PostNL’s stock is taking a heavy hit on the market today, losing around 12% of its value and falling to an all-time low of €0.83 per share. The trigger? Kepler Cheuvreux downgraded its rating from Hold to Reduce and lowered its price target from €1.00 to €0.80—pretty much where we are now.
We received several questions about the stock today. To be honest, we’re not deeply familiar with the company, but let’s give it a fair shot.
What is PostNL?
PostNL is the national postal and parcel delivery company in the Netherlands. It handles mail and parcel distribution domestically and internationally, and has expanded into logistics and e-commerce services.
Political Uncertainty and the Universal Postal Service
According to Kepler, the collapse of the Dutch government plays a key role. This means that controversial and non-urgent decisions are being postponed — and that’s exactly where PostNL feels the pinch.
One of the matters that may be delayed is the potential revision of the Universal Postal Service (UPD).
What is the UPD?
The Universal Postal Service (UPD), in Dutch: Universele Postdienst, is a legal obligation that requires PostNL to maintain a minimum postal network. This primarily concerns letter mail, such as letters and small parcels up to 2 kg (including mailbox parcels), which must be delivered nationwide five days a week.
PostNL must also ensure there are enough mailboxes and a network of post offices or service points, so that everyone in the Netherlands has access to these services.
This obligation currently costs PostNL a lot of money. Mail volumes in this category have dropped significantly, while costs have increased. It’s a heavy drag on PostNL’s business.
Compensation?
First of all, it’s important to note that under both Dutch and European law, PostNL is allowed to submit a compensation request.
- According to the Dutch Postal Act of 2009, PostNL may submit such a request in the event of disproportionate burdens.
- Article 7 of the EU Postal Directive (97/67/EC, as amended by 2008/6/EC) also supports this mechanism.
- In PostNL’s 2024 Annual Report, it is explicitly stated that compensation can be requested if net costs create a disproportionate financial burden.
PostNL has already submitted compensation requests for 2025 and 2026, amounting to €30 million and €38 million, respectively, to cover the net costs of the Universal Postal Service (UPD). This request still needs to be formally assessed and approved by the government, depending on political decision-making. So, it’s quite possible that the impact won’t be as severe as it might seem.
Competition and Falling Margins
Even then, the problems are not entirely resolved. Increased competition is also contributing to the disappointing results. More and more new players are entering the parcel market, making it difficult for PostNL to maintain its market share. International webshops and logistics players are also putting pressure on prices. The result? Falling margins in the parcel business, putting profitability under further pressure. Although PostNL is the dominant player in the Netherlands, it doesn’t carry much weight on the European stage:
Takeover Speculation? Czech Billionaire Křetínský Could Make a Move
Now that the stock is trading at a low point, it’s only natural that takeover speculation might start to creep in again. Czech billionaire Daniel Křetínský, who holds a significant stake in PostNL through Vesa Equity Investment, has been actively investing in the European postal and parcel market in recent years.
He Recently Bought the British Royal Mail for £3.6 Billion, but this deal came with certain conditions, such as the requirement to deliver mail nationwide in the UK (including letter mail), a “golden share” for the government that allows it to block major changes like exiting the UK, and the requirement to maintain a public stock listing in London.
Daniel Křetínský Seems Willing to Cooperate with Governments
If Daniel Křetínský is planning to acquire PostNL—and given his takeover of Royal Mail, that does seem to be the long-term plan—the Dutch government could pose an obstacle. This could be due to the implementation of the Postal Act, the designation of critical infrastructure, and the large number of employees.
It’s notable that the Royal Mail acquisition shows Křetínský is quite willing to make significant concessions to reach a deal. It’s also remarkable that he was prepared to pay a high multiple for Royal Mail.
Compared to Royal Mail, PostNL at its current valuation could—in theory—be acquired at an attractive premium for shareholders, but still at a relatively low price overall. Of course, this would all have to materialize.
Additionally, it’s important to note that Křetínský cannot expand his stake further without making a mandatory bid for all shares, as he already owns more than 30%. Normally, such a bid is required upon reaching the 30% threshold, but there’s an exemption if this threshold is exceeded due to share buybacks (previously, he held 29.9%).
Our View on PostNL
At 999Gems, we find it a tricky case. We consider postal delivery a tough business, and the broader sector doesn’t seem likely to enjoy much tailwind in the coming years.
On the other hand, you might wonder: how much would it cost to build a company like PostNL from scratch? Is that feasible at the current valuation—don’t forget to include the debt—that’s on the table now? However, that analysis is meaningless if the company can’t generate profits in the future. The follow-up question is then: Are PostNL’s assets currently underutilized or so poorly managed that they could be deployed more efficiently in the future? There’s certainly something to be said about management, but even then it’s hard to estimate the potential upside.
Although we wouldn’t be surprised to see a share price recovery from these levels, there are currently too many uncertainties for us to add the stock to the portfolio. However, the share price decline has caught our attention. We’ll be monitoring developments and have added the stock to our watchlist.
Share information
Name: PostNL
Ticker: PNL
ISIN: NL0009739416
Market: Euronext Amsterdam
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