Reflecting on 2024 with Jan Nooitgedagt
Supervisory Board chair Jan Nooitgedagt reflects on 2024.
Looking back on 2024, how do you feel about the year and PostNL’s performance and financial position?
As anticipated, the external environment remained difficult in 2024, and 2024 turned out to be a disappointing year from a financial perspective. The company had to deal with severe cost pressures in a tight labour market with rising wages. As Supervisory Board we feel the Board of Management has taken all necessary steps and put in relentless effort on adapting operations and offerings with ongoing attention for customers, while improving efficiency and capacity utilisation. Nevertheless, as a response to the financial performance and changing market dynamics we support the Board of Management in adjusting elements of our strategy.
Despite the difficult circumstances, there were opportunities and many things to be proud of, including the progress made in areas such as ESG. PostNL successfully priced €300 million sustainability-linked notes with a term of seven years, and together with trade unions FNV, CNV and BVPP signed an agreement on a new pension scheme for PostNL. Furthermore new collective labour agreements had been reached, a further roll-out of the automated parcel lockers has been implemented and the acceleration of the company's digital transformation continues and is accretive to the results. Also, thanks to well-executed cash and balance sheet management, the outlook for free cash flow and normalised comprehensive income was achieved, and due to the dedication and commitment of our staff, the company had a strong Q4 operationally. The favourable NPS scores reaffirm PostNL's strong position versus competition and show commitment to customers, supporting the strategic direction.
We remain confident in the long-term growth potential of the e-commerce market. PostNL maintained the strong market position. Yet, client concentration was accelerating faster than expected and put further pressure on margins. The record-high number of parcels in the very short peak period came with a less favourable volume distribution than anticipated. Combined with locked-in costs, necessary to absorb peak-day volumes, this put pressure on operational leverage. The results of Mail in the Netherlands clearly show the urgent need to transform the current unsustainable business model at Mail in the Netherlands.
Given the challenging macroeconomic environment, the Supervisory Board fully supports the Board of Management in securing the company’s robust financial position, the measures taken to mitigate the impact from cost increases, a softer-than-anticipated volume development, and the adjustment to investments to align with volumes and strictly manage working capital. Throughout the year we had in-depth and thorough discussions with the Board of Management, in particular on the business and financial performance. The balance sheet as a whole, and as such the financial resilience of the company, was a recurring discussion topic, in conjunction with the company’s credit rating. Naturally, the issuance of the €300 million sustainability-linked notes was discussed with the Supervisory Board.
These were among the topics the Supervisory Board focused on in 2024, and which have had an influence on PostNL’s strategic direction and the sustainable long-term value it creates for stakeholders. And as a Supervisory Board, we were particularly proud of our people and our partners, working day and night to ensure we can deliver mail and parcels responsibly.
What is the Supervisory Board’s view on the future of mail?
The urgent need to transform the current unsustainable business model at Mail in the Netherlands is clearly shown by the results of the segment, whereby the performance in December has to fully offset the losses of the previous months. Underlying trends in volume decline, the shift towards within two day delivery and cost increases are continuing. The future of mail has been the topic of discussion in several Supervisory Board meetings. As Supervisory Board we fully support the Board of Management that actions are inevitable to safeguard a future-proof and financially viable postal service that ensures predictable delivery for everyone in the Netherlands, while also providing job security to tens of thousands of people. More information on this, including PostNL’s request for temporary government financial support under the Dutch General Administrative Law Act to cover net USO costs for 2025 and 2026, can be found in the Future of Mail box in the Our operating context chapter.
How is the Supervisory Board involved in ESG developments?
ESG is an important topic with a number of different dimensions that cover the environment, the responsibility companies have for their employees and their impact on society, and governance. The Supervisory Board believes ESG is a vital element in our strategic development, and will continue to be so. 2024 has been the first full year the ESG Committee has been up-and-running. More information on the scope of the ESG Committee and the meetings held in 2024 can be found in the section Meetings of the committees of the Supervisory Board.
In terms of environmental progress during 2024, PostNL continues to steadily reduce its environmental footprint, and improved the average carbon efficiency of its own fleet compared with 2023. The Supervisory Board discussed the importance of tackling climate change and the environmental goals set by the company with the Board of Management and senior management, including the underlying plans on how to reach those goals. At the same, the Supervisory Board also acknowledges the challenging circumstances the company faces which leads to adjustments in the investments to further reducing the company’s environmental footprint.
With PostNL one of the largest employers in the Netherlands, offering thousands of people the certainty of having a job, a stable income, security and opportunities for personal development and growth, the importance of the social dimension of ESG is clear. The Supervisory Board was closely involved in developments connected to the company’s employment model, as well as the scarcity of labour and absenteeism, the actions taken by the company and the impact these issues have on the company’s operations, such as delivery quality within Mail in the Netherlands. The Supervisory Board was very happy with the outcome of the legal proceedings in Belgium, where PostNL Belgium and its directors were fully acquitted of all charges. As the Belgian labour inspectorate did not file an appeal, the court case is now closed. The Supervisory Board also discussed compliance as a whole, labour conditions along our value chain, employee engagement, and diversity, equity and inclusion, PostNL's culture, and negotiations on and conclusion of the PostNL CLA and CLA for Saturday deliverers.
On the governance side, we remained focused on being transparent, responsible and accountable. PostNL has clear business principles and acknowledges the importance of stakeholder dialogue. The growing prominence of ESG signals a broader societal development in which companies are accountable, directly or indirectly, for more than just their financial performance or only to their shareholders. They are accountable to society itself. This means engaging with stakeholders to find the right balance. This is a process that will take time and will not always be easy.
Through the Audit Committee, the Supervisory Board is continuously updated on the progress the company is making in relation to the reporting obligations of the EU Taxonomy and the CSRD. In relation to the latter, we are very pleased that we can present our stakeholders this first CSRD-proof annual report. A big compliment to many people within the company who worked very hard to achieve this!
Additionally, the Supervisory Board discussed the ambitious and appropriate targets for the Board of Management and senior management to promote gender diversity, as well as succession planning through the Nomination Committee. Furthermore, several members of the Supervisory Board met with the daily management of the Central Works Council, and regular informal sessions were held between members of the Supervisory Board and PostNL employees and senior management, to get their view on the company. The Supervisory Board members also regularly met with the members of the Executive Committee. And, of course, performance reviews were held with Herna and Pim.
Mentioning Herna and Pim, can you reflect on the change in leadership in 2025?
When Herna informed us of her intention to step down as CEO, our succession plan was put into action. Herna is an exceptional leader in a challenging industry undergoing transition. She has transformed PostNL into a leading player in e-commerce logistics, without losing sight of the societal importance of maintaining quality postal services. Under her leadership, PostNL has developed into an engaged and responsible employer for tens of thousands of employees, including deliverers, transport drivers and sorters.
We regret Herna's decision and at the same time we are delighted to have Pim as her successor. Over the past six years, Herna and Pim have jointly, as PostNL’s Board of Management, led this transformation further – focusing on an acceleration in digitalisation, network expansion and growth of our international customer base. Pim brings extensive knowledge of the international market, considerable experience with various stakeholders, and proven focus and expertise in strategy, logistics and commerce. That’s why the Supervisory Board after careful consideration unanimously, and with full confidence, appoints Pim as CEO of PostNL.
In parallel to the appointment of Pim, we have also engaged an executive search agency for the procedure for appointing a new, female CFO. The Supervisory Board in this regard is happy to appoint Linde Jansen as new CFO. With Linde, PostNL again gains an inspiring leader who will form a strong Board of Management together with Pim. She combines strategic expertise with business acumen, executional strength and a people-focused approach. Her proven track record in transformation processes is critical for operating effectively in a sector in transition. The change in leadership will take place after the Annual General Meeting of shareholders on 15 April 2025. Until that date, Herna and Pim will continue their duties as CEO and CFO, allocating additional time for a smooth handover. At the same time, Linde will already join PostNL as a member of the Executive Committee in March 2025, also allowing for a smooth handover of the CFO role.
As Supervisory Board we again stipulate that we regret Herna’s decision, it is truly the end of an era. At the same time, we are delighted to have Pim and Linde and are confident that they will form a strong Board of Management, capable of successfully advancing the company's strategy.
Will the change in leadership impact the company’s strategy?
The decision to appoint Pim – from withing PostNL’s ranks – as successor of Herna reflects the Supervisory Board’s commitment to stability and continuity in the company’s strategy, to be the leading e-commerce and postal service provider, by delivering a distinctive customer experience. As a leading player in last-mile delivery in the Benelux region, the Board of Management is committed to further investments and innovation will remain high on the agenda to support the growth of the e-commerce market. However, the ecommerce sector has changed, marked by rising costs, a tight labour market, evolving consumer behaviour and client concentration, and has become more mature. At the same time, sustainability and working conditions are becoming more important. These developments will result in a more attractive and more sustainable, yet more costly, e-commerce chain. It is a joint responsibility of all players in the chain to address these challenges and strive for a more balanced distribution of value. The company will respond through yield management improvements to enhance customer value, and pursue strategic initiatives such as further building on international opportunities and accelerating the Out-of-Home strategy. As a Supervisory Board, we fully support the Board of Management in the execution of these actions.
The company’s competitive position, competition, and market share were discussed regularly with the Board of Management. In June, we held our regular strategic plan update with the Board of Management and the Executive Committee, with deep dives held on the Out-of-Home and Ecommerce network strategy and the strategy in relation to the large Asian web shops in conjunction with ESG. The Supervisory Board's role is to challenge the establishment of the strategy in a constructive and critical manner. Furthermore, the Supervisory Board was further involved on the integrator proposition, the future of mail as mentioned above and the investor relation strategy. In light of our digital transformation, accelerating digitalisation across the company will enable us to strengthen our competitive position and further develop customer satisfaction, as well as reducing our cost base and attracting new customers. Consequently, PostNL's IT strategy, the speed of digitalisation, (the impact of) artificial intelligence, and cyber security were discussed regularly and fully with the Board of Management, the Executive Committee, and management, and we acknowledge the importance of compliance with the GDPR and digital ethics.
Furthermore, the change in customer and consumer demands and expectations, as well as the speed of change, are regular discussion topics in the Supervisory Board. In 2024 the Supervisory Board was kept up to date and had regular discussions on initiatives initiated by PostNL to further develop customer value and provided with updates on the development of the digital KPIs and investments in digitalisation. An important aspect for PostNL is the net promoter score (NPS), which is used as a key client satisfaction indicator and an important KPI for PostNL. The Supervisory Board was updated on NPS and the NPS measurements within PostNL, and will be kept informed on the outcome of the NPS measurements. And, of course, the Supervisory Board was updated on the potential and the use of AI within PostNL. In relation hereto, a deep dive was organised with internal and external speakers to get a view on the development of artificial intelligence both within and outside of the company.
How do you see the future?
We saw that 2024 was a year of continuing challenging circumstances with rising costs, a tight labour market, geopolitical volatility, evolving consumer behaviour and client concentration. And a further pressure on postal services. 2025 will be about executing on the strategic actions as mentioned above, and taking further actions to safeguard a future-proof and financially viable postal service whilst awaiting the decision from government. We are convinced that the Board of Management will continue to take the right decisions and actions to steer the company forward, and that we have talented, motivated people and management teams in place to tackle any issues that come our way. We continue to learn and adapt and, more than ever, PostNL is ready to deliver.
In closing, I would again like to thank our people for their hard work and commitment in 2024, and to compliment them for the way they are working together to succeed in today's fast-changing environment. I also want to thank our other stakeholders for their trust in PostNL and for their constructive feedback. It helps us to continuously improve the way we deliver on our purpose and our strategy.