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PostNL shares soar as Q1 volumes and profit fall less than forecast

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

By Olivier Cherfan and Augustin Turpin

(Reuters) -Dutch postal firm PostNL on Monday affirmed its 2023 outlook after reporting a smaller than expected drop in first-quarter parcel volumes and operating profit helped by measures to cut delivery costs, sending its shares up nearly 10%.

Parcel volumes at delivery and postal firms such as PostNL, FedEx and DHL-owner Deutsche Post are declining as e-commerce trends normalise and inflation-hit consumers cut back on discretionary spending.

PostNL's finance chief Pim Berendsen said the results were mainly driven by measures taken last year to lower the cost per parcel by creating more efficient routes.

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The company, which delivers parcels and letters across Belgium, the Netherlands and Luxembourg, said these measures included optimisation of routes, staff and fleet, and tight control on indirect costs.

Its parcel volumes fell 6.5% to 81 million items in the quarter, while analysts had expected a drop of 8%.

"The development in parcels was ahead of expectations, as PostNL had initially anticipated a significant volume decline in 1Q23, due to post COVID-19 normalisation, and potential loss of market share," Jefferies analysts said.

PostNL posted a 78% drop in normalised earnings before interest and taxes (EBIT) to 7 million euros ($7.7 million), but beat analysts' estimate for a loss of 2 million euros.

KBC analyst Michiel Declercq said the first quarter would be an important indicator for the group's full-year performance.

PostNL confirmed its full-year guidance for normalised EBIT between 70 million and 100 million euros and free cash flow between 10 million and 40 million euros.

"Overall, we are satisfied with the start of year, which has shown the positive effect from the necessary steps taken to mitigate the impact of the macroeconomic situation and inflationary pressure on our volumes and costs," Chief Executive Herna Verhagen said.

($1 = 0.9056 euros)

(Reporting by Olivier Cherfan and Augustin Turpin; Editing by Himani Sarkar, Milla Nissi and Emelia Sithole-Matarise)