Österreichische Post AG (POST) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to today's Earnings Call of Austrian Post Q1 2026 Results. I am your operator for today. [Operator Instructions] And the conference is being recorded. [Operator Instructions] We are looking forward to the presentation. And with having said this, I hand over to the Head of Investor Relations, Harald Hagenauer.

Good afternoon, ladies and gentlemen. Welcome to this Conference Call of Austrian Post. Today, we would like to discuss our Q1 results. Here with me in the room is Walter Oblin, our CEO; and also our CFO, Barbara Potisk-Eibensteiner. I would like to hand over to Walter. Please go ahead, sir.

Good afternoon, ladies and gentlemen. It's a pleasure to have the opportunity to present to you our Q1 results. Let me start right away on Page 2. I think the summary is the environment continues to be quite challenging, both on a macroeconomic level as well as for the postal industry Europe-wide and also in Austria. The market environment, on the one hand, provides some positive perspective as the longest recession after the Second World War is forecasted to be over. At the same time, geopolitical uncertainties and the Middle East conflict weighs on the macro economy and tariff measures and different regulatory proposals, both on the EU level as well as on a national level, have the potential to disturb e-commerce markets. The 2 mega trends dominating our industry for the last years are continue to be present and continue to dominate our industry. Number one, digitization of communication with declining Letter Mail volumes and direct mail as a result. And second, e-commerce continues to fuel growth in parcels, but this -- all this in a quite competitive and volatile environment. Page 3 gives a summary of the key developments and of the key topics in Q1. In Austria, an accelerated decline of Letter Mail for this single quarter of around 9%. We do not expect this figure for the full year, but we have seen a rise in Letter Mail decline over the last roughly 18 months. Second, there is a good parcel growth in a large part of our portfolio, both in Austria as well as in CEE, 10% and 9%, respectively, a little bit less in Turkiye, but also here on the positive side, we are in growth mode again despite a regulatory burden given that the threshold for imports for customs for Chinese Asian parcels has been taken away, and there is a substantial reduced inflow of Chinese parcels into Turkiye. So in this context, the 2%, I think, are quite okay. On the revenue side, again, here, the positive news, revenues are up by 0.9%. This despite what I said, happened in Turkiye and this despite the quarter where we did not have any revenue from our telecommunications business, neither from the old corporation, which ended in December 2025, nor from our new telecom offering, which only started on April 1. On the earnings side, the quarter was, as expected, weaker than last year. EBIT down EUR 7.7 million -- sorry, EBITDA down EUR 7.7 million at EUR 93.8 million and EBIT down EUR 11.6 million, basically 3 main drivers. One is the silent period in telecommunications. Second, a challenging market environment, in particular, competitive environment in Eastern Europe. And third, the already mentioned absence of Asian volumes in Turkiye. Three highlights to mention on the positive side. One is the closing and initial integration of EU shipment, an e-commerce fulfillment company based in Bulgaria with a presence across Eastern and Southeastern Europe and including also in selected Western European markets. We feel very positive about this company. Second, a very good quarter of bank99 with an -- with a profit of more than EUR 2.5 million in the first quarter. And third, the successful start of YELLLOW. YELLLOW is our telecommunications brand that we launched on April 1 with an MVNO offering, which has been well accepted in the first month. Page 4 gives you the usual overview of Austrian Post. One thing to remind you that as of this quarter, we are switching to a somewhat modified segment reporting. We have decided, given that the bank99 now has reached a level of maturity, that we want to present it as a stand-alone segment. Accordingly, we have taken the retail, the Austrian Retail segment or retail element of the segment and included it in the Mail segment, which we now have named Mail, Retail & Services. In the middle, e-commerce and logistics is mostly only a renaming. We think that e-commerce and logistics better reflect what we are doing here, given that we are a partner for e-commerce companies on the logistics side. Page 5 summarizes the strategy we decided and communicated a year ago. Our vision is to be a leading logistics and services group, reaching more than 150 million people in Austria, Eastern Europe, Turkiye and beyond. Three core elements: one, post and beyond in Austria. We want to be a strong post in Austria, but beyond that, offer key services for consumers, including financial services, telecommunication services and potentially more in the future, all integrated into one consistent ecosystem. Second, international e-commerce. Our aspiration is to be one of the even -- or maybe even the leading e-commerce partner in Austria, Eastern Europe, Turkiye and beyond for e-commerce retailers, be they small, be they large. And third element, one group, operationally excellent. This means that we want to stronger harmonize across the group, stronger integrate, stronger exploit efficiencies with the aspiration to be operationally excellent in whatever we do and to be a leader in the application of modern technologies. Let me now go through the core elements of the strategy, starting with the Austrian business. And here, again, starting with the incumbent Mail business. Letter volumes continue to decline now for the 17th or so year. This first quarter at a rate of 9%. In total, we've lost around 60%. Similar development on the Direct Mail side with a relatively stable development on unaddressed mail, but a stronger decline on addressed mail. Revenues overall still declining substantially less than volumes. Mail remains a large and profitable cash-generating business with revenues of beyond EUR 1 billion last year. Also, our tariffs shown on Page 7, remain moderate if compared across Europe with other countries. So I think there's also some leeway still some headroom for further price increases without pricing ourselves out of the market. We have increased prices on the standard product May last year on other products, so registered mail, international mail, Direct Mail effective January 1 this year. And so, I would still expect some further price increases on the standard product or on the core letter product still this year in the second half. So much on mail. Moving to our bank. bank99 is developing quite well. It's well accepted in the market, constantly receives positive feedback from different customer service, second year in a row, best customer service among retail banks in Austria, which I think is remarkable given that the bank is only 6 years old and has a quite small marketing budget compared to the main retail networks such as the Sparkassen sector or the Raiffeisen sector, 300,000 consumers, EUR 4.2 billion balance sheet. Last year, breakeven with an income of -- with a net income of EUR 1.5 million. A very good start into the first quarter with an EBIT of EUR 2.6 million. This includes a smaller one-off, but still we are on a good record of expanding our profit also for the full year. We will expand our asset offering, so our offering of stocks and ETFs. So the ability to trade to buy and sell single stocks as well as ETFs in the coming months. We are working also on a focused SME offering to be launched in the second half of the year, and we are constantly working on automation and cost efficiency. Our self-service network is being expanded month by month. We are soon reaching the -- or surpassing the threshold of 3,000 postal access points. With that, we have increased the number of postal access points by more than 60% over 2.5 years. And this self-service network is well accepted by consumers. Last year, 35 million transactions, I think, is a number that speaks for itself. Page 10. Our mobile offering has been launched in time, in budget on April 1. The idea is similar to the bank. We do have a strong postal ecosystem consisting of a brand of a retail network of digital channels and offering customer frequency that we can use to cross-sell and to add further services. This is the plan for YELLLOW, the brand we launched on April 1. YELLLOW is an MVNO offering, which is running basically on the network of A1, the Austrian telecom incumbent. We offer a very focused, transparent, simple offering consisting of mobile phone rates, hardware, Internet rates and a few additional packages. The positioning is to offer a quality network at quite affordable rates, combined with consulting and service close to customers in our retail network, which is the densest retail network in Austria in the telecommunication sector with 340 postal branches and 1,300 postal partners. This has -- this offering has been received well on the market. We are fully on plan with customer acquisition rates over the first month. And this despite a very price aggressive competition given that there is a battle between 2 other mobile companies going on in Austria. But our positioning here with the retail network as the main sales channel has proven very effective in this context. Moving to Page 11 to our e-commerce and logistics business. We have expanded our presence, now operate in more than -- yes, in 15 countries with last-mile networks in most of these countries and with now the acquisition of euShipments, also a logistics and e-commerce fulfillment offering for cross-border e-commerce in Eastern Europe. The idea is also to expand this to Austria and Turkiye and also selected Western European markets step-by-step in a CapEx-light business model. Let me start going through the geographies, starting with Austria on Page 12. Again, 10% growth in Austria, quite strong momentum. We are gaining market share and gaining new customers on an already strong level -- against an already strong level in 2025, including customers such as Vinted, which is the European category leader in the secondhand C2C business, quite strongly growing business segment, also revenue-wise with 9.5%, a good revenue growth. Moving to Eastern Europe. Here, light and shadow, good volume development with plus 9%. EBIT-wise, we are not satisfied. The competition is quite price aggressive, in particular from the side of new entrants on the parcel locker side. But we see that in some markets, this competition is not sustainable, such as in Hungary, where 1 competitor has announced to exit and where we have engaged in a transaction, which is still not closed yet as we are still collecting the necessary approvals. So overall, a good revenue development in Eastern Europe, but not satisfying profitability in the first quarter, and we are addressing both operational as well as strategic levers to get to a profitable -- get back to a profitable growth path. Moving to Turkiye on Page 14. Here, as I said, a regulatory discontinuity with very restricted import rules for parcels from Asia, which have led to a drop of volumes of around 5%. Still, the company was able to achieve a net growth of 2% and revenue-wise, including also price increases and inflation, plus 20%. Of course, there is inflation in these numbers. So overall, again, challenging quarter in Turkiye, but we are looking more confidently in the next quarters. Page 15, a short glance on euShipments.com. The company is based and founded in Bulgaria. Bulgaria will -- is targeting revenues of about EUR 55 million for the full year. We have fully consolidated the company as of March 1, see good profits, good growth, good customer satisfaction, are trying to integrate this where reasonable and where necessary with Austrian Post Group are trying to use the platform of Austrian Post in other markets to also support geographic expansion and think that this e-commerce, logistics offering will help us growing profitably in Eastern Europe, but also in Austria and in Turkiye. So much as an overview on the most important developments in our strategy 8 weeks after we communicated the full year results. And I'm now handing over to Barbara, who will give you more details on our financials.

Thank you, Walter. Also welcome from my side. In line with our guidance we gave with full year results, Q1, we expected weaker. And yes, it's weaker, but we are showing some growth on the revenue side, about 1%. As Walter just mentioned, with March, we are also including the revenues of -- in shipment, but we did another fully consolidation of Agile Actors. It's our IT company in Greece. I will come later on because this has also some impact on our balance sheet. EBITDA and EBIT are in line with our expectations, but of course, they are down by EUR 8 million on the EBITDA side compared to Q1 2025 and also down by EUR 12 million compared on the EBIT side. We are still showing a stable balance sheet with low debt. Financial debt to EBITDA is showing up by 0.3x. And the logistics equity ratio is 27%. I will also do some comments on this later on when we are going through the balance sheet. We were able to produce a strong operating cash flow. Also there, I will spend some words later on. Walter already mentioned the change in our segment reporting. We already did, I think, a first intro on this with the Q4 results. So we have now a clear result reporting on the bank99. And I think this also helps you to go on with your estimates in a better way. If we are coming to Page 18, Walter already mentioned the situation on the market, the tough situation on the digitization side on the main business. And we also saw that the pricing measures could not offset the volume declines there. We also lost revenues on the telco side due to the sudden period. This we will be able to recover within the coming quarters. On the e-commerce, logistics side, we really had a great Q1 in Austria with a strong growth of nearly 10%. In Turkiye, we just saw the volume development. But due to the inflation and FX in total, we see minus 2.7% on the revenue side in euros. See, there we had a very weak Q1 in 2025. And we see that there, the revenues are coming back, and we see there good growth on the parcel side, on the volume side and also on the revenue side. Bank, also Walter already commented, why are the revenues lower is due to the lower interest rate level we saw in Q1 2026. Coming now to the earnings. We already went through. So what do I want to mention there? We are lacking the telecommunication income. So we saw the revenues of about EUR 7 million we lost and it's falling through, I would say. On the other hand, on the e-commerce side, we have had a good profitability in Austria on the parcel side in Turkiye and also in CEE, there's room for improvement as competition was really intensive there. The bank, EUR 2.6 million of EBIT. That's a really good improvement compared to last year, but there is also onetime positive effect of about EUR 0.8 million. So please do not take EUR 2.6 million times 4 for the full year EBIT of the bank, it will be a little bit lower. But the bank is really doing well. Coming to corporate/consolidation. So there, we see a minus of EUR 5.7 million. It shows that the cost savings programs we are running at the overhead side and the focus there. Going now into the detailed profit and loss account. I only want to have a short discussion on the financial result. There we have the negative impact of the valuation of the put option for Aras Kargo. We had there a valuation effect of minus EUR 8.4 million in the financial result 2026. In 2025, in the first quarter, we ended up with plus EUR 4.4 million. So you're seeing there we have a quite high swing. This is what we cannot really steer. It's really depending on inflation and FX in Turkiye. Also, the tax rate is suffering due to this because this valuation effect, we're not able to take as a tax deductible. Going now into more details on the segment side, Mail, Retail & Services. There you see the development of the different segments within this segment. And what I want to address is we saw that on the Direct Mail and Media Post the main decline in the addressed segment and in the unaddressed segment the business was better. The EBIT of this segment suffered due to the loss of telecommunication income, where we are trying hard to come back to levels of before. On the e-commerce and logistics division side, I think everything was said. Profitability is suffering out of Turkiye and CEE and good profitability on the Austrian side. There, we are also showing in-Group Logistics Solutions, the result of euShipments, which amounts for about EUR 5 million on the revenue side and about EUR 0.8 million on the EBIT side. Division bank, I think everything said. Then coming to the balance sheet. You can see a decrease on the equity side compared to end of 2025. It's coming out of the put options we got out of the acquisition of euShipments. So it's the liability we booked against equity and for Agile Actors and euShipments. So for both together, it accounts for about EUR 75 million. And on the other hand, I think the balance sheet is quite stable. Financial debt is at EUR 124.2 million and equity ratio still amounts for 27% for the logistic part. Coming now to operating free cash flow. Our cash flow from operating activities amounted for about EUR 79 million. We did some investments. It's a little bit more than EUR 20 million. The most -- the biggest spend we did in the first quarter of 2026 was the acquisition of the euShipments and we had a payout of EUR 59.1 million. So free cash flow before money market investments was EUR 8.7 million. So where did we spend our money in the first quarter, mainly in Austria for our expansion of the logistics center in Salzburg-Wals, also for some e-vehicles and on the other hand, also for our out-of-home business internationally. Now I would like to give to Walter for the outlook for 2026.

Thank you, Barbara. Let me close with the outlook for the full year. I think as a summary, a stable outlook, a rather confident outlook that assumes that we can catch up most of what we are behind the prior year in Q1 over the next 3 quarters. In terms of market environment, of course, there is some uncertainty, but the core trends of a declining mail volume and increasing -- still increasing e-commerce markets, the market environment remains pretty stable. On the parcel side, we have some uncertainty from different levies on parcels, mostly from non-EU countries, which are still not 100% clearly defined. So we will have to see how this affects parcel volumes. On the revenue side, for the overall group, we expect a slight revenue increase similar to what we've seen in Q1, potentially a little bit above that. This will be the net of a decline in mail in the mid-single-digit range. So a higher volume decline offset by certain price effects, a revenue growth on the e-commerce side in the upper single-digit range and a slightly growing income also on the bank side. So overall, we expect growth for the full year. We continue to invest, as Barbara said, with a CapEx guidance of EUR 140 million to EUR 160 million with our Salzburg Logistics Centre as the main big project included here and the expansion of our electric fleet as the other big investment program -- part of the investment program. And on the earnings level, the target is to achieve earnings that are in line with the last years, with the bandwidth of the last years, of course, depending on the macroeconomic environment and on the Turkish lira-euro exchange rate. But overall, as I said, we do expect to catch up some of the decline that we've seen in EBIT versus last year over the next 3 quarters. So with that said, I would like to thank you for your attention, and we are now happy to take your questions.

[Operator Instructions] And there is Ingo Schmidt.

This is Ingo Schmidt from Montega. First of all, congratulations on a solid set of operational results in Q1. My first question is about Aras Kargo. You know that the drop in Asian import volumes is a temporary effect due to the new custom rules. Based on what you see now, when do you expect these volumes to recover? Are you already seeing a stabilization in the second quarter? And secondly, on CEE and SEE, you mentioned continued margin pressure in the region. Could you maybe explain a bit more how euShipments can help over time? Should we mainly think about higher parcel volumes? Or can services like fulfillment also help to support margins going forward?

Well, thank you, Ingo, for your questions. On Aras Kargo, as you said, there has been this discontinuity on the custom side. We do expect Chinese volumes to find other ways into Turkiye and part of the volume to be over time absorbed maybe by Turkish e-commerce platforms, which are in, to some extent, anyway in the hands of large Chinese e-commerce groups. Overall, we are optimistic that both revenue-wise as well as EBIT-wise, that the next 3 quarters will be better than the first quarter. There is a variety of initiatives underway, in particular, focusing on SMEs, which where we see potential for Aras Kargo. And what we've seen in April confirms that we seem to be in a good way. On CEE, I think there are also a number of initiatives ongoing. You're aware that there is one strategic project, which is the acquisition of an exiting competitor in Hungary, which should help if this acquisition goes through. There are a number of initiatives on the operations side, but also initiatives which go in the direction of a stronger integration across the group, exploiting synergies between companies that in the past have more acted on a stand-alone basis where we're now trying to stronger integrate across the group, exploiting synergies on the cost side, but also presenting the group stronger as a region to large international customers. And again, here, the volume development in the first 3 months makes us optimistic that volume-wise, we are on the right way.

Ingo Schmidt, maybe I can answer this question. So what we are focusing together with euShipments to roll out the concept of euShipments in countries where we are already. So this means going to Turkiye and other countries where we want to do fulfillment for the customers. But what we want to avoid is only shifting parcels to Austrian Post and subsidiaries because then this would put the business model of euShipments at risk. So this is not -- of course, it will help our entities with some volumes, but it's not a focus to ship every parcel coming from euShipments with our entities. So it's more the rollout of the fulfillment business and also getting new customers in these countries.

I wish you continued success for the rest of 2026, and of course, have a great weekend.