Parcels will continue to focus on the growth potential of the business by improving the balance between volumes, profitability and cash flow. PostNL expects to improve operational efficiency, partly offset by the impact from the tight labour and transport markets and changes in Dutch labour regulation.
At Mail in the Netherlands, the integration of Sandd into the PostNL network will be completed in 2020 and is on track to deliver the promised benefits and synergies. At the same time, the postal market is expected to decline by 8% to 10% in 2020. PostNL will continue its moderate pricing policy. To adapt the organisation to changes in structural volumes, it will continue to focus on efficiency and cost savings.
Accelerating the digitalisation of our service offering will be a key focus area for management in 2020. This also holds for our environmental impact. PostNL’s long-term value creation is connected to the global UN Sustainable Development Goals. We have set ourselves a number of ambitious environmental goals to combat climate change, including emission-free last-mile delivery in the Benelux by 2030.
For 2020, the outlook for normalised EBIT is between €110 million and €130 million (2019: €135 million). Normalised EBIT in 2020 will be negatively impacted by ~€10 million additional expenses caused by the new labour regulation and ~€25 million additional pension expenses (no cash impact).
The free cash flow outlook for 2020 is between €(315) million and €(285) million (2019: €107 million). Free cash flow in 2020 will be impacted by a ~€300 million settlement payment related to the Dutch transitional pension plan.
The following table shows our outlook for 2020 on normalised EBIT and free cash flow.
145 - 165
impact new labour regulation and pension ~(35)
110 - 130
Free cash flow1
(15) - 15
final payment transitional plans ~(300)
(315) - (285)
In relation to the final payment of the transitional plans, we note that the amount and/or timing might change, pending finalisation of discussions with the pension fund. Refer to note 3.5 to the consolidated financial statements.
Highly satisfied customers above the level of 2019 (2019: 27%)
Employee engagement at the level of 2019 (2019: 76%, based on the new measurement methodology)
Delivery quality Mail in the Netherlands at/above the minimum required level of 95% (2019: preliminary 94%)
Delivery quality Parcels, being the share of parcels with an on-time, first-time delivery attempt, at/above 2019