External developments, strategy and outlook

As the challenging conditions are expected to continue into 2023, it is critical to invest in further strengthening of our fundamentals and to secure our position in a dynamic and very competitive market. In 2023, we will further innovate our services, and improve customer value. And in addition to a number of initiatives to improve efficiency, mainly in Parcels, we are today announcing a reduction of 200-300 FTEs in overhead and other measures to reduce indirect costs.

Based on a longer-term upward trend in e-commerce, underpinned by fundamental growth drivers, we have full confidence in our strategy. Our pro-active approach ensures that PostNL is well-positioned to resume the growth trajectory in e-commerce, while maintaining a solid performance at Mail in the Netherlands. Taking into account the benefits from all measures, including the additional plans presented today, a step-up in performance will be visible as of 2024, that will be further supported once the economic environment starts to improve.

Executing on our strategy

Over the last couple of years, PostNL successfully transformed into an e-commerce logistics player. The e-commerce market has strong potential going forward, with unchanged fundamental growth drivers. While PostNL is taking all necessary adaptive measures and focusing on strict cost and cash control in the shorter term, its strategic aims for the longer term remain unchanged.

At Parcels, the aim is to capture further e-commerce growth by balancing volume, value and capacity. The related investment programme is flexible and ensures an efficient and future-proof infrastructure. At Mail in the Netherlands, PostNL aims for mitigating volume decline through a moderate pricing policy and cost savings initiatives, by further improving its sorting and delivery processes. The company aims to further strengthen its competitive position by building on its platform, integrating customers, consumers and solutions through simple and smart digital journeys. The impact of its business activities on the environment and society at large are important for PostNL. Clear and ambitious ESG objectives are fully embedded in its strategy.

Financial outlook 2023 and beyond

2023 is expected to be a challenging year with continued macro-economic uncertainty. Parcel volume projections remain uncertain for the short term. PostNL now assumes a low single digit volume decline for the year, also taking into account some potential loss in market share. Organic costs will increase again, and will not be fully offset by price adjustments in a competitive market characterised by overcapacity. In this operating environment, PostNL today announced a reduction of 200-300 FTEs in overhead and other measures to further reduce indirect costs and improve efficiency, mainly at Parcels. This results in €20 million restructuring provision and related costs in 2023. At Mail in the Netherlands, volume decline is expected to continue at between 8% and 10%.

PostNL is well-positioned to resume its growth trajectory. In 2024, a margin improvement for PostNL of at least 200 basis points is expected. This results from additional cost savings mainly at Parcels, which are expected to be around €25 million in 2024 and reach a run-rate of around €30 million as of 2025. This margin improvement also assumes an upward trend in the development of e-commerce. Further upside is dependent on economic conditions. The company aims to pay dividend that develops substantially in line with operational performance.

For 2023, PostNL assumes:

PostNL Financial performance in € million
2022 - 2023

Below we disclose our non-financial targets for 2023 per value domain.

Outlook on customer value

Providing customer value is a key driver within the company, and we believe that in recent years we have demonstrated the many ways we achieve this. We will strengthen our competitive position by further connecting customers and consumers through simple and smart digital journeys, developing logistic solutions that support e-tailers with their e-commerce business, and will continue to steer on customer satisfaction.

In 2023 we continue to focus on our two customer value-related key material topics. The first is 'customer experience and digital solutions' where we took steps in 2022 to make the transition to NPS, and for 2023 we will report on our NPS performance. Our 2023 target is to maintain our average number one position in our relevant markets. The second is 'accessible, reliable and affordable services' where we have set a delivery quality target for Parcels of 98% and for Mail in the Netherlands of 95%. These targets contribute to our ambition to be everyone's favourite deliverer.

Outlook on social value

We will further develop our labour model, taking the next steps to recruit additional parcel deliverers onto our payroll. We do expect the tight labour market to continue during the year, making it challenging to hire sufficient people in certain parts of the company. It remains crucial to attract, develop and retain the people working with and for us. Our people's engagement will remain a crucial focus area in this respect.

In 2023 we continue to focus on strengthening engagement with our people across the company, making our people feel enthusiastic about the vital role they play at PostNL, and remain committed to making a difference. We have set our targeted employee engagement score at 78% for 2023, in line with our adjusted 2022 score. For 2023, we also aim to visibly improve our absenteeism rate compared to 2022.

Outlook on environmental value

Climate change will remain the key topic that we aim to make strategic progress on towards our long-term targets. We plan to take a further step in cutting our carbon emissions, by continuing the deployment of bio- and renewable fuels in our large and small trucks, steadily growing the electrification of our own fleet, and intensified engagement with our delivery partners on the transition to electrify their fleets.

For 2023, our plans translate to a targeted CO₂ efficiency (for our own operations) of 143 g/km and a share of emission-free delivery of parcels and mail in the last-mile in the Benelux at 24%. We will extend the pilots on effective electrification established in 2022, as the transition depends on important pre-conditions, such as charging infrastructure, sufficient battery range and work comfort, all of which require careful preparation and testing.

The following table summarises our non-financial key performance indicators' actual results for 2022 and targets for 2023.

PostNL Non-financial performance as indicated
2022 - 2023

• 1 Preliminary
• 2 Result reflecting the adjusted methodology