Bpost, the Belgian post office, is probably the least valued logistics company in the world, if we exclude the maritime transport players. The file is paying 5.7 times the expected results this year and its EBITDA multiples are at the floor. All sectors combined, the European average would be 15.4 times. And the sector that the market “pays” the least expensive, the automobile, is 7.5 times. It must be said that the stock market history of the company is gratinated:
- -21% since 1er January
- -37% over one year
- -26% over three years
- -74% over five years
The results are all the more painful when we compare the course of action with that of other European players. Even the neighbor PostNL, which is not brand new, does much better. Over the “Covid” period which has benefited logisticians quite a bit, the following graph is clear
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But why so much hate? To start a bit of history. The capital of the Belgian Post was opened up in 2005 for the benefit of the Danish Post and its shareholder and financial backer, CVC. The other contenders, notably the French Post Office and the German Deutsche Post, had declined. The Belgian State has always retained the majority of the capital, currently 51%. Technically, there was no privatization in the sense that the public authorities retained control. Moreover, investors generally do not like to rub shoulders with a majority public shareholder, which has probably added to the disaffection from which the title suffers. But that was not the case at first!
A value once prized by managers
The CVC era indeed coincided with major upheavals and a rise in margins hailed by investors. Up to 20.5% operating margin in 2016, despite a hopelessly flat turnover. It must be said that the Belgian Post, meanwhile renamed Bpost, had, like its counterparts in other countries, to deal with the digitization of exchanges and the fall of its traditional cash cow, the good old stamped mail. And like its counterparts, Bpost has benefited from the development of online commerce to compensate for the constant decline in its historical activities.
America is not Peru
In the pandemic context, the “Mail & Retail” branch, which includes traditional activities, fell to represent only 42% of revenues, while parcels and activities related to e-commerce (“Parcels & Logistics”) increased by about 25%. In this area, the Belgian company is larger in the United States (which generates 32% of the group’s revenues) than in the rest of the world (26%) thanks to the acquisition in 2016/2017 of the logistics company Radial. Around 60% of the activity is still carried out in Belgium, when the two specialties are combined. On the other hand, in terms of results, “Mail & Retail” still generates 60% of Ebit and North America is much less profitable than Europe despite higher revenues: this is a sign that the transformation of the company is not completed, or not in an optimal way.
Bpost income statement (Source Zonebourse with S&P Capital IQ)
Because despite a booming logistics market, Bpost has missed a lot of meetings with its shareholders. Since the 2016 record, the results have steadily deteriorated. The operating margin should be around 7% in 2022 according to current projections, against 20.5%, I repeat, in 2016. The main reason is the difficult integration of Radial. Then sawtooth results and a waltz of leaders not conducive to serene management. The proliferation of disappointments has tired investors, who are still waiting for the low point of the income statement.
The hopes placed in the recovery of Radial’s profitability and in the umpteenth savings plan are no longer enough to reassure. The market needs something concrete, which did not even deign to take an interest in this value with its depressed PER, or not for long, during the recent big leap towards “value”. Analysts are also worried about new potential air threes this year, such as inflation in costs (energy) and wages, the reduction in the acceleration linked to covid or the fierce competition between logisticians in several markets ( Amazon entered Belgium at the end of 2021).
“Fallait pas l’invite” identifies companies that are going through a complicated period on the stock market. You never know, they could recover! Latest articles in the section:
As a bonus, the recent performance of the folders in the list
Performance of the aforementioned shares (since January 1 in column 1) / Source Screener MarketScreener