemen, hello, and welcome to the bpost Group Fourth Quarter 2024 Analyst Call. My name is Ben, and I will be your coordinator for today's event. Please note that this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Mr. Chris Peeters, CEO of bpost Group. Please go ahead, sir.

Good morning, ladies and gentlemen. Welcome to all of you, and thank you for joining us. Today, I will be presenting our fourth quarter and full year 2024 results as CEO of bpost Group. With me, I have Philippe Dartienne, our CFO; as well as Antoine Lebecq from Investor Relations. We posted the materials on our website this morning. We will walk you through the presentation, and we'll then take your questions. As always, 2 questions each would ensure everyone gets the chance to be addressed in the upcoming hour. Let's get to the highlights of the full year result, and Philippe will then walk you through our fourth quarter '24 results. On Page 3, you can see that bpost Group delivered results in line with its full year guidance with total operating income exceeding EUR 4.3 billion. Our group's adjusted EBIT reached EUR 224.9 million, representing a margin of 5.2% at the upper end of the EUR 205 million to EUR 230 million guidance reaffirmed in November with our third quarter results. Our overall performance reflects the strong contribution of Staci. We are pleased with Staci's performance over the past 5 months, delivering approximately EUR 340 million in revenues and EUR 41 million in EBIT, corresponding to an EBIT margin of 12%, ranking among the highest in the logistics industry. This solid performance aligns with our expectation despite a seasonally softer start in August. However, when excluding Staci's strategic contribution and looking at performance on a like-for-like basis, the overall picture is different. Revenues declined approximately EUR 270 million, driven mainly by 2 key factors: a reduction of EUR 50 million in press revenues following the new press contracts that took effect after the end of the press concession on June 30th and a decline of more than EUR 210 million in Radial U.S. revenues, impacted by a softer U.S. market environment with lower market volumes and increased competition among 3PL providers. Despite these pressures, domestic parcel volume continued to grow, delivering a solid performance in 2024 with an increase of more than EUR 30 million in revenue. However, this has, of course, remained insufficient to offset the top line decline. Profitability was also impacted with EBIT declining by approximately EUR 65 million year-over-year. In Belgium, EBIT decreased by EUR 45 million, with EUR 33 million of this decline in the second half of the year, primarily due to the press impact mentioned earlier. And in North America, top line pressure at Radial and Landmark was partly offset by Radial's strong productivity gains, helping to mitigate the impact. Also in these adverse market conditions in the U.S., we have recently learned of the departure of several customers, some of whom are significant in size and have a material impact on Radial's top line going forward. We, therefore, had to reflect the departure of these customers in our future growth projections as well as the challenging market conditions translating into lower sales from existing clients and a more cautious outlook regarding the contribution of future customers. This led us to recognize an impairment of EUR 300 million on Radial U.S., bringing the book value from EUR 912 million to EUR 612 million. Consequently, our reported group net result stands at minus EUR 209 million. And based on this, the Board of Directors will recommend to the general meeting in May not to distribute a dividend this year. Before handing over to Philippe for the fourth quarter results, I'd like to take a moment to reflect on our key strategic priorities of 2024 and how they shape our transformation journey. 2024 was my first full year in the company, arrived in November 2023. I discovered very quickly a great deal of capabilities and expertise within bpost Group. bpost Group and bpost in Belgium suffered from an identity crisis. We are international, but not global. We still have a lot of postal products, but we are no longer a postal company. 2024 was about accepting our new identity, integrating its consequences and from this, building a strategic vision for the future. We built synergies throughout the group and leverage our capabilities to create a better service offering to all our clients, whether they are operational in Europe, North America or Asia. We no longer pursue big clients with big volumes to simply fill up our warehouses. We still cherish our big clients, but we want to become less vulnerable. That's why we now focus on SMEs. We focus on diversified verticals, and we want to fill our warehouses with multiple clients. We want to create value for our clients. We have a range of capabilities. Combined, we can create a broad range of solutions, which would be almost impossible for the client to recreate by themself. In 2024, we laid the foundation for this big shift in 2025. bpost becomes a digital expert in parcel size logistics operational in 2 regions, North America and Europe. And what has then changed for the group since that? So what you can see here is that we launched our strategic vision to become this regional digital expert in parcel size logistics. And therefore, we have now organized the company around 3 dedicated business units that each strengthen the group and also can become really leaders in the respective sectors that they are present. We also leverage the capabilities across the group to make sure that we can bring good solutions to our clients, and we diversify our portfolio with clients in the B2B space. And the Staci acquisition, as you can see in the figures, was very successful. We're integrating it today. It's on track. And also in terms of the synergy creation, we're fully on track for this. Meanwhile, we have developed a transformation road map. We have launched several pilots meanwhile, and we will be ready to scale some of them later down the year. And we have, again, engaged in investing in some of our mail products so that we can [ prolong ] their lifetime going forward. If we then zoom into the different BUs that we have. At the 3PL side, looking at North America, there the focus is that we shift the portfolio to ensure that it's more diversified and less dependent of enterprise clients, of which you also have seen that one of those risks was materialized and led to the impairment. So the strategy is still the same as the one that we discussed last year. We will have an intensified focus to realize that. Don't forget that meanwhile we also drastically reduced the cost and continue to reduce the cost structure and the efficiency of our operation over there. And we have launched a new offering specifically focused on mid-sized companies, which is called Radial Fast Track that we are piloting as we speak with our first clients in the U.S. Meanwhile, as well, synergies between Staci Americas and Radial have been realized or are on the way of being realized in the coming months. If you look at the European side, the integration between Staci, Active Ants and Radial Europe is on track, meaning that meanwhile, they are already exchanging clients, bringing to those clients the best of capabilities we have into the group and also ensuring that we have a higher fill rate of our different warehouses. If we then zoom into BeNe Last Mile, there we need to accelerate, of course, from a company which is mainly a postal company in its DNA towards a parcel size logistic operator. And for that, we are now exploring new market segments that could create a new trajectory of growth. So we don't limit ourselves to the B2C segment. We continue to focus on that, and we continue to focus on also, but we add to that the B2B segment and the C2C segment. And as said before, we launched several pilots in this area, which look very promising and some of them will be scaled in the second half of this year. Also, we extend our out-of-home delivery network. We have already a strong PUDO network, but we will increase it also with parcel machines -- automatic parcel machines and lockers so that we have -- can create full convenience, whatever the client need is at that moment. And then we have, of course, as well evolved the press concession towards a press contract in the distribution model, which is on its full way, and that transformation is also happening today in Flanders, and we're preparing to do the same in the South in the coming years. And also, we have modernized some of our mail products, making them more convenient for the clients so that we can count on an extension of their lifetime going forward. And on the Cross-Border side, we have further integrated activities in the other -- of the other business units into the service offering that we have so that we have a complete end-to-end service offering. And of course, we further defend our lanes, meaning that also there we have a higher focus on midsized clients. And also, we are actively looking at a couple of additional inbound lanes that we can develop in the coming years. From here, I will then hand over to Philippe, who will lead us through the results.

Thank you, Chris, and good morning to all of you. As you can see on the highlights on Page 5, our group operating income for Q4 stood at EUR 1.335 billion, an increase year-over-year by close to 10%. At constant perimeter, excluding the EUR 240 million consolidation impact of Staci, our operating income decreased by 8% or EUR 96 million, mainly due to ongoing pressures in North America, lower press revenue tied to the new price concession started on July 1st. While on the other hand, domestic mail remained resilient with less than 3% decline in revenue and our domestic parcel revenue grew by more than 7%. Our group adjusted EBIT stood at EUR 84 million with a margin of 6.3% or at EUR 57.6 million, while excluding the EUR 26.4 million EBIT contribution of Staci. On a like-for-like basis, this represents a decline of EUR 16.5 million compared to last year. In line with Q3, and as Chris has just explained, for the full year, the decline is mainly attributable to press, where the lower revenue has a direct impact on EBIT and to a lesser extent to North America, where our peak management and our productivity gains helped attenuate the top line pressures. Before diving into the financial performance of our business unit, you will note on Slide 6 that our reported EBIT amounts to a negative EUR 222 million, which mainly reflects the EUR 300 million impairment loss on Radial, as mentioned by Chris. Let's move now to the details of our 3 segments. I'm on Page 7 with the Last Mile segment. We see that revenues declined by EUR 24 million to EUR 591 million. In line with Q3, Domestic Mail recorded close to EUR 28 million decline in revenues, of which EUR 21 million are coming from press, mainly due to the new contracts with the editors following the end of the press concession on June 30th. Excluding press, Mail recorded an underlying volume decline of 8.1% for the quarter with a good resilience in advertising mail, thanks to our commercial efforts and contribution of new customers. The decline in mail volume led to a revenue impact of minus EUR 19.2 million overall, though this was partially offset by a positive price and mix impact of plus 5.3% or plus EUR 12.6 million. As a result, the domestic mail revenue decline was limited to under 3% or roughly minus million year-over-year. Parcels Belgium recorded in Q4 an increase of EUR 10.7 million in revenue or plus 7.4%. Parcel volume grew by 6.9% year-over-year, following 8.7% in Q3 and marking a strong uptick compared to the plus 2.9% and plus 2.5% growth in Q1 and Q2, respectively. The strong volume growth was driven by significant contribution of major marketplaces within our customers' portfolio and their strong outperformance relative to overall market growth. This brings our full year 2024 volume growth to plus 5.3% despite ongoing challenging market conditions, including negative consumer confidence index in '24 with further deterioration in the fourth quarter and inflation in Belgium still exceeding 3% and facing continued upward pressure. As our volume grew, growth was mainly driven by large customers. The price/mix only improved by plus 0.6% in Q4. Proximity and convenience retail network revenue decreased by EUR 4 million with lower banking revenues offsetting the indexation of the management contract. And revenues from value-added services remained operationally stable. However, this was offset by the repricing of tracked service, which is now accounted for within value-added services instead of in other revenue as in the previous year. This is the last time we will have to represent this restatement. As from now on, next quarter onwards, we'll have again a clear view of the performance without this reclassification impact. Our personalized logistics revenue at Dyna remained nearly stable in the quarter, supported by -- supported in the mix by a recovery of both one man and 2-men delivery. Let's move now to the P&L of Last Mile on Page 8. In our intersegment and other revenue, besides the restatement impact of the repricing of the state I just explained, we have on that line some high intersegment revenue from inbound cross-border volumes handled in the domestic network from the Cross-Border segment. Altogether, this brings our total operating income down by 3.6% or minus EUR 23 million. On the cost side, our OpEx, including D&A, slightly decreased by 1.9% or EUR 11 million, mainly driven by, on one hand, some higher salary costs as our cost per FTE increased by 3.4% year-over-year following the impact of 2 salary indexation in December 2023 and June 2024, while FTEs slightly decreased despite higher parcels volume and on the other hand, lower cost of sales and lower D&A. To summarize, our adjusted EBIT declined by EUR 11.5 million year-over-year, mainly due to a drop in press revenue, while the resilient mail revenue and the solid parcel volume growth could not fully compensate the increased payroll costs driven by inflation. Moving on to 3PL on Page 9. 3PL revenues increased by EUR 151 million, but declined by EUR 62 million or minus 15%, while excluding the EUR 240 million contribution from Staci's consolidation in the quarter. In 3PL Europe, at constant perimeter, Radial and Active Ants sales were up 14.6% year-over-year, continuing the trend of previous quarters. This growth was fueled by customers onboarding as part of our international expansion efforts and upselling activities targeting existing customers. In 3PL North America, revenue decreased by EUR 69 million. At constant exchange rate, this corresponds to a decrease of 20%, in line with previous quarters as the lower sales from existing customers and the [ in-year ] contribution of new customer wins cannot compensate the client churn we announced last year in the context of economical softness and market overcapacity. Let's move to the P&L of 3PL on Slide 10. Excluding Staci, while the operating income decreased by 14.9%, our operating expenses and D&A decreased by 15.3%, primarily driven by lower variable OpEx in line with Radial's U.S. revenue trends and a sustained improvement of Radial U.S. variable contribution margin rate. Our VCM has increased by around 5.5% year-over-year, reaching a record high in peak period and delivering an impact of around $18 million compared to last year. Year-to-date, this corresponds to a cumulative efficiency gain of more than EUR 45 million. These efficiency gains helped alleviate the top line pressures of minus EUR 62 million, and we see that at constant perimeter, we managed to protect our adjusted EBIT with a limited EBIT decline of EUR 1.3 million, bringing it down to EUR 20.2 million. In terms of reported EBIT, we see that the EUR 300 million impact relating to the impairment on Radial U.S. brings the book value from EUR 912 million to EUR 612 million. Regarding Staci, the EBIT contribution totaled EUR 26.4 million with a margin of 12.3%, clearly highlighting the strategic importance of the acquisition to the group's performance. Before moving on to our cross-border activities, I would like to take a moment to review the performance of Staci and Radial U.S. On one hand, Staci has only been consolidated within the group for 5 months, and we want to provide you with more perspective on its full year performance. On the other hand, Radial U.S. has faced top line pressure over the past 2 years, but we would like to take a step back and put it into perspective the impact of the protective measures that we have implemented. Let's start with Staci on Slide 11. In the first graph, we illustrate 3 years of revenue progression from '23 to '25 with a CAGR of approximately 3% to 5%. This is fully in line with our plan despite a slight slowdown in '24 when Staci was still focused on its [ sale ] process until August as well as some deceleration during the integration phase of their acquisition in the U.S., where the growth trajectory now seems to be back on track. Looking forward beyond '25, we anticipate a gradual acceleration in growth, reaching to its full potential in 2027. This will be driven by cross-selling opportunities between Staci, Radial Europe and Active Ants and also other parts of the group, leveraging the complementary of our B2C, e-commerce logistics and B2B offering as well as our geographical footprint. Also in this graph, we see the EBITDA margin under French GAAP pre-IFRS 16, so excluding the leasing impact. Given Staci local accounting framework, this is the only common metric that will allow us to benchmark several years of performance before and after the acquisition by bpost as we report under IFRS. We observed that the margin was around 12.5% in 2023. And after a slight decline in '24 linked to the transition phase I just mentioned, we expect margin improvement towards up to 13% in 2025. To benchmark, this is an in IFRS framework that we are familiar with. The second graph shows that this local GAAP EBITDA margin translates into IFRS EBITDA margin of nearly 20% for the 5 months consolidated in our IFRS accounts, which outperforms, as Chris mentioned it already, industry margin in logistics industries. In terms of CapEx intensity, we are around 2% to 2.5% of revenues. And finally, it's also worth noticing that part of the rationale behind this acquisition was to unlock value creation at Radial Europe and Active Ants by leveraging Staci's management expertise and bpost competencies in e-commerce logistics. We see strong potential for both growth and profitability in this area as well. Now turning to Radial U.S. on Page 12. For several quarters now, we are delivering the same message. We are experiencing revenue pressure, and we are working on productivity improvement to mitigate the impact on EBITDA and EBIT as much as possible. Taking a step back and looking at several years of data, this is exactly what the following graph illustrates. We can see a continuous improvement in IFRS EBITDA margin, increasing by 9% from 3.1% 5 years ago to 12.1% in 2024. And despite a $390 million revenue decline equivalent to 28% over 2 years, EBITDA has only decreased by $12 million, thanks to a strong focus on cost management and productivity enhancements. As Chris just mentioned, the recent customer departures we have learned recently will put additional pressure on revenues in '25. And despite our commercial redeployment effort targeted to midsized customers in the diversified verticals, we will not be able to reverse the trend in the short-term. Now our focus is not on size, but on profitability and resilience of our portfolio. To put this in perspective with the 3PL U.S. market, some industry reports indicate that the market contracted by approximately minus 20% to 25% in '23. Our case is, therefore, not an isolated one. Additionally, other sources project research show a growth towards 2030, with a high single-digit CAGR. We are, therefore, convinced that we will emerge from this downturn better equipped, thanks to efficiency improvement and a more robust and rebalanced customer portfolio. Finally, in terms of CapEx, we see that compared to Staci, Radial U.S. has a higher CapEx intensity, around 4% to 5% of revenue. Over the coming years, we will work towards bringing this down to the range 3% to 4%, while continuing to refine the profile of our customer portfolio. Moving on now to our cross-border business on Page 13. Cross-border Europe revenue rose by EUR 2.4 million or plus 2.4%. This growth was driven by increased volume from China to Belgium, our expansion efforts in Europe and improving market condition in U.K. This was nevertheless partially offset by Asian consolidators shifting away from untracked services where we are well positioned. Similar to previous quarters, our top line in North America remains under pressure. Cross-border North America revenue declined by EUR 15.3 million or minus 18% as Landmark Global reported its eighth consecutive quarter of year-over-year revenue decline and continued to face commercial headwinds. However, this was partially mitigated in the quarter by strong peak volume growth, further boosted by a volume transfer during Canada Post strike. Overall, our global cross-border operating income decreased by EUR 13 million or 7% year-over-year. As shown on Page 14, our OpEx and D&A decreased at the same time by 5.8%, reflecting lower volume-driven transportation costs, reflecting lower North American volume alongside higher volume shipped to Belgium, which has a positive impact in terms of mix and slightly higher salary costs tied to the ramp-up of our international activities, inflationary pressures to [ an extent ], absorption of unexpected peak volume tied to Canada Post strike. Overall, from a profitability standpoint, the EUR 4 million EBIT decline and year-over-year margin dilution reflects ongoing challenges at Landmark U.S. Moving on to the Corporate segment on Page 15. Both the external operating income and the net OpEx and D&A remained stable despite higher FTE and inflationary pressures resulting from 2 salary indexations. Adjusted EBIT, therefore, remained stable at around minus EUR 10 million. Then let's move to the cash flow on Slide 16. The main items to flag here are the following: Cash flow from operating activities before changes in working capital stood at EUR 160 million and increased by EUR 30.57 million versus last year, mainly reflecting higher EBITDA generation. Change in working capital and provision stood at plus EUR 96 million. This variation primarily stood from a shift in accounts receivable due to the termination of the press concession, which was typically settled in the following year and was still recorded on the balance sheet last year. The net cash outflow from investing activities totaled EUR 63 million, with CapEx reaching EUR 64 million for the quarter. On a full year basis, CapEx amounted to EUR 147 million, aligning with our EUR 150 million guidance. This guidance has been tied up by EUR 30 million from our initial outlook, reflecting the financial discipline amid unfavorable market conditions. This item constitute the variation of our free cash flow and at the level of the net cash outflow from financing activities, that amount to minus EUR 75 million, an improvement of plus -- of EUR 126 million year-over-year, driven by the repayment of our term loan in December last year and higher payment related to lease liabilities in 2024. Chris will bring us to the strategic priorities of 2025.

Thank you, Philippe. As you can see, we faced in the early part of the year a couple of important challenges. First of all, there was in the context of the social unrest in Belgium, mainly driven by an overall social climate with the new government. We had a strike that impacted the company to some extent. And secondly, of course, the churn of a few clients in the U.S., of which one enterprise size client made as well an impact and led to the impairment. That being said, I think that we have also many positive elements that also reinforce for us the confidence that we have developed last year, the right strategy, a strategy that is focused on creating more resilience in our portfolio and also to be focused again and reconnected to growth of this company and profitable growth going forward. And for that, we are now convinced that 2025 will be a year where we will accelerate that transformation of the company to ensure that we have that. What are the highlights that we already have seen this year? First of all, Staci has been, for us, a real good acquisition that we've done, both on the side of the speed that we do today, the integration with the rest of the business, but also in their organic business we see a very good conversion of their sales pipeline in the early months of this year, which makes us very optimistic about the further forecast of this company. Second, we have had the best peak ever. We focused last year on creating more resilience in peak performance end of year. Both in North America and in Belgium, we've seen that we have treated much higher volumes at high quality. So we see that operationally, this company is fit to do the things that they need to do. So we're very enthusiastic about that. And lastly, we launched a couple of pilots, some of them that are now in the evaluation stage. And there, we see as well very promising elements that make us believe that the transversal capability that we have can lead to solutions that are value adding to our clients and also, of course, value adding to the group, and that's where we want to focus the growth of the company. And in that perspective, we also will take a couple of steps now to reinforce the group. First of all, we will integrate the bpost Group management with the bpost Belgium management, meaning as well that I myself will take the bpost Belgium CEO position as of May to have even a more strengthened focus on the transformation of this company. Because, of course, an important part of the bpost Group transformation will be situated in Belgium, and it's important that we put sufficient effort. Also there will be ExCo members being focused fully on the operations in Belgium and on the commercial success within Belgium. And we really look forward to accelerate with that the transformation. And secondly, we had an interim CEO, Craig Simon in U.S., who did an excellent job in managing the company and helping us to further increase efficiency in that company, of course, on a portfolio that is still in transition. But we're happy to announce that Thomas Schmidt will join the company as of the 17th of March. And after the transition period between Craig and Thomas, he will take the helm in Radial U.S., also accelerating there the increase of resilience in the portfolio and the shift towards the mid-market. If we then zoom in on the different businesses that we have. So within the 3PL, we launched a new organization that fully integrates now Staci with Radial Europe and Active Ants. And there we see a lot of capabilities that complement each other. And so we can now offer even more adequate solutions to our clients using the best of capabilities to bring to those clients. And secondly, we also ensure now that we have those same methodologies that Staci has in building up a profitable, resilient client base that is multiclient on a warehouse, that is a capability that we're bringing in on the other sites, ensuring that we have the same resilience on our different warehouses. North America, as said, we will soon onboard our new CEO. And also there, we will accelerate with Radial Fast Track the onboarding of midsized clients. It will take some time. As we have said already 6 months ago, we have a portfolio which still has vulnerabilities towards enterprise sized clients, that will move over time. But what we see is actually that -- with the progress over the coming months, we will see that this risk is going down and that those clients are complemented more and more with smaller-sized clients that give us less vulnerability on that market. In BeNe Last Mile, as said, we will reinforce the leadership in that organization. We will have a strong COO focused on the transformational task that we have within our operations. We will also have a CCO dedicated to that, and I will myself take over from Jos Donvil in the month of May, to ensure also that the transformation is driven through in that organization. We continue to launch pilots, pilots that integrate the full capability, also including the capabilities of the other BUs to ensure that we have a strong offering towards the segments that we don't serve yet, the B2B and the C2C segment. And also, we triple our capacity in lockers to ensure also that we have a 24/7 offering for all our clients. And then finally, for the retail network, we are in preparation of the 8 management agreement to ensure that we have a good offering that we can negotiate with the government in the second half of this year. And on the cross-border side, we also will focus on more midsized clients in the existing lanes to ensure that we can combine our cross-border offering with the last mile areas that we have. So both in Belgium and in Canada, we have a last mile offering, and we see that, that is a very attractive offering for our clients. And second thing what we do is we combine the cross-border activity with 3PL activities. And there we have products like, for instance, launching new markets of certain of our suppliers. So we have today people that use our 3PL capabilities in a certain market and then ask us that in a start-up of a new market that we help them with cross-border to bring the parcels to this market and ensure that they can start before they're investing in real 3PL capabilities in that new market. And finally, of course, we will, of course, open new lanes. We are opening as we speak, new lanes that also are supported by the Staci presence in certain countries in the south of Europe. And so we look forward to a year of transformation. A lot of things will happen in the coming year. You have seen in the figures that we have that we're not yet fully there. But on the other hand, that we're on the right track and that we look forward that this year will prove that we are on the right track and that we will make big steps towards a parcel sized logistics leader in the European and North American market. And I give now the word back to Philippe so that he can give us the outlook for 2025.

Thank you, Chris. You have heard that transformation is a complex and lengthy process, and we cannot expect immediate results. From a financial perspective, 2025 will be a challenging year. While our transformation is well underway, we are also facing external headwinds, both anticipated and unexpected, over which we have varying degrees of control and whose impact we can only mitigate to a certain extent. However, this must not distract us from our objective. We remain resilient and stable course. The contribution of Staci, one of the first visible positive effect of our transformation will help us navigate the challenges ahead. In Belgium, where we are managing the disruption caused by the end of the press concession in 2024 and more globally, the necessary reorganization in response to mail and parcel volume trends and evolving customer needs. In North America, where with a difficult market environment we are also dealing with the unexpected loss of enterprise customers that we will address with the implementation of additional cost-cutting measures and rebalancing our customer portfolio. While the group total operating income is expected to grow by high single-digit percentage, the group adjusted EBIT in '25 is expected to range between EUR 150 million to EUR 180 million, a decrease of EUR 45 million to EUR 75 million year-over-year despite the full year contribution of Staci. For the Last Mile segment, we expect a slight decline in total operating income, reflecting a further EUR 55 million reduction in press revenues due to the new press contract that replaced the press concession as of July 1st. As a result, the year-over-year decline is expected to be more pronounced in the first half of the year before normalization from July '25 onwards. Lower mail revenue from transactional and advertising, driven by a structural mail volume decline of between 7% to 9%, only partially offset by price/mix impact of between 4% to 5%. While the price increases are intend to offset some of the volume decline and inflationary pressures, they cannot -- they can only partially mitigate this combined impact. While on the other hand, parcel revenue are expected to grow, benefiting from an underlying volume growth in the mid- to high single-digit range, complemented by a low single-digit price/mix improvement. However, it's important to emphasize that this does not account for any direct or indirect commercial impact of the strike we faced in January, as Chris mentioned it, since it's still too early to quantify them. As a reminder, in response to our planned reorganization of delivery rounds aiming at aligning with evolving mail and parcel volume, our postal workers went on strike. What began on February 5th with a few localized distribution centers gradually escalated spreading in Wallonia to other distribution center and ultimately leading to shutdown of 3 of our 5 national sorting centers. The strike only ended last Wednesday evening on February 19th. During this period, some parcels volume were redirected to competitors, which beyond this direct impact could have long-term consequences if they do not return totally or even partially to bpost. We have now cleared the majority of the backlog accumulated during the strikes and are very closely with our teams working to restore service quality and rebuild customer trust. Adjusted EBIT margin is expected to range between 2% to 3%. Beyond the impact of structural mail decline, this reflects margin erosion from the new price contracts. As we mentioned last July, with the gradual transfer of volume to AMP is expected to align margins more closely with those under press concession. Nevertheless, in the early stages, we could not absorb the impact of lower press revenue on EBIT, the impact of 2 additional salary indexation of 2% each. Depending on the timing of the salary indexation later this year, this currently represents an estimated cost increase of more than EUR 30 million. Delays in planned -- so the third element is delays in planned reorganization due to the strikes affecting our efficiency improvement targets. These headwinds highlight the urgent need to move forward with our reorganization efforts in Belgium. For the Third-Party Logistics segment, we expect revenue growth of between 20% to 25% in '25, primarily driven by the full year contribution of Staci compared to only 5 months in 2024. On a pro forma basis, Staci is expected to grow by a mid-single digit percentage in 2025. While our European e-commerce logistics activities are expected to remain on their growth trajectory, we anticipate a net revenue decline at Radial U.S. This reflects the impact of recent enterprise customer losses we have just informed in -- of and the contribution from new mid-market customers, which is not yet sufficient to offset those losses. From an EBIT margin perspective, we expect a range of 4% to 6% for the segment. Staci's margin is projected to be between 10% and 12%. At Radial, we will continue to accelerate productivity gains, building on the strong progress we made over the past quarters, and we'll further reinforce this with additional cost reduction measures to help mitigate the impact of top line pressure. At cross-border, we anticipate a mid-single digit organic revenue growth driven by a gradual top line recovery at Landmark in U.S., supported by customer wins as well as continued growth in Europe and Asia with notably the expansion of new lanes. The EBIT margin is expected to remain in the 11% to 13% range, reflecting slight dilution due to a shift of product mix with higher commercial revenue and lower postal revenues. It's important to highlight that our guidance does not yet account for any potential impact from the U.S. tariff on Canada announced on February 4th. The scope and their potential effect are still uncertain and their implementation is currently on hold as negotiations are still ongoing. At the corporate level, we anticipate higher payroll costs due to salary indexation in Belgium, compounded by an increase of FTEs and higher operating expense to support our transformation initiative. Finally, we can expect our growth CapEx to be around EUR 180 million. Growth CapEx remains a key priority to build our future, especially in the context of our transformation. However, given the current challenges, we will deploy growth CapEx investment as in the past, within strict financial discipline and prudence. We are gaining the necessary perspective on the operational, strategic and financial implication of the recent events. We will reflect it in our projection and plan to hold a Capital Market Day beginning of June this year to present our strategy and financial trajectory in more detail. We are now ready to take your questions. Again, 2 questions each will allow -- gets the chance for everyone to be addressed in the coming 30 minutes. Operator, please open the line.

[Operator Instructions] The first question comes from the line of [indiscernible] KBCS.

he first question would be on the BeNe Last Mile. I'm just trying to understand the guidance a bit more there. If I take the midpoint of your EBIT guidance and assume some revenue declines there, there is quite a big step down in the absolute adjusted EBIT of around EUR 70 million, EUR 80 million according to my calculations. I understand, of course, that there is a bit of an impact from the press. I would assume EUR 30 million as what you have seen this year as well. But this still leaves a big gap, especially given that you also will likely have some tailwind from the reversal of the strike impacts last year as the strikes from this year are not yet included. So this all seems a bit like an acceleration in the profitability decline. I'm just wondering what is driving this acceleration? And maybe can you also elaborate a bit on what your current estimate would be on the strike impact in Belgium for this year? Last year, we had EUR 11 million, but this year, it takes a bit longer. So I think the impact will be a bit higher. And yes, just looking forward towards, let's say, 2026 with mail volumes further decreasing, have we come at a bit of a tipping point? What measures are you taking there? So that would be my first question. And just on the third-party logistics, if I look at your outlook and the growth forecast for Staci, I would assume that based on some maths that you expect Radial U.S. again to decline by at least mid-teen levels. I'm just wondering, is this roughly a correct assumption? And if you can talk a bit more about the loss of these big customers and -- which were unexpected, of course? And maybe also on the customer wins of SMEs, is that going a bit as planned? Or is that also lagging? Those would be my questions, please.

I'll start and you complement. So on BeNe Last Mile, indeed, the -- what we expect in 2025 is, again, an impact of the press concession. Also, keep in mind that we are transitioning from one model to another model, and there is always a lag between the moment we see the decrease in volume and the reorganization, the alignment of the cost structure that we could apply. There is always a lag, and this will still heavily weight on the profitability in BeNe Last Mile. The mail will continue to decrease not only in terms of a natural trend, but also the price mix is only 4% to 5%. So the net of the 2 will be negative, while we had in certain previous years an offset from the price to the volume decrease. We will not expect that one. On parcels, the underlying volume is expected, of course, to increase. No discussion on that one. So -- and it indeed, as you rightly pointed out, it does not include the impact of the strike. And I want to come back on the amount that you mentioned of EUR 11 million in 2024. Just want to remind that this EUR 11 million we were referring to a 4-day strike. We are in a totally different scenario right now. And what is really important to keep in mind, there is not only the volumes that we have lost during the strike, meaning that they have been redirected to our competition -- our competitors, but there is or there might be a mid- to long-term impact in the sense that which speed these customers will come back either totally or partially. And that it's really too early to assess it. So if you allow me, I would not make a quick computation saying 11 for 4 days, and you would multiply it for the number of days that we had -- we were in strike this year because it's by far more complex this time since they might have more impact on the midterm on customers. The question on '26 for mail, we do not expect a slowdown in mail decrease. The trend should be the same. Nevertheless, as Chris mentioned it, we are investing to rejuvenate or to add functionalities to the mail product, that remains a very profitable product, adjusting also ourselves to the customer needs. That should also partially help reducing the speed of the decrease. When it comes to your question on 3PL, yes, we expect a decrease of the top line of Radial in the U.S. It would be more than what you were expecting. We would be more in the 10% to 20% range. I think I covered most of it.

Yes. Maybe a couple of things. On your tipping point in mail, I think it's, at this point, still a bit too early. We, of course, are preparing for a new discussion with the government going forward. That being said, today, we still see that mail, although the decline remains for us a profitable activity. That's also why you see that certain specific products where we see also that profitability, which is good that we do some level of defense. That will not say that we're naive, that they will not decline, but that we can slow down the decline to some extent. And of course, obviously, now we have an operational model, which is dense, non-dense, and we think that this is still profitable until the end of the current [ USO ]. And now we are doing the reflections on what would it mean in terms of usual definitions going forward in case that the decline is continued as it said. And likely, that is the case, of course, as we see that the same is happening in -- with other postal operators. Then maybe on the side of Radial on what has happened there. We can, of course, not mention client names, but it is the vulnerability that we have discussed last year. So we said that Radial in the COVID period has taken on board in at that moment a low capacity market, a number of enterprise size clients, which in the moment that they churn actually create for us a cost that we, on the one hand, operationally very good are in reducing, but there are a couple of fixed costs that we cannot reduce that fast. That is part of the portfolio that we have over there. And so we can just mention that one of those enterprise clients that used as a swing capacity just recently stopped its operation or will stop its operation with us. And so that has the impact and that led to the impairment combined with some less relevant clients compared to this situation. Therefore, we are convinced that this transformation that we're doing in the U.S., which is a transformation towards multi-client sites where we operate for midsized clients, is really the right one. We are -- over the last year, we have worked on an operational model that works. We also have worked on a tech stack. We are piloting it as we speak. So we have signed up a number of clients that do the pilots together with us. These are new clients with who we are doing this. And also, we have actually a very extensive client pipeline of potential clients that could be signed up. But this is, of course, something that will be accelerated at the moment that we see that our operational model and our tech stack is doing what it should do and is creating the value that we're looking for. And then we will, of course, full force focus on that in a market where, of course, the change of the President can play in our advantage or disadvantage, something also that we have, something that we will have to look forward for how we manage that going forward. At this point of time, it looks at least that for activity 3PL that we have into the U.S., there might be some opportunities for local brands to further increase it. Of course, other businesses from our side could be challenged based on cross-border tariffs.

The next question comes from the line of Othmane Bricha calling from BofA.

I have a few. First, on Radial U.S. Can you quantify the revenue contribution from new SME clients? And then on cross-border, can you explain more in detail the impact of Asian consolidators shifting away from untracked services, the impact on cross-border division? And how should we think about that in 2025? Also, how do you see the potential impact of -- potential regulation on non-EU parcel volumes? Then on out-of-home parcel delivery, which is an objective for you. I think you have close to 1,300 locations of lockers in 2024. How are you thinking about additions in 2025? And do you see competition heating up in this space? And then lastly, on cash flow for 2025, how do you see working capital given in 2024, I think you had the contribution, if I'm not mistaken, close to EUR 40 million. So how should we think about the impact on cash?

Let me maybe first take the business question and then I hand over to Philippe to complement it with some financial figures. If you look at the revenue contributions for new clients in '25 in Radial U.S., we're very conservative at this point of time given the fact that we're in the piloting phase. So we are optimistic about that, but it's a bit too early to radiate that optimism already in the figures. And why is that? We're piloting as we speak. We see a nice pipeline of clients that could be interested in that. But of course, it's only the success of the pilot that will actually put us full force into starting to onboard these clients. And if you then look at the time lag of these things, now we think it's something where you will see the initial success. So we can probably show to you that this is the right trajectory that we're following. But if you look at financial impact, it will be beyond '25 horizon. A couple of elements you probably will see in the peak of this year if we have some of these clients, but the real impact is actually for a bit later just because of the state where we are in that transformation. If you look at the locker capacity...

You want me to take the financial part on that one?

Yes. Okay.

So I would like to propose you the following answers is that if I compare what we have added as new customers in 2024 was roughly EUR 40 million, which is mostly to midsized customers already, even if it was not under the new format or the new pilot that Chris explained. And considering a prudent deployment or implementation or adaptation of this one, you could make yourself a guess of what we could be -- we have included in the '25 figures.

Good. Then I move to your question around the locker capacity. In terms of number of locations, we more or less double this year. And in number of capacity, we triple this year because we have a higher focus on large-scale parcel machines. And secondly, we also shifted the location strategy towards those areas where we see that clients are really looking for 24/7 solutions. While I would say what has been developed over time was more a testing across the full geography. Now we really have a very focused strategy towards those areas where we have most of the clients that are looking for an out-of-home delivery option, which is not, let's say, equally participated over the geography. And so that's for us important that we focus on that. And yes, indeed, I think that having an out-of-home solution, everybody knows that, that becomes critical if you want to be a good parcel logistics provider. So you see that other of our competitors also are looking at that. I think it only confirms the fact that this is the right direction, and we will, for sure, do everything to be in the lead of the pack in this development.

So there was an additional question on cross-border, which is a trend where Chinese platform move away from tracked product, which is something we were very strong in, into untracked product that we could also offer, but we are not the only one on the market. So meaning it opens more room or give more room to the competition on that one. I think with that, we have covered...

No. Just an additional -- I think your -- there were 2 other questions, one on potential regulations of non-EU parcel volumes. And another question was on working capital. And I know I'm asking a bit too many, but if I can, one, just on Radial U.S., just to help us understand where things are? Can you give us a measure of what is the current warehouse utilization? Is it like below 50%, 70%? I think to have a decent profitability, you need at least 90%, if not 90%. So just to help us understand where you are right now?

On EU, we'll see how it comes. We are -- difficult for us to predict what could happen. On Radial, what I would say, it's -- we are not in the 90% -- would we be in the 90%, I think profitability would be higher than what it is right now. We're also above the 50%. I think you announced a number which is not too far away from reality. But I would also be careful with that one because if we would -- if we are operating a warehouse that doesn't belong to us, which is the case in some of our customers, it could boost, in fact, the utilization of the capacity. And the flip side of the capacity nonutilization is the cost that we have to bear and the revenue that we could build to our customers. When we are operating a warehouse from customers, yes, we use it full, but also the costs are also bear in the price of the customer. So it doesn't fully reflect the impact on profitability and risk that we are bearing on this portfolio. But indeed, we are not on the 90%-ish. We are more in the 70s as you referred to.

And working capital?

I suggest that, that one, you take it with Antoine for the right details after this call if you...

[Operator Instructions]. The next question comes from the line of Othmane Bricha from BofA..

A couple of questions left. First, on the trend that you see in the parcels business. So September was still up double-digits, now at high single-digits. Can you give a bit more color how that trended in Q4 and into Q1 this year and what we should expect a bit going forward? That's my first question. And then a question on Staci. You're guiding for an EBIT margin of between 10% and 12%, if I'm correct, IFRS, that is. How much -- how many synergies are in that number that you foresee already for '25? And then my last question is a bit on the balance sheet and the cash flow. Do you think you will be cash flow positive in '25? And linked to that, the leverage ratio based on your guidance and probably the guidance will be even a touch lower with the strikes in there. Yes, it seems that your leverage ratio will go to 4, 5x. Would it be an issue for your lenders or any covenants ou would have in your bonds?

Okay. So I'll start and the others you are free to jump in, Chris. Yes, parcels growth sometimes goes up and down. It depends quarter-to-quarter. I think it's a bit premature to comment on what was happening in the first 10 or 8 weeks of the year, especially in the context of the strike that we experienced. But we will, for sure, come back in details when we'll be announcing Q1 results. So Staci, indeed, we are guiding between the 10% and 12%. There is...

One second -- you can maybe give a bit of a color on the parcel volumes because we had December and January as well without strikes? So can you give a bit more color there?

Well, what you've seen is that in peak, there was a quite strong increase of parcel size. So there, you clearly are at the higher single-digit level that you were on the peak performance. Of course, if we then see over the full year, that might be a different picture because you also see an effect of concentrating around these sales periods where parcels are. So it's not necessarily a full representation of the reality that we have. But what we see in the market is that we still have on that dimension -- well, I'm not talking about the U.S. market, but in the European market, we see high single-digits that we still see today happening also with our clients, if you look at same-store sales. You still see that the increase is in that range, especially in those ones that can benefit from platform effects.

Which are growing faster than the market.

You're still trending on high single-digit growth. Is that what you're saying?

That's what we see. Of course, if you look at the U.S., there, you have seen a same-store sales, which has been slightly negative over the last period. So that is something that we've seen. Most of the analyst reports that we see on that market is that there is an expectation that, that trend will be reversed soon with some unclear starting dates of when that will happen. At this point of time, in our fulfillment activity of the clients that we have, we don't see yet the shift of the same-store sales trend that we've seen. So there is something where probably in the coming months, we will have to report further what's happening in same-store sales. And as well, of course, when we onboard new clients, we as well can report on what we see happening with those new type of clients.

So on Staci, the 10% to 12% range is indeed what we are guiding on. There is some synergies into it, but they are still limited. They will materialize more in '26, but there are some included into it. Balance sheet...

So we should maybe assume that you have 1% of synergies, let's say, that's a high single-digit to low double-digit EBIT number? Is that the EBIT number we're looking for? Because the initial guidance, I think, was between 11%, 12%. So we came down a little bit. So that -- is then the underlying margin a little bit softer? Is that correct to assume?

No, no, not really. So another way of saying it, the upper part of the range is still the same. So we are still confident in the level of margin that we benefit yielding from Staci. Your question on your balance sheet and the cash flow, yes, the cash flow will be positive in 2025. Indeed, it will have an impact on the leverage, maybe not to the extent that you are mentioning, but indeed, it will have an unfavorable impact. And on your question on the loan, no, there is no impact whatsoever. There is no covenants attached to any leverage or rating or any condition in any shape or form on the bond that we issued last fall.

It also doesn't trigger higher interest payments on the grid?

No. Fixed rate.

Okay. So the cash flow you said is positive in '25, free cash flow in the end.

Yes.

Ladies and gentlemen, there are no further questions. So I will hand it back to Chris to conclude today's conference. Thank you.

Well, we would like to thank everybody in the call for having taken the time to be with us and for your interesting questions. We will hear from you at the conferences we're going to attend in London in March. And please note also that we will release our annual report 2024 on March 26th. And we will soon announce the exact date early June of the Capital Markets Day, and we look forward to stay in touch and our first quarter results will be released in May. Thank you very much, and have a nice day.

Thank you.

Thank you for joining today's call. You may now disconnect.