Research Update: Netherlands-Based PostNL N.V. Outlook Revised To Negative On Increased Leverage; 'BBB+/A-2' Ratings Affirmed

We believe that PostNL N.V.'s S&P Global Ratings-adjusted debt will exceed our previous forecast of €350 million-€400 million in 2022, largely because the company spent a portion of cash accumulated during the COVID-19 pandemic for share buybacks in first-half 2022. We also forecast that additional share buybacks in 2023 and elevated capital expenditure (capex) will further increase debt, as adjusted by S&P Global Ratings. As a result, adjusted funds from operations (FFO) to debt will fall short of the 60% threshold for the 'BBB+' rating in 2022-2023 but might bounce back above 60% in 2024, according to our base case, depending on EBITDA growth in the parcel segment and moderation of shareholder remuneration. We therefore revised our outlook on PostNL

...- We believe that PostNL N.V.'s S&P Global Ratings-adjusted debt will exceed our previous forecast of 350 million-400 million in 2022, largely because the company spent a portion of cash accumulated during the COVID-19 pandemic for share buybacks in first-half 2022. - We also forecast that additional share buybacks in 2023 and elevated capital expenditure (capex) will further increase debt, as adjusted by S&P Global Ratings. - As a result, adjusted funds from operations (FFO) to debt will fall short of the 60% threshold for the '###+' rating in 2022-2023 but might bounce back above 60% in 2024, according to our base case, depending on EBITDA growth in the parcel segment and moderation of shareholder remuneration. - We therefore revised our outlook on PostNL to negative from stable and affirmed our '###+/A-2' long- and short-term issuer credit ratings on the company, as well as our '###+' issue rating on the company's senior unsecured debt. - The negative outlook reflects that we could downgrade...

Research Update