Poste Italiane SpA (PITAF) Q1 2025 Earnings Call Highlights: Record Revenue and Strategic ...

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Revenue: EUR3.2 billion, up 5% year-on-year.
Adjusted EBIT: EUR796 million, up 13% year-on-year.
Net Profit: EUR597 million, up 19% year-on-year.
Solvency II Ratio: Well above 300%.
Dividend: Total dividend for the year EUR1.4 billion, equivalent to EUR1.08 per share.
Mail, Parcel & Distribution Revenue: EUR949 million, up 2% year-on-year.
Financial Services Revenue: EUR1.4 billion, up 6% year-on-year.
Insurance Services Revenue: EUR442 million, up 11% year-on-year.
Postepay Revenue: EUR398 million, up 5% year-on-year.
Parcel Volume Growth: Up 9% year-on-year.
Net Interest Income: EUR666 million, up 13% year-on-year.
Consumer Loan Distribution Fees: EUR71 million, up 14% year-on-year.
Protection Revenues: Up 22% year-on-year.
Adjusted EBIT for Postepay: EUR133 million, up 13% year-on-year.
Average Head Count: 120,000 employees.

Warning! GuruFocus has detected 8 Warning Signs with PITAF.

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Poste Italiane SpA (PITAF) reported record first-quarter revenues of EUR3.2 billion, marking a 5% year-on-year increase.
The company achieved a 13% year-on-year growth in adjusted EBIT, reaching EUR796 million, and a 19% increase in net profit to EUR597 million.
Strong performance was noted across all business units, with significant contributions from net interest income, parcel services, investment products, and Postepay services.
The balance sheet remains robust, supporting an upgraded dividend policy with a Solvency II ratio well above 300%.
The acquisition of a 24.8% stake in TIM is expected to support the consolidation of the Italian telco market and generate synergies over time.

Negative Points

Mail revenues declined by 3% year-on-year, impacted by unfavorable comparisons due to one-off items in the previous year.
The EU regulatory change on instant payment fees resulted in a EUR7 million negative impact on payment revenues.
Despite a 7% increase in parcel revenues, the growth rate may not be sufficient to meet the full-year guidance of EUR1.8 billion.
Postal savings experienced net outflows due to high maturities, although new commercial initiatives are in place to mitigate this.
The company faces ongoing challenges in managing inflationary impacts and cost increases from expanding businesses.

Q & A Highlights

Q: What are the potential areas of synergy with TIM, and how do you plan to create value from this shareholding? A: The first synergy is a roaming service agreement for Poste Mobile clients, expected to start next year. Additional synergies include distributing Postepay services through TIM's network and vice versa. These synergies will take time to develop, but we are working well with TIM to explore all opportunities. (Matteo Del Fante, CEO)

Q: Can you elaborate on the EU payment regulation change and its impact? A: The EU law change requires instant payments to have the same cost as normal credit transfers. This was anticipated and budgeted, with a net impact of EUR7 million in the quarter. We expect this impact to continue throughout the year. (Camillo Greco, CFO)

Q: Regarding the 7% increase in parcels, is this enough to meet the EUR1.8 billion guidance for the full year? A: We confirm the guidance, as April showed double-digit growth. The market was softer than expected in the first quarter, but we have increased delivery efficiency, which supports profitability. (Camillo Greco, CFO)

Q: Can you discuss the favorable mix effect in Mail revenues and the potential for value-added services to offset volume declines? A: The favorable mix effect includes increased registered mail pricing. While value-added services help, they won't stop the long-term decline in Mail revenues. We continue repricing actions to support revenue. (Matteo Del Fante, CEO)

Q: How sustainable is the strong NII performance, and are there any one-offs? A: The NII performance is strong, benefiting from variable rates on 30% of our portfolio. We expect non-proportional NII levels throughout the year and confirm our total portfolio return guidance of EUR2.6 billion for 2025. (Camillo Greco, CFO)

Q: Regarding the TIM acquisition, should we consider the 70% payout on profits with or without TIM's contribution? A: We prefer not to comment on the payout policy concerning TIM's contribution at this time. (Matteo Del Fante, CEO)

Q: What actions are being taken to address postal savings outflows, and what trends do you expect? A: We are working with CDP on product initiatives and are confident in achieving our net funding targets despite a heavy Q1. (Matteo Del Fante, CEO)

Q: Can you comment on the strong growth in insurance volumes and whether these trends are sustainable? A: The growth is driven by strategic portfolio adjustments and strong performance in CPI products. We expect these trends to be sustainable and in line with our budget for 2025. (Camillo Greco, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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