PostNL NV (PNL) surged the most in nine months in Amsterdam trading after the biggest Dutch postal operator raised its target for cost reductions.
PostNL gained as much as 10 percent, the biggest intraday advance since May 22, and was up 8.7 percent at 2.01 euros as of 11:41 a.m., valuing the company at 882 million euros ($1.17 billion). The company increased its cost-saving target to 400 million euros from 330 million euros, of which 110 million euros was achieved over the past two years.
The postal operator, based in The Hague, postponed part of its restructuring plans last year to avoid harming the quality of mail service. PostNL now aims to save 290 million euros in costs until 2017 by restarting “the roll-out of the operational restructuring” and by implementing additional measures, including job cuts at headquarters and among support staff.
“Key is that the savings target has been raised by 70 million euros, more than expected, and limited additional provisions will be needed to reach that target,” Marc Zwartsenburg, an Amsterdam-based analyst at ING Groep NV, wrote in a note to investors. He recommends buying the stock and predicts it will rise to 2.90 euros in 12 months.
The company expects to cut as many as 3,500 jobs in total, it said in an e-mailed statement. “Clearly we stimulate voluntary leave as much as possible,” with firings among production staff “strongly reduced” from an earlier expectation of 2,800, the postal operator said.
PostNL will increase prices to balance expected mail delivery volume declines of as much as 10 percent to 2015 in the Netherlands, it also said. The company repeated its 2015 forecast that underlying cash operating profit will rise to 300 million euros to 370 million euros, from 130 million euros last year.
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