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PostNL cuts profit forecast, plans price increases to cope with higher costs

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FILE PHOTO: A PostNL employee is seen at the entrance of the UK Mission to the EU

By Elitsa Gadeva

(Reuters) -Dutch postal company PostNL on Monday cut its 2022 earnings outlook for the second time this year and said it would raise prices in 2023 to combat soaring costs and waning e-commerce volumes.

Postal operators, who benefited from a surge in online shopping during coronavirus lockdowns, now face higher labour and fuel costs and falling parcel volumes as consumers cut spending to cope with inflation.

"Inflation puts pressure on consumer spending, which has meanwhile rebalanced towards services since society reopened. This impacts parcel volumes and reduces predictability," CEO Herna Verhagen said in a statement.

Verhagen said the company would combat the higher costs through price increases, as well as improved efficiency and productivity.

The company has also been affected by labour shortages in the Netherlands, pushing it to offer higher wages and permanent contracts for its delivery workers.

CFO Pim Berendsen told analysts in a call the company planned to increase prices in its e-commerce business from next year to help it to absorb the rising costs.

"The bigger element of the organic cost pressure is in the e-commerce segment rather than the mail segment," Berendsen said.

He added the organic cost increases could not be offset by productivity gains alone, and would therefore lead to higher pricing throughout the industry.

PostNL, which delivers parcels and letters across Belgium, the Netherlands and Luxembourg, forecast full-year normalised earnings before interest and taxes (EBIT) of between 145 million and 175 million euros ($148-178 million), against its earlier outlook of 170-210 million euros.

It also reported an 84% fall in its second-quarter EBIT to 10 million euros, missing analysts' average estimate of 12 million in a company-provided poll.

PostNL's shares opened around 5% down before reversing course to rise 3% in the morning trade, which KBC Securities analyst Michiel Declercq attributed to the price increase plan.

The stock was trading 0.9% up at 1255 GMT.

($1 = 0.9821 euros)

(Reporting by Elitsa Gadeva in Gdansk; editing by Milla Nissi and Jane Merriman)