Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CTT-Correios de Portugal SA (CTTOF, Financial) reported strong revenue growth driven by express & parcels, with volumes nearing peak season levels.
- The company achieved record high margins in the second quarter due to high volumes and a unified pricing system for Iberia.
- CTT-Correios de Portugal SA (CTTOF) saw a significant increase in profit before tax by 45% in the quarter.
- The bank division opened 20,000 new accounts in the first half, indicating strong client engagement and growth.
- The company is experiencing impressive growth in Spain, with a 69% increase on top of 37% growth in the same quarter last year.
Negative Points
- Addressed mail volumes decreased by 10.9% year-on-year, despite an increase in average revenue per item.
- Costs in mail & other segments increased by 10.5% due to inflation and lower financial services activity.
- Financial services revenue declined significantly due to a difficult comparison with the previous year.
- The company is facing challenges in normalizing public debt placements, which are taking longer than expected.
- There is a slowdown in express & parcels volumes in Portugal, with only a 3.2% year-on-year growth in the second quarter.
Q & A Highlights
Q: Can you provide an update on the Banco CTT approval process and any implications on the transaction terms?
A: Joao Afonso Ramalho Sopas Pereira Bento, CEO: The approval process is ongoing, and we expect it to be completed soon. There are no changes to the transaction terms, and we are satisfied with the current agreements among all parties involved.
Q: What is the guidance for free cash flow generation in the second half of 2024?
A: Guy Pacheco, CFO: While we do not provide specific guidance on free cash flow, we expect CapEx to increase slightly due to investments in capacity and digital channels. Working capital effects should reverse, and with expected EBITDA, you can estimate the free cash flow.
Q: Is CTT losing market share in the parcels segment in Portugal?
A: Joao Carlos Ventura Sousa, Executive Director: We are not losing market share. In fact, we are growing with our existing customers and gaining new ones. The growth in the B2C segment is particularly strong.
Q: What are the plans for inorganic growth, and in which markets?
A: Joao Afonso Ramalho Sopas Pereira Bento, CEO: We are focusing on Portugal and Spain, particularly in the express and parcels value chain. We are interested in logistics fulfillment, customs clearance, and last-mile delivery operations.
Q: How will the new judicial notification system impact mail volumes and revenues?
A: Joao Afonso Ramalho Sopas Pereira Bento, CEO: The impact is expected to be minimal as judicial notifications for companies represent a low volume and margin. We are working on digital solutions to manage the transition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
