Research Update: Netherlands-Based PostNL Upgraded To 'BBB+' On Lower Debt And Sustained Financial Discipline; Outlook Stable

PostNL achieved stronger-than-expected S&P Global Ratings-adjusted EBITDA of about €406 million in 2020, and we expect this to spill into 2021 supported by the positive non-recurring volume and price/mix effects in parcels and mail during COVID-19-related lockdowns, as well as synergies from the Sandd acquisition. PostNL's FFO-to-debt ratio, as adjusted by S&P Global Ratings, increased to 102% in 2020 on the back of strong cash generation enabling material reductions in debt. Robust operating cash flow will likely continue this year, compensating for the elevated capital investments and resumed dividends, while containing adjusted debt levels. This translates into adjusted FFO to debt of more than the 60% we view as commensurate with a higher rating. We therefore raised our ratings on

...- PostNL achieved stronger-than-expected S&P Global Ratings-adjusted EBITDA of about 406 million in 2020, and we expect this to spill into 2021 supported by the positive non-recurring volume and price/mix effects in parcels and mail during COVID-19-related lockdowns, as well as synergies from the Sandd acquisition. - PostNL's FFO-to-debt ratio, as adjusted by S&P Global Ratings, increased to 102% in 2020 on the back of strong cash generation enabling material reductions in debt. Robust operating cash flow will likely continue this year, compensating for the elevated capital investments and resumed dividends, while containing adjusted debt levels. This translates into adjusted FFO to debt of more than the 60% we view as commensurate with a higher rating. - We therefore raised our ratings on PostNL and its senior unsecured debt to '###+' from '###', and affirmed the 'A-2' short-term rating on the company. - The stable outlook reflects our expectation that PostNL will pursue a disciplined...

Research Update