Full Year 2024 Oesterreichische Post AG Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Othmane Bricha - BofA Global Research - Analyst : Hello. Hi, good afternoon and thanks for taking my questions. I have a few ones, maybe we can do them one by one. First, on the mail reform, can you quantify potential cost savings from moving more mail into the economy service? Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post We're talking about mid to higher single million digit euro figure.

Question: Othmane Bricha - BofA Global Research - Analyst : Okay, thank you. Then on advertising mail, I think you had good momentum in Q4 with volume decline, I think of only 2%. Going, heading into 2025, how do you see volumes and, also pricing for this segment? Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post Yeah, I think on the pricing side we should expect pricing to come in line with inflation, as inflation has come down to around 2.5%. I think that will be roughly the order of magnitude of price changes on the volume side. We have to expect the continued mail decline. I would say in the lower single digit figures given consolidation in the stationary retail and a continued move from retailers to digital advertising at the same time, in particular on the food retailers or leaflets, our (inaudible) products remains a very strong element of their advertising mix and we expect these volumes to be relatively stable.

Question: Othmane Bricha - BofA Global Research - Analyst : Okay. And on the turkey parcels, how do you see volume growth in 2025? And do you expect any continued impact from customer insourcing their volumes? Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post I think we should not expect substantial growth in Turkey. We continue to see a growing market, but we continue to work with large e-commerce platforms that where some of them continue to grow their insourced share, and as a result, I would expect volumes to be somewhat flattish. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 07, 2025 / 2:00PM, POST.VI - Full Year 2024 Oesterreichische Post AG Earnings Call

Question: Othmane Bricha - BofA Global Research - Analyst : No, I'm not talking, sorry, I'm not talking about the bank. I'm talking about the the interest income at the end of the P&L. Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post Okay, it's about our financial.

Question: Othmane Bricha - BofA Global Research - Analyst : Okay. Thank you very much.

Question: Patrick Steiner - ODDO BHF - Analyst : Good afternoon. It's Patrick Steiner speaking. Thank you very much for the presentation also for answering the questions. I would have a few. Let's take them one by one, I would suppose. Firstly, I mean, in 2024, we saw mail volumes declining in most of the categories despite the special effects from from the elections. Can you give us a number for this positive volume effect from the elections in 2024? Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post I think the impact of the election is more on the revenue side than on the volume side as we're talking about registered letters that are used for mail voting, but there has been some volume impact. I would say around 1% is probably a reasonable number.

Question: Patrick Steiner - ODDO BHF - Analyst : Okay. Great. Perfect. The next one is a bit more theoretical, I would say, given that the volume losses in mail, trigger higher pricing per item in the form of tariff adjustments. And this in turn should theoretically again reduce demand and so on. Do you think that the decline or the any physical mail could come early than we would generally assume. It would be just be happy to hear your thoughts on that. Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post I don't think so to be honest. I've been in this industry for around 16 years. The question of is there a cliff ahead of us has been constantly in the room over the last 15, 16 years. I think in reality, we've always seen certain more disruptive changes in individual customer segments, but across the whole portfolio. They have resulted in a more linear decline which in Austria has always been in this range somewhere between 4% and 7%. And given what we see with customers, with the public sector, we would not expect a disruptive development ahead of us. And we have a good diversification of our mail volumes across different sectors, applications, and so on. So I think yes, we have seen some acceleration, but still relatively modest, and we don't see any disruptive changes in the near future.

Question: Patrick Steiner - ODDO BHF - Analyst : All right, thank you. Last one from my side. If I understood this correctly, you increased the 2025 revenue guide slightly, while keeping the EBIT target unchanged. Does this imply a lower margin expectation compared to Q3? Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post I don't think this is an intention to now signal a stronger confidence on the revenue side. What we do in November is typically some rough leaning out of the window for the next year and with increasing visibility, we try to be a little bit more specific. Maybe the starting point, the end of year revenue has made some changes that you have interpreted now, but there is no margin dilution that we expect. Yes, the reality is we are competing in a challenging environment. Market remains competitive. But we also, think we focus primarily on absolute earnings unless on margin guidance.

Question: Hank Slotboom - the IDEA! - Analyst : Good afternoon. Thanks for the presentation and thanks for taking my questions. I've got three if I may. The first one relates to Asia. You said Asian volumes have grown nicely. I did some quick and dirty calculations on the Austrian parcels side, and I see that the average price per parcel has gone up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 07, 2025 / 2:00PM, POST.VI - Full Year 2024 Oesterreichische Post AG Earnings Call And it's quite in contrast to what we see from (inaudible) said, just look at a (inaudible) for example. Can you give me any idea about what the growth was in Asian parcels into Austria and what volume share it accounts for now and how do you manage the yields per parcel? Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post So last, so the total share of, let's focus on large Chinese e-commerce platforms is in the mid to higher single digit order of magnitude. So we're talking about 6%, 7%. They have contributed disproportionately to growth starting from a relatively low base. They are, of course, very sensitive customers, but we try to make sure that we burn decent margins also with these customers and across the board, I think a good market and quality. Position in the Austrian market has helped us to both gain market share, but also to execute price increases given the strong inflation we've had.

Question: Hank Slotboom - the IDEA! - Analyst : Yeah, I'm still here.

Question: Hank Slotboom - the IDEA! - Analyst : (inaudible) as well then my final question.

Question: Hank Slotboom - the IDEA! - Analyst : Okay. Understand REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 07, 2025 / 2:00PM, POST.VI - Full Year 2024 Oesterreichische Post AG Earnings Call Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post There is a positive total cost of ownership. So we are doing it because we take responsibility, but also because it's economically favorable.

Question: Hank Slotboom - the IDEA! - Analyst : Okay, well, that's one of my questions. Thank you very much and have a nice weekend. Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post Thank you.

Question: Marco Limite - Barclays - Analyst : Hi, good afternoon. Thanks for taking my question. So, I've got one question back on the outlook for 2025. So, your outlook for '25 is for, let's say about EUR200 million, which is a small step down year-over-year. But on top of that, you are also guiding for the bank to go to break even. So ,if you normalize for that actually, you are guiding for quite a step down on the line when you exclude the bank division. Now, I was just wondering if you would be able, you're in the position to quantify, again, back to a question that was asked before, but if you're able to quantify the EBIT tailwind in '24 coming from the elections number one and number two also was the tailwind from favorable FXs from Turkey. Just to understand whether the EUR200 million guidance is maybe extra conservative. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 07, 2025 / 2:00PM, POST.VI - Full Year 2024 Oesterreichische Post AG Earnings Call And the second question is on your strategy 4,030. Well, you're showing today, a revenue ambition 4,030. Just wanted to make sure that I'm getting this right, and the idea of the target is also that you are growing a lot more into international expansion. So, it's not the growth is not only coming from Austria, but you want to become bigger, in CE and internationally. Thank you. Walter Oblin - Oesterreichische Post AG - Chairman of the Management Board, Deputy Chief Executive Officer - Mail and Finance, Chief Executive officer - Austrian Post Right, so let me start with the second question. Yes, you're right. The revenue aspiration that we shared with you today implies that we grow substantially across the whole portfolio, that we also grow our regional footprint. Most of that growth we believe can be done organically, but we will continue to look out for opportunities to strengthen our portfolio both in adding additional regions as well as gaining market share within our regions. To the first question, you're right. The ambition is to break even on the bank, so that should provide some uplift on the EBIT side at the same time we will lack the tailwinds on the mail side that have supported us last year. Let me remind you we have three countrywide elections EU election, national parliament election, in terms of Labor elections. Those big nationwide elections will not be present this year. So on the mail side, we have to expect mail volumes to continue to decline as already discussed multiple times in this call, and at the same time the tariff increase that we also shared will not fully compensate and so we will see some decline on mail profits clearly. And overall, also please understand that we're still early in the year and in some areas visibility is not, is still a little bit foggy and we'll try to get more precise and clearer over the course of the next quarter.