EU TRANSPORTATION: PostNL | 1Q Results
(PNLNA: NR/BBB- stable) (equities -4%)
It was asked about this article (https://tinyurl.com/4mjt8886) which details Bol.com — the largest e-commerce platform in Netherlands (owned by Ahold Delhaize) and PostNL's largest parcel client — expanding its own delivery capabilities (similar to what Amazon did). Co played down the impact, noting Bol was only considering servicing 1-3% of volumes internally and that it would be difficult to scale. It comes in the face of PostNL preparing to price higher and take a volume hit (starting in Q2) - part of its recently announced strategy. We have no firm view on the 31s but near term catalyst look skewed negative. That could turn if the government agrees to financial support (which PostNL has formally requested). Reminder Daniel Kretinsky, who has recently bought out Royal Mail & GLS owner IDS, holds 30% and could buy out remaining for a ~€350m (equity at all time lows). CoC at par will not help (€103 cash px) but Daniel's EP group will likely commit to IG ratings and may not necessarily add any debt.
Q2 results come 4th August.
- Revenue of €782m, +2% y/y. Parcels +3.5% (volumes +2%), Mail -3% (volumes -7%)
- Market share stable, but expected to fall in 2Q as price hikes kick in
- International parcel volumes +19%, domestic -2.4%; international made up ~25% of last years volumes and is mostly Chinese e-comm
- EBIT loss €15m (vs €9m loss LY), still pressured by wages
- FCF loss €33m (vs €7m loss LY), on adverse WC swings
- Net debt ~€547m; gross debt €967m, cash €420m
- Guidance unch for similar EBIT to LY, implying ~2.4x net/4.0x leverage
- FY FCF guidance unch at -10 to -50m down from €12m LY
- includes guidance for higher capex (€100m LY) partly on 'efficiency measures' costing ~€15m
- Annual dividend still guided to (7c or €35m last year; not all cash-paid)
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Historical bullets
AUSSIE 10-YEAR TECHS: (M5) Strong S/T Bounce
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.915 - High Apr 4
- PRICE: 95.860 @ 16:42 GMT Apr 04
- SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.640 - 1.0% 10-dma envelope
Aussie 10-yr futures extended a recent strong bounce through to the Friday close, putting prices through the top end of the recent range. The confirmed breach of 95.851, the Dec 11 high on the continuation contract, reinstates a bull cycle and focuses attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
USDCAD TECHS: Bearish Structure
- RES 4: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 3: 1.4415 High Apr 1
- RES 2: 1.4308 50-day EMA
- RES 1: 1.4242 High Apr 4
- PRICE: 1.4196 @ 17:10 BST Apr 4
- SUP 1: 1.4028 Low Apr 3
- SUP 2: 1.3986 Low Dec 2 ‘24
- SUP 3: 1.3944 61.8% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD rallied Friday, but remains lower on the week after Thursday’s downleg. The move down has confirmed a clear reversal of the bull cycle between Sep 25 ‘24 and Feb 3. Price is through a key support at 1.4151, the Feb 14 low. This signals scope for an extension towards 1.3944, a Fibonacci retracement. On the upside, key short-term resistance is seen at 1.4308, the 50-day EMA.
CANADA DATA: Unexpected Jobs Contraction Boosts Implied April BOC Cut Chances
Canadian employment unexpectedly contracted in March, falling by the most since January 2022 at -32.6k (+10.0k expected, +1.1k prior) in a sign that the trade war with the US is spilling over increasingly into the "hard" data. The unemployment rate ticked up 0.1pp to 6.7%, in line with expectations and below the November 6.9% high, though unrounded it rose from 6.55% to 6.71% - the largest increase since November.
- The drop in employment was largely due to a 62.0k drop in full-time positions (after -19.7k, the 2nd straight drop), with part-time up for the 4th consecutive month at 29.5k (after 20.8k prior) - that mix is clearly indicative of hiring uncertainty among firms.
- The monthly full-time drop was the 2nd largest since the pandemic lows in the labour market (April 2020). Goods producing jobs fell by 12k (2nd consecutive decline), while services shed 21k (wholesale/retail trade and Information, culture and recreation led losses).
- The participation rate dipped 0.1pp to 65.2%.
- Wages were soft, dropping 0.2% M/M for the first drop since November, with the Y/Y rate slipping to 3.6% from 3.8% prior. The rise in permanent employees' wages of 3.5% Y/Y was well below the 4.1% expected (4.0% prior).
- Market-implied probability of an April BOC rate cut rose to as high as 68% after the data before settling the day at around 55%. That compares to 40% prior to Wednesday's US tariffs announcement.
