Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oesterreichische Post AG (OERCF, Financial) reported double-digit revenue growth of 17.2% for the first six months.
- The Parcel & Logistics segment showed strong growth, particularly in Turkey with a 76% increase.
- The Retail & Bank segment grew by 25%, driven by bank99's performance.
- The company has a robust cash generation with an operating free cash flow of over EUR145 million.
- Oesterreichische Post AG (OERCF) continues to invest in green transformation, including expanding its electric vehicle fleet and renewable energy initiatives.
Negative Points
- The Mail business segment is experiencing a decline in volume, with a 7% decrease over the last few quarters.
- High inflation in Turkey and the fluctuating Turkish lira pose risks to revenue and EBIT figures.
- Staff costs in Austria increased by 10% due to a collective wage agreement, impacting profitability.
- The Retail & Bank segment's EBIT declined due to migration costs and depreciation from integrating ING-DiBa's Austrian retail business.
- The company faces a challenging economic environment with low growth and high inflation in its operating geographies.
Q & A Highlights
Q: You're now guiding for mid-single-digit growth in EBIT, which implies full-year revenue around EUR200 million. With EUR105 million EBIT already achieved in the first half, why won't we see a bigger step-up in EBIT year-on-year in the second half? How are you seeing volume and profit trajectory in the second half?
A: We have another staff cost increase as of July 1st. Additionally, the strong impact from price increases in the Mail segment effective September last year will be included in the previous year results, and we do not plan further price increases this year. We also need to be cautious about the Turkish lira's potential deterioration, which could affect our reported EBIT due to hyperinflation accounting. Combined with low visibility on parcel volumes, this has led us to a cautious guidance. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: Regarding Turkey, how much of the volumes do you still have on your network from the customer that is insourcing their volumes? Do you believe they will insource all their volumes or keep some with you? Also, can you comment on your market share in Turkey excluding this impact?
A: This important customer still makes up around 25% of our volumes. We do not have full visibility on their plans, but typically, customers establish their own deliveries in urban centers while continuing to work with us in less dense areas. We are confident we will continue to work with these customers on a significant scale. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: Can you comment on the growth of your domestic Parcel business in Austria, excluding the impact of Asian volumes?
A: Most e-commerce volumes in Austria come from international customers. Roughly 1/3 of the growth in Austria is from Asian customers, with the remaining 2/3 from other customers. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: What was the underlying letter volume decline in Q1 and Q2 without the positive one-offs from election volumes? What is driving the higher-than-usual volume decline?
A: The impact of elections is around 1 to 1.5 percentage points. The higher volume decline is driven by increased digitization among financial services customers, such as banks and insurance companies, who are stepping up their digital communication with consumers. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: Can you quantify the staff cost increase on July 1st and overall for H2?
A: We negotiated a collective wage agreement leading to a 6.5% increase in staff costs year-on-year. This includes one-off premiums for the second half of the year, providing taxation benefits. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: Can you guide us on how to think about interest income for the remainder of the year?
A: The put option valuation is roughly EUR50 million. For staff costs, you can work with a 6.5% increase year-on-year. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: What is the driver behind the higher-than-usual letter volume decline in Q1 and Q2?
A: The decline is primarily due to increased digitization among financial services customers, such as banks and insurance companies, who are accelerating their digital communication with consumers. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
Q: How do you expect the Turkish lira's potential deterioration to impact your reported EBIT?
A: With hyperinflation accounting, any substantial deterioration in the Turkish lira will require a readjustment of already-reported revenues and EBIT, which could negatively impact our financials. - Walter Oblin, Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
