Declining historic business ‘insufficiently compensated for’ at bpost

Expected letter volume declines were not offset by Belgian postal operator bpost’s North American parcels business, leading to an overall 2.9% y-o-y fall in operating income to €4,272m in 2023.

The historic business, mail delivery saw volumes fall by 8.1% in the financial year, helping the company to an overall drop in EBITDA of 0.4% to €522.8m. Where bpost’s Belgium division saw overall revenues increase by 3.3% y-o-y to €2,265.7m, the segment’s EBITDA fell by 30% to €195.2m.

Diversification not offsetting historic business lines

Initial management observations were that the declining historic business lines are being ‘insufficiently compensated for by recent diversification efforts.’ This was led in a large part by its rapidly declining E-Logistics North America segment’s revenues and profits, which saw revenues fall by 13.4% y-o-y to €1,438.4m and EBITDA down by 6.5% to €168.4m.

According to the parent company, Radial US and Landmark remain overexposed to‘s insourcing of its logistics operations in the USA. Group CEO Chris Peeters said, “A major transformation is necessary to strengthen our company for the future and that is our priority in the next months and years.”

Though a much smaller business line in terms of revenues, E-Logistics Eurasia saw far greater success in terms of profit and revenue growth. Its recent acquisition Active Ants saw revenue growth of 15.1% y-o-y, helping the segment to a 34.9% growth in EBITDA to €70.9m in the financial year, on revenues of +8.8% to €668.3m. In particular the cross border parcel logistics business saw revenue growth of 10.1% to €349.5m.

2024: M&A on the way?

Bpost’s management have indicated that they will announce their growth strategy later in the year, to include further plans for M&A, as well as growing existing business lines. Peeters concluded that even with the hurdles that the postal and parcel logistics operator continues to face, “Our collective effort and resilience enabled us to achieve both our initial and reinstated [financial results] guidance”.

Amidst the difficulties faced both in domestic and foreign markets, bpost has not done badly in terms of profitability. It remains to be seen how it plans to build away from those historic business interests that continue to weigh on its profitability. 

Author: Richard Shrubb