Half Year 2024 Oesterreichische Post AG Earnings Call Transcript

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

Question: Amy Li - UBS - Analyst : So my question was on the upgraded guidance. So you're now guiding for mid-single-digit growth in EBIT, which implies full year and the revenue would be around the EUR200 million mark. With EUR105 million EBIT already achieved in the first half, it implies that EBIT in the second half is more or less in line with last year. And I was just wondering, given the strong growth momentum that you're seeing across the group and the strong parcel volume development. Just wondering any reason why we won't maybe see a bigger step-up in EBIT year on year in the second half? And wondering how you're seeing volume and profit trajectory in the second half? Walter Oblin - Oesterreichische Post AG - Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board I think a very good question. I think some reasons to be on the cautious side. One is we have another staff cost increased as of July 1. Second reason is that we've had a strong impact from price increases in the mail segment effective September last year, which as of September this year will be included in the previous year results, and we do not plan to have any further price increases in the mail segment this year. Again, and I have to repeat the fact that we have to be a little bit cautious on the Turkish lira side, if you look at inflation in the country and Turkish lira development, one has to expect that Turkish lira will deteriorate at some point in time and with the hyperinflation accounting, this technically more or less means a readjustment of EBIT that we have already reported. So I think that combined with general low visibility on parcel volumes and other things has led us to this guidance.

Question: Othmane Bricha - BofA Global Research (UK) - Analyst : First is on Turkiye. You have mentioned a customer that is insourcing their volumes. So on this, how much of the volumes do you still have on your network right now just to gauge how much additional volume loss you may experience? And do you believe that they will insource all of their volumes or they will keep, let's say, half for you and half for them? And also, can you comment on your market share in Turkiye, excluding this impact of insourcing, just to understand the health of your business there? Second question is on your domestic parcel business in Austria. Can you comment on what was the growth either in Q2 or in Q1 for your domestic parcels, so trying to exclude the impact of these Asian volumes? Third, you just mentioned another cost -- staff increase on July 1. Can you quantify that? And overall, what is the staff cost increase that you would have in H2? And my last question, please, just on the interest income line. Can you comment there's, I think, the valuation of your -- of the option on your Turkish business? There's also, I think, cash -- interest on some cash from the deposit at the Ministry. So can you maybe guide us on how we should think about interest income for the remainder of the year? Walter Oblin - Oesterreichische Post AG - Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board Let me maybe start with the last question, interest income. I think there, you asked the question on put option valuation. We're talking about an order of magnitude of roughly EUR50 million. Then on staff costs, we negotiated a collective wage agreement of that -- that leads to an increase in 6.5% -- 6.5% staff costs -- so there is some complication that last year as well as this year, we have used an instrument of one-off premiums for the second half of the year. That gives us taxation benefits on both sides, employer and employee. But I would suggest that roughly you can work with those 6.5% increase. Then domestic growth in Austria, I think we -- you have to be aware that there is -- that most of e-commerce volumes in Austria come from international customers. Volumes from Austrian online retailers are relatively small as Post-dominant American and Chinese platforms but also the large European retailers typically ship to Austria from platforms. So orders are made on German platforms or on European platforms and volumes are shipped from outside. So I just want to say that the term domestic growth is somewhat misleading. But I think roughly you can say that a third of the growth that we have seen in Austria is coming from Asian customers. So substantial, but two-thirds coming from other customers. And then I think on Turkiye, we still -- this important customer that has continued to insource still makes up some order of magnitude of around 25% of volumes of our scale.

Question: Othmane Bricha - BofA Global Research (UK) - Analyst : And just a follow-up on the staff cost increase. You mentioned -- you said to take 6.5%. Is that on top of the wage increase that's kicked off in July 1? Or that is on aggregate? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 1:00PM, POST.VI - Half Year 2024 Oesterreichische Post AG Earnings Call Walter Oblin - Oesterreichische Post AG - Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board So the 6.5% is more or less year on year. So if you take Q3 versus Q3 last year, this is roughly the order of magnitude here.

Question: Marco Limite - Barclays - Analyst : The first question is on the letter volumes. So you have reported 7% letter volume decline this quarter and the previous quarter. But both quarters, if I'm not wrong, had some positive one-offs from election volumes. So wondering what would have been the underlying, let's say, volume decline in Q1 and Q2 without elections? And yes, what you think is the driver of this higher than usual or higher than historical run rate that the volume declined in Q1 and Q2? And the second question, just a follow-up to the previous question. Just wondering what would have been the parcel -- in Austria parcel volume growth when excluding the Asian retailers? Walter Oblin - Oesterreichische Post AG - Deputy Chief Executive Officer - Mail and Finance, Member of the Management Board The second question I tried to answer earlier is that it's roughly one-third of the growth. So if you take the 15% growth that we've seen roughly in Austria, then one-third of this growth is being generated by Asian customers. And the question on mail volumes is, I think the impact of elections is in the order of magnitude of a good percentage point. So at 1 to 1.5 percentage points in decline if you want to adjust for the impact of the one-off election volumes.