Bpost will invest in new services and minor M&A deals to compensate for falling mail profits and accelerate its transformation into an ‘omni-commerce logistics’ group under its new ‘CONNECT 2026’ strategy.
Presenting its new ‘strategic vision’ at a Capital Markets Day yesterday, the postal group stressed it will remain “an efficient mail provider” in Belgium but is also ready to consider minor disposals in some areas.
Financially, CONNECT 2026 aims to enable bpost “to more than compensate” the EBIT loss from the declining mail business over the 2021-2026 period. Significantly, the board of directors has agreed to step up investments in order to enable the company to accelerate its growth and transformation plans.
Re-inventing the company
CEO Jean-Paul Van Avermaet said: “The launch of CONNECT 2026 is a mind shift for our company for at least four main reasons.
“Firstly, it will allow us to continue to reinvent our company in order to put customer centricity even more at the heart of everything we do. Anticipating the evolving needs of the customers is what drives us and motivates us to create value from them.
“Secondly, it will allow us to invest in our omni-commerce logistics activities. This is our main engine of growth, thanks in particular to the great opportunities offered by Radial and Active Ants in e-commerce logistics. Active Ants, for example, will be opening a number of new sites in European countries, including Belgium.
“Thirdly, our new strategic vision more than ever puts the spotlight on our societal role, by underlining our willingness to develop new services and this as a planet-friendly and inclusive organization. As it is mentioned clearly in our CONNECT 2026 vision, bpost group wants to be the trusted guide to connect in a changing world for our customers, employees, citizens, companies, shareholders and governments.
“And last but not least, the launch of this ambitious strategic vision sets the guidance of a sustainable future for bpost group and all its employees, who give the best of themselves every single day.”
Pandemic accelerates need for change
Explaining the need for an updated strategy, bpost emphasized that in recent years the postal industry was already being challenged by ongoing structural change, with declining mail volumes and growing e-commerce.
This year, however, “the COVID-19 crisis has clearly revealed what an acceleration of the business transformation might look like, with spectacular growth figures in the Parcels & Logistics activity”, it commented. “This new reality, which will continue even after the COVID-19 crisis, requires an acceleration of the multi-year transformation journey in which bpost group is embarked.”
But the new strategic vision CONNECT 2026 “is an evolution, not a revolution”, bpost underlined. Over the past few years, the group had already succeeded in turning into an efficient and innovative mail operator in Belgium, while becoming a relevant actor in the parcels and e-commerce logistics space in Belgium, in Europe and in the US.
“Today, the group is ready to move up a gear and to accelerate its business transformation in order to be able to continue to create long-term sustainable value for its worldwide customers and shareholders in the years to come,” it declared.
Investing in growth
On the financial front, bpost aims to guarantee sustainable long-term profitability, ensuring investments for business transformation beyond mail. This includes re-inventing the Mail & Parcels Supply Chain in Belgium, based on the expected market evolution combining agility, cost and service quality, and driving further value creation in Mail.
The company said that to sustainably secure future earnings growth it is fully committed to countering mail volume decline by investing capex in parcels and e-commerce logistics growth activities. In addition, targeted bolt-on M&A will accelerate the development of Radial Europe.
Furthermore, bpost commented that it is also “committed towards active portfolio management where non-core assets could be identified and considered for disposal”.
Overall, “the financial ambition is to seek to more than compensate the EBIT loss from our declining mail business in the trajectory 2021-2026, and gear for adjusted EBIT growth of bpost group”.
Focus areas
In the field of e-commerce, bpost wants to become a ‘trusted partner’ for brands, enabling them to successfully grow their omni-commerce activities. The company itself aims to increase its own omni-commerce revenues and EBIT, increase its revenue from digital services in omni-commerce, serve brands in e-commerce logistics with at least 2 different value chain services, and enable logistics subsidiary Radial to serve leading US brands in Europe or leading EU brands in the US.
The company also wants to make Belgium ‘a top-notch omni-commerce country’ by enabling Belgian SMEs to embrace e-commerce and increase their online business by offering the best customer experience for senders and receivers. It also aims to offer ‘innovative and exciting’ customer experiences with a fundamental shift from a sender to a receiver perspective.
In terms of sustainability, bpost wants to become a reference company through diverse measures. This includes being fully active in several Belgian cities with sustainable city logistics for zero emission in city centres; decreasing the total carbon footprint by 20% in 2030 compared to 2017; and deploying 50% e-vans by 2030 at group level.
Moreover, bpost want to play an important role in society and be a preferred partner for public services, including by creating additional paid neighbourhood and proximity services, and modernizing existing services for public authorities. Internally, it will improve staff training, develop diversity and create a ‘one group’ culture.
