Introduction

Our purpose is to deliver special moments. In a world in which everything and everyone is connected we remain the indispensable link between senders and receivers, and the connection between the physical and the digital world. We continue to work hard on our ambition: to be the favourite deliverer for customers, consumers and across society.

Realising our ambition means focusing on the desired customer experience in everything we do. Our culture and behaviour form the basis of how we do business, starting with leadership to provide adequate tools and engage with people to develop PostNL and themselves. It requires the right work environment for people to carry out their duties effectively, stimulating the desired employee behaviour which, together with the quality of our services, impacts the customer experience.

Our company-wide Orange Compass programme helps us steer our organisation in the way we want to do business. This contributes to achieving our strategy to be the leading e-commerce logistics and postal service provider in, to and from the Benelux. It also requires significant investments in our network, accelerating digitalisation, and furthering sustainability across the company. These investments are vital if we are to achieve our financial goals, and strengthen our balance sheet, fund acquisitions, improve our cash position and maximise total shareholder return.

We have identified three strategic pillars that form the foundation for realising our strategic objectives.

Manage Parcels for growth

With a state-of-the-art network that offers customers the highest quality service across the Benelux, we are ideally positioned to capture further e-commerce growth. To safeguard profitable growth we actively steer on balancing volumes and value. Our focus is on further enhancing customer interaction and delivering smart logistic solutions, while managing our network capacity and utilisation of infrastructure. Together, these enable us to enhance customer value while continuing to make efficiency improvements and increase capacity.

Manage Mail in the Netherlands for value

In the Netherlands, we offer senders and receivers a strong nationwide postal network. We focus on reinforcing the value of mail and enhancing the customer experience, and as the designated provider of the universal service obligation (USO) in the Netherlands we work to provide accessible, reliable and affordable postal services. We will manage the expected volume decline through moderate pricing and by making adjustments to the organisation and our processes, enabling us to deliver stable and predictable normalised EBIT and cash flow.

Accelerate digitalisation

Digital transformation across our sector is picking up speed rapidly, and this is increasing customer expectations. For PostNL, it creates a range of opportunities to optimise our operations and re-invent our business model. We want to become the most innovative and efficient e-commerce logistics and postal platform in our markets, by being a data-driven company and offering seamless integration to customers, consumers and operators. By running an integrator model in parallel with our existing physical services, we will be able to grow the range of services we offer our customers, while managing our e-commerce-related networks and those of our partners as one. Achieving this will enable us to deliver unique customer experiences and will help us realise our ambition to be the favourite deliverer for customers, consumers and across society. At the same time, the transformation will generate financial benefits, for example through commercial effectiveness and cost efficiencies. Our ambitious plan to accelerate our digital transformation consists of six building blocks. We are focusing on transforming our core commercial engine, transforming our logistics and operations, and scaling up our platform and digital business models. To support these transformations, we are strengthening our data and IT foundation while driving our digital DNA across the company. More information on these building blocks can be found in a section on Digital Next at the end of chapter 'Customer value'.

Allocation of financial capital

PostNL applies a structured approach towards the allocation of financial capital, based on the following four steps, in order of priority:

1. Investments in our business

2. Accelerate digital transformation

3. Dividend

4. Mergers and acquisitions

In our rapidly changing environment, it is crucial that we invest in our business and digital transformation to strengthen our competitive position. To help us execute our strategy, in 2021 we announced €450 million of additional investments in our network, for example in capacity and infrastructure, automated parcel lockers, and sustainability. This will result in a cumulative investment of € 950 million for the 2022 - 2024 period. As part of our digital transformation, we are planning to invest around €80 million until 2024, of which we realised around €18 million in 2021. The remaining capital will be used to pay a shareholder dividend, and invest in mergers and acquisitions to strengthen our portfolio. Excess cash is spent to compensate for dilution due to stock dividend and/or share buyback, or optimisation of balance sheet and/or debt reduction.