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PostNL cuts forecast on inflation and supply chain challenges, shares down

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

(Reuters) -Shares in PostNL plummeted more than 13% on Monday after the Dutch postal firm cut its full-year forecast and reported a 75% drop in core profit, warning that economic uncertainty, inflation and pressure on e-commerce volumes make 2022 "more challenging than previously anticipated".

The company, which delivers parcels and letters across Belgium, the Netherlands and Luxembourg, expects normalised earnings before interest and taxes (EBIT) of 170 million to 210 million euros ($179 million-$221 million) in 2022. It had earlier forecast a normalised EBIT in the 210 million-240 million euro range.

"PostNL's 1Q22 results missed consensus estimates on all fronts," KBC Securities analysts said in a note.

Shares in PostNL, underperforming the European STOXX 600 index, are on track for their worst day since March 2020.

In the first quarter, its core profit came in at 33 million euros, down 75% from a year earlier and below analyst expectations of 41 million euros.

"The war in Ukraine remains very concerning ... bringing additional uncertainty for the overall economic environment," chief executive Herna Verhagen said in a statement.

During the quarter, PostNL's overall volumes dropped 19.5% due to fewer non-recurring volumes and a reduction in cross-border activities.

"The composition of consumer spending might temporarily rebalance towards services, also due to rising prices for some goods, impacting the development in e-commerce," Herna Verhagen added.

The group also expects this year an additional impact of about 5 million euros from COVID-19 lockdowns in China and 15 million euros from rising costs, including further inflationary pressures on fuel and labour.

Belgian rival Bpost beat core profit forecasts on Thursday but warned of a 40-million-euro downside risk to its 2022 guidance from rising inflation and a drop in parcel volumes as COVID restrictions unwound.

($1 = 0.9516 euros)

(Reporting by Olivier Cherfan, Dagmarah Mackos; Editing by Christian Schmollinger and Louise Heavens)