Dutch mail service PostNL NV’s stock fell the most since United Parcel Service Inc. dropped a bid for the company’s holding in TNT Express NV as it struggles to switch from letter deliveries to fast-expanding parcel handling.
The shares declined as much as 22 percent after Post NL posted a net loss of 170 million euros ($234 million) for last year and cut its 2015 operating profit forecast by 40 million euros, citing pricing pressure in package-delivery operations.
Mail volumes in Amsterdam-based PostNL’s home market fell 12 percent, accelerating from a 9 percent decline in 2012, and may shrink at the same speed through 2017, it said today. While parcel volumes rose 7.5 percent, the price per item declined and the company racked up costs from building up the division.
“This requires further extension of our services, like evening delivery, in order to meet growing consumer demand,” Chief Executive Officer Herna Verhagen said in the statement. PostNL said it’s also investing in new buildings and machines as well as subcontractor relationships “at the expense of our margin in parcels, which will become increasingly visible.”
PostNL shares fell as much as 93.3 cents, the most since their 40 percent decline on Jan. 14 last year, when UPS’s 5.16 billion-euro TNT bid was blocked by regulators, and were trading 21 percent lower at 3.38 euros as of 12:37 p.m. in Amsterdam.
While the stock has lost 18 percent this year, it has still advanced 83 percent in the past 12 months, the highest gain in 26-member Bloomberg Europe Transportation Index, giving a market value of 1.49 billion euros.
Next year’s operating profit will be in the range of 260 million euros to 330 million euros, versus a previous forecast for 300 million euros to 370 euros. The 2014 estimate is for a figure of 180 million euros to 220 million euros. The net loss for 2013 was 14 million euros worse than the analyst consensus in a Bloomberg survey, with sales also missing the target.
Future revenue will also be hurt by an accounting change affecting a planned mail joint venture in the U.K.
The company lifted a cost-savings target for traditional mail services by 26 percent to 365 million euros by 2017 to help offset volume declines, and won’t pay a dividend before 2016.
PostNL now owns a 14.8 percent stake in TNT Express after selling half its shares on Dec. 6 following UPS’s decision to walk away from a planned purchase in the wake of a European Commission ruling. The Dutch company says it plans to “monetize” the remaining holding in the medium term.