bpost NV/SA (BPOSF) Q4 2022 Earnings Call Transcript

bpost NV/SA (OTCPK:BPOSF) Q4 2022 Results Conference Call February 24, 2023 4:00 AM ET

Company Participants

Philippe Dartienne - CEO

Koen Aelterman - CFO

Conference Call Participants

Ivar Billfalk-Kelly - UBS

Frank Claassen - Degroof Petercam

Marco Limite - Barclays

Henk Slotboom - The Idea

Operator

Hello, and invited to nan bpost Fourth Quarter 2022 Analyst Call. My sanction is Laura, and I will beryllium your coordinator for today's event. Please note, this telephone is being recorded. [Operator Instructions]

I will now manus you complete to your host, Mr. Philippe Dartienne, bpost's CEO; and Mr. Koen Aelterman, bpost's CFO, to statesman today's conference. Thank you.

Philippe Dartienne

Good morning, ladies and gentlemen, welcome. I americium pleased to coming our 4th fourth and afloat twelvemonth 2022 results arsenic CEO astatine Interim of bpost Group. Welcome to each of you, and convey you for joining us. With me, I person Koen Aelterman, our CFO astatine Interim; arsenic good arsenic Antoine Lebecq from Investor Relations. We posted nan materials connected our website past night.

We will locomotion you done nan presentation, and we'll past return your questions. Two questions each will guarantee everyone gets a alteration to beryllium addressed successful nan upcoming hour. Let's spell to nan highlights of nan afloat twelvemonth results. On Page 3, you spot that our group adjusted EBIT stood astatine €278.5 million, successful statement pinch our first guidance communicated connected February 24, 2022, earlier nan world changed. I americium pleased pinch this awesome achievement.

As contempt persisting macro headwinds and marketplace disruptions faced passim nan year, bpost managed to sorb adjacent to €40 cardinal of nan downside consequence pressures pinch nan successful implementation of our mitigating actions. This included accrued income efforts, value summation and costs reduction, which stay cardinal for 2023. Beyond nan P&L, our strict financial subject is besides reflected successful our CapEx. I will travel backmost to that successful a second. Let maine stock pinch you nan cardinal highlights of 2022 for each of our business units, and we will get past into much specifications for nan 4th fourth results.

Our Belgian conception contributed for €198.3 cardinal to nan group adjusted EBIT pinch a separator of 9%, good wrong nan guided scope of 8% to 10%. Belgium was faced pinch nan effect of 6 consecutive automatic net indexation and nan alteration successful nighttime displacement regulation, corresponding successful full to €80 cardinal of further costs versus 2021, but besides pinch higher power prices, nan Amazon in-sourcing and nan post-COVID parcel measurement normalization. Mitigation measures were taken to offset these headwinds, targeting some apical statement and costs. On apical line, midyear value increases were implemented and an tremendous commercialized effort allows america to replace, connected a afloat twelvemonth basis, nan measurement nonaccomplishment from Amazon successful 2022. On costs, nan attraction connected productivity and aligning resources to nan reduced request has allowed for an FTE simplification of astir 800 FTEs aliases 3.2%.

These mitigation measures has allowed america to stay wrong nan guided scope and show nan resilience of our Belgium business. At E-Logistics Eurasia, adjusted EBIT stood astatine 24 constituent -- sorry, €27.4 cardinal pinch a separator of 4.5% beneath nan first guidance. As discussed during Q3, this reflects nan inflationary pressures connected costs and nan separator dilution from nan -- from little apical line. Indeed, Asian portfolio activities were still heavy impacted by nan caller VAT regularisation successful nan first half of nan twelvemonth and did not retrieve arsenic anticipated. And Dyna's capacity is still lagging.

On nan affirmative side, nan description momentum continued astatine Radial Europe and Active Ants, and we enjoyed a patient apical statement maturation of positive 17% successful 2022. At E-Logistics North America, adjusted EBIT stood astatine €86.9 cardinal pinch a separator of 5.2%, successful statement pinch nan first guidance. At changeless perimeter and excluding nan favorable FX effect of 12%, nan 5% summation successful revenues reflects Radial apical statement growth, which was driven by nan customer motorboat successful 2021 and continues of our different North American businesses. Specifically to Radial, moreover successful a worsening marketplace information successful nan 2nd half, expected to persist successful 2023, 2022 has been different twelvemonth successful which we saw an betterment successful nan underlying EBIT of nan business. I will besides travel backmost to that.

Finally, CapEx ended up astatine €164.4 cardinal beneath nan guided letter cover of €250 million. Some has been pushed into 2023, but this underspend besides reflects our financial subject successful nan disruptive marketplace environment, successful statement pinch our group of mitigation action implemented successful 2022. In position of dividends, our results let america to propose a dividend per stock of €0.40 maturation to nan General Shareholders' Meeting. This corresponds to a payout of 33% of nan IFRS nett profit wrong nan 30% to 50% scope forcing successful our dividend argumentation arsenic we adjusted for nan important noncash effect successful 2022, notably linked pinch IAS 19. Moving now to Page 4 pinch our quarterly results.

We are pleased to study that, acknowledgment to nan operational readying and a bully execution of nan peak, we delivered a beardown 4th contempt nan ongoing and moreover stronger ostentation headwinds and grounds debased user confidence. Our group operating income for Q4 astatine €1.302 cardinal accrued by 3% aliases €39 cardinal erstwhile excluding nan consolidation of Ubiway, reflecting higher gross crossed each our segments. Our group adjusted EBIT stood astatine €77 million, pinch a separator of 5.9%. And surprisingly, owed to nan lasting inflationary pressures connected costs and macroeconomic trends, EBIT was down minus 12.7% connected past year, but nan mentation of nan highest and nan optimum alignment of our resources to customers request has borne fruit, particularly successful Belgium and successful North America. Again, erstwhile excluding Ubiway impacts, Belgium adjusted EBIT of €41.6 cardinal bespeak a changeless perimeter.

On 1 hand, higher operating income from unit and value-added services, somewhat little message gross and astir remarkably higher parcels revenue. And connected nan different hand, higher OpEx owed to nan fixed net indexation of positive 2% each, partially mitigated by continued FTE reductions and nan elimination of nan 2nd distribution rounds during highest and higher power costs. At E-Logistics Eurasia, adjusted EBIT remained astir unchangeable year-over-year astatine €5.4 million, reflecting, connected nan apical line, nan description momentum of Radial Europe and Active Ants, higher supplier cross-border income and nan integration of IMX since July this year. And connected costs, higher payroll and volume-driven proscription costs. At E-Logistics North America, operating income was up positive 2.9%.

But while FX provided a tailwind, income successful U.S. dollars decreased by minus 7.1%, reflecting nan effect of little highest volumes pinch a mixed capacity crossed our customers and nan effect of immoderate terminated contracts. At nan aforesaid time, successful guidance to this other caller facet and successful statement pinch nan committedness taken successful 3rd quarter, we successfully adjusted our costs guidelines to apical statement and we strengthened our adaptable labour guidance during peak. Adjusted EBIT was €43.1 cardinal pinch a separator of 7.7%. This is almost 13% up year-on-year erstwhile rebasing past twelvemonth 4th fourth pinch nan non-repeating one-offs relating to nan cyber security betterment and nan onetime concession from vendor.

I would for illustration now to manus complete to Koen for much specifications connected nan financials of nan 4th quarter.

Koen Aelterman

Thank you, Philippe, and bully greeting to you all. For your reference, you find connected Page 5 an overview of nan cardinal financials for nan quarter, some reported and adjusted. Philippe already mentioned our group apical statement and EBIT aliases adjusted nett profit amounts to €83 million. Similar to nan erstwhile quarters, nan nett profit benefited from nett financial consequence expanding by €22 cardinal year-over-year, chiefly related to IAS 19 worker benefits successful statement pinch higher discount rates and frankincense a noncash impact. Allow maine to move straight to nan specifications of Belgium connected Page 6.

At Belgium, erstwhile excluding nan effect of Ubiway, we spot that outer revenues accrued by €12 cardinal to €570 million. Looking by subsegment, Domestic Mail recorded an underlying message measurement diminution of 7.5% for nan 4th against 8.9% successful nan 4th fourth of 2021. This impacted revenues by minus €21 million, further compounded by a moving time effect of minus €0.9 million, yet mitigated by a affirmative price/mix effect of positive €13 cardinal arsenic good arsenic €5 cardinal of further gross from Aldipress, which was acquired connected September 30, 2022. All together, Domestic Mail revenues remained astir unchangeable year-over-year.

Note that nan transactional message revenues were successful nan 4th fourth of 2021, supported by nan COVID-19 communications pinch an effect of astir €8 million. This was nary longer nan lawsuit successful 2022. Parcels Belgium recorded an summation of €6 cardinal successful gross aliases 4.7%. Excluding nan effect of Amazon in-sourcing, parcel volumes were up positive 7.5% year-over-year. The measurement inclination is supported by our existing customers and our successful hunting plan, notably pinch nan motorboat of bol.com successful November.

It should beryllium noted that this measurement maturation occurred nether unfavorable marketplace conditions that person continued to deteriorate since nan opening of nan year, reaching their highest successful nan 4th quarter. In Belgium, ostentation reached its highest level astatine 12.3% successful October, while user assurance reached its lowest level of nan twelvemonth astatine minus 27, good beneath nan level of minus 16 observed successful March aft nan commencement of nan warfare successful Ukraine. Online unit income adjusted for ostentation declined by 11% year-over-year successful nan 4th quarter. When including nan Amazon impact, parcel volumes were still 1.5% supra past year, meaning that, connected a afloat twelvemonth basis, nan mislaid Amazon volumes are now afloat compensated. To put things successful perspective, parcel volumes stay 54% supra nan pre-pandemic 4th fourth of 2019.

The price/mix stood astatine 3.3% successful Q4, successful statement pinch nan erstwhile call.

Similar to what we observed successful nan erstwhile quarter, proximity and convenience unit web gross accrued organically by €4 cardinal owed to nan caller guidance contract, which came into unit successful 2020. In this subsegment, nan deconsolidation effect of Ubiway arsenic from nan period of March was minus €36.6 cardinal successful nan quarter. Value-added services accrued by €5 million, mostly resulting from higher revenues from fines solution. Let's move to nan P&L of Belgium connected Page 7. On nan costs side, again, excluding Ubiway, operating expenses accrued by €21 cardinal year-over-year, chiefly owed to nan persisting inflationary pressure.

We person so recorded higher payroll costs per FTE, reflecting nan effect of each of nan 2% net indexations of November '21, February, April, June, September and December 2022, arsenic good arsenic nan alteration successful nighttime displacement regularisation and a premium paid to our labor to alleviate nan unit connected purchasing powerfulness arsenic good arsenic higher power costs. These impacts were chiefly mitigated by nan elimination of nan 2nd distribution rounds, which travel pinch little density and frankincense higher costs, and nan FTE simplification of astir 810 FTEs year-over-year, again, excluding nan Ubiway impact. Moving now to E-Logistics Eurasia connected Page 8. External operating income was up €40 million, reflecting nan continued beardown maturation successful e-commerce logistics and nan integration of IMX cross-border. Looking astatine nan gross improvement per subsegment, we spot that successful e-commerce logistics, Radial Europe and Active Ants income were up 19.5% year-over-year, driven by our existing customer description and by caller customer onboardings arsenic announced pinch our Q2 and Q3 results.

At Dyna, akin to nan erstwhile quarters, income were down versus past year. This was owed to nan little volumes successful 1- and 2-man transportation networks astatine DynaLogic, driven by nan little user spending successful achromatic equipment and little devices to beryllium repaired astatine DynaFix. The beardown maturation momentum astatine Radial Europe and Active Ants did offset Dyna improvement pinch a mixed summation of €5.5 cardinal successful gross for nan subsegment. Cross-border gross accrued by €8 cardinal aliases positive 9.7%. This apical statement improvement is driven by some nan consolidation of IMX since July this twelvemonth and nan maturation of our Asian income where, contempt nan lasting proviso concatenation disruptions successful China, we saw nan benefits of immoderate caller customer bids.

Let's move to nan P&L of Eurasia connected Slide 9. Operating expenses accrued by €14 cardinal aliases 9%, chiefly explained by higher carrier costs successful statement pinch higher fulfillment and cross-border activities arsenic good arsenic nan IMX integration, higher payroll costs from ostentation and caller tract openings successful statement pinch our description and nan strategical improvement initiatives for Radial Europe and Active Ants, and partially offset by little material, interims and carrier costs astatine Dyna, successful statement pinch little volumes arsenic conscionable explained. Moving connected to our North America e-logistics business connected Page 10. The operating income of e-commerce logistics accrued by €16 million, but was down minus 7% astatine changeless speech rates. At Landmark, we recorded a continued measurement maturation from existing customers and caller customers won successful 2021, while astatine nan aforesaid time, we started to spot nan first effect of Amazon's in-sourcing arsenic portion of its volume.

At Radial, apical statement decreased by 9% year-over-year arsenic nan consequence of different factors. In statement pinch North American marketplace pressure, Radial recorded little highest volumes pinch a mixed capacity crossed customers, notably successful clothing and cosmetics.

Besides that, connected nan proviso side, U.S. e-commerce logistics marketplace has shifted from an undercapacity to an overcapacity, which put immoderate further unit connected our measurement development. Finally, we besides had nan effect of immoderate terminated contracts, including nan 1 we discussed already successful Q3. Radial revenues amounted to USD 480 cardinal successful nan quarter. This is 9% beneath nan 4th fourth of 2022, yet, moreover aft this year's station COVID normalization, still positive 36% connected nan pre-pandemic 2019.

Moving to nan P&L connected Slide 11. Focusing connected nan capacity astatine changeless speech rate, we spot that while nan apical statement decreased by 7.1%, our operating expenses decreased by 6.6%. However, it should beryllium noted that past year, Radial U.S. benefited from 2 one-offs positively impacting OpEx, notably nan cyber security betterment and nan onetime concession from a vendor. When rebasing past twelvemonth pinch nan aforementioned one-offs for a full of €7.8 million, E-logistics North America adjusted EBIT accrued by €5 cardinal to €43 million.

At changeless speech rate, it intends that contempt €43 cardinal little apical line, EBIT really still accrued by €1 million, reflecting nan beardown betterment successful operational performance. Our labour costs were favorably impacted by costs complaint effect and a stronger adaptable labour management. Thanks to beardown mentation and execution during nan peak, we managed to align capacity to request and recognize productivity gains. Philippe, I cognize you wanted to return nan opportunity of nan '22 results to put Radial's capacity complete nan past years successful perspective.

Philippe Dartienne

Indeed, Koen, convey you. Let maine attraction now connected Radial specifically, and you tin spell -- you spot that connected Slide 12. As Radial capacity has been impacted by a number of one-offs successful nan erstwhile years, notably since nan ransomware onslaught connected October 2020, we wanted to return this opportunity to look backmost and spot nan continued advancement made astatine Radial. We spot connected nan page nan improvement of Radial's cardinal capacity metrics successful section rate and excluding nan one-off we shared pinch you successful nan erstwhile quarters and years. Radial yearly revenues grew by 50% complete nan past 4 years, moreover erstwhile including nan post-COVID normalization.

And nan EBIT separator progressively improved from minus 3.1% to positive 3.6% done operational ratio and highest plannings.

Operationally, Radial is simply a apical tier e-commerce logistic usability successful North America pinch a web of 26 fulfillment centers and connection 60% next-day and 99% 2-day transportation capabilities to U.S. customers. Radial is now firmly established and good positioned to look nan challenges of nan changing marketplace conditions.

Koen Aelterman

Thank you, Philippe. Moving connected to nan firm conception past connected Page 13. External operating income decreased by €3 cardinal year-over-year from little building sales. More importantly, operating expenses decreased by €8.2 million, reflecting continued costs guidance measures and efforts connected overhead reduction. Regarding FTEs, a 4.5% alteration partially offsets nan effect of nan hole net indexations of positive 2%, arsenic discussed earlier.

OpEx improvement besides includes €2.5 cardinal of costs related to nan property concession compliance review. Then we move to nan rate travel connected Slide 14. The main items to emblem present are nan following: rate travel from operating activities earlier changes successful moving superior remained unchangeable year-over-year, alteration successful moving superior and provisions accrued by €135 million. As explained successful nan erstwhile quarter, this is notably owed to nan compensation schedule of nan guidance contract. Whereas past year, we received €80 cardinal successful Q3.

This year, we received €99 cardinal successful early Q4. We besides received successful this quarter, €37 million, which you would person received nether nan erstwhile guidance statement successful nan first 4th of 2023. Additionally, we person deferred into nan first 4th of 2023 nan Q4 payments of nan payroll withholding taxation for €31 million, making usage of a measurement granted by nan Belgium authorities successful nan discourse of nan power crisis. Cash outflow from investing activities decreased by €37 cardinal to €47 million, chiefly from little CapEx. Down to €51.4 million, our CapEx continued to beryllium directed towards our E-logistics description successful Europe and successful nan U.S. and nan optimization of our home web successful Belgium. Let's now person a look astatine 2023.

Philippe Dartienne

Thank you, Koen. Before sharing our outlook for 2023, I would for illustration to locomotion you done our guidance priorities for this year, which support nan group ambition to beryllium a world e-commerce and logistic work supplier pinch a sustained anchor successful Belgium and to beryllium recognized arsenic a sustainable reference. The attraction of guidance operating arsenic a collegial squad is clear, and we proceed to execute connected our strategical plan. In Belgium, nan attraction of Jos Donvil and his squad is to create nan target operating exemplary and nan supporting statement based connected customer centricity and translating successful higher value and flexibility. Besides nan business transformation, Jos and his squad will besides hole nan early of nan property concessions, connected which I will update you successful a minute.

And it will besides summation nan wellbeing of our labor truthful arsenic to amended existent absenteeism levels. In E-Logistics Eurasia, Kathleen Van Beveren will proceed to execute connected nan maturation scheme of Radial Europe and Active Ants. Kathleen will besides turn our commercialized cross-border activities, and we launched nan execution of a multiyear turnaround scheme for Dyna. In North America, adjusting to alteration marketplace conditions, Henri de Romrée and his squad will create and execute connected nan commercialized pipelines crossed our entities, notably Radial and Landmark Global. Henri will besides instrumentality astatine Radial a nett worldwide thin operating model, driving further separator improvements.

The group will prosecute its M&A ambitions for our e-commerce logistic activities successful Europe and North America, but besides for cross-border businesses. We person a beardown equilibrium sheet. We, therefore, do not exclude transformative acquisitions if specified opportunities originate successful nan market, which let america to further accelerate connected our translator and build scale. Across nan group, we will besides proceed to execute connected our sustainability strategy. In this regard, bpost has been selected since past week arsenic portion of nan caller Euronext's Bel ESG banal index, search business-listed companies, demonstrating nan champion practices successful this field, a awesome nickname of our world ESG strategy.

Let maine now update you connected nan property concessions and stock pinch you nan caller developments since we past talked successful December. First, arsenic a reminder, nan Belgium authorities decided successful November 2020 to widen nan ongoing concession for nan distribution of newspapers and periodicals successful Belgium until December 31, 2023, arsenic nan conditions that use for 2022 are specified successful nan existent concessions. The process of submission of nan hold to European Commission for support nether State assistance rules has started. Secondly and rightly so, location is simply a batch of mobility astir nan financial impact, notably from a good and our expertise to participate successful ongoing and early modular procedures. As said previously, we want to beryllium arsenic transparent arsenic imaginable successful this matter, and we are coming successful a position to stock pinch you nan pursuing updates.

Regarding nan investigation of nan Belgium Competition Authority, bpost has afloat cooperated pinch nan ongoing investigation. But nan consequence of nan imposition of nan good will dangle connected nan findings made by nan BCA. Subject to further uncovering of nan BCA investigation, nan consequence is presently assessed arsenic imaginable but not probable. Based connected nan accusation presently astatine our disposal, you will person seen that bpost Group has not taken a proviso related to these matters. You astir apt besides publication successful nan property that connected February 1, 2023, nan Belgium authorities announced its volition to behaviour a governmental audit into nan compensation for nan existent property concession.

Here, nan mobility is, could bpost person to repay an overcompensation? Well, whilst nan costs associated to nan work were reviewed and scrutinized, connected 1 hand, connected an ex-ante ground successful nan discourse of nan European Commission's State assistance reappraisal and, connected nan different hand, connected an ex-post ground by nan College des Commissaires arsenic portion of nan yearly support of nan accounts, bpost is presently unavailable -- sorry, incapable -- presently incapable to measure nan risks associated to this audit and its imaginable findings fixed that bpost has not yet received immoderate accusation regarding to nan scope of nan audit. Any findings of overcompensation could lead to a declare for reimbursement of a portion of nan revenues charged for nan service. As to our capacity to participate successful tendering procedures, it's probable that considering nan self-cleaning measures taken by nan company, nan contracting authorities will see that bpost has demonstrated its reliability and will, therefore, let bpost to participate successful ongoing and early tendering procedures. And lastly, to reason connected nan imaginable effect connected nan ongoing investigation, bpost has besides taken measures of practice pinch nationalist charismatic truthful arsenic to trim immoderate consequence of criminal enforcement.

Third and past point, now what astir 2024 and beyond. Recent property articles dated February 10, 2023, referred to an statement reached by nan authorities connected nan caller tender for nan play '24, '27. The authorities has announced its volition to trim nan fund attributed to nan property concession and to accommodate nan tender specification successful usability of this reduced budget. bpost expects this caller tender to beryllium launched soon. And upon receipt of nan RFP and its requirement, we will measure whether an connection tin beryllium submitted that is financially sound.

bpost judges itself well-placed to triumph specified a tender process. In which case, operational and financial effect will dangle connected nan tender specifications. This financing brings maine onto our outlook for 2023. In 2023, while nan translator of nan group, of course, continues, we will activate each levers connected sales, pricing, costs and productivity to look nan ongoing marketplace pressures and hole for immoderate rebound. The group's full operating income is expected to turn by a mid-single-digit percentage, while nan group adjusted EBIT is expected to scope betwixt €240 cardinal and €260 cardinal based connected existent macroeconomic assumptions.

For Belgium, we expect full operating income to turn by 3% to 5% erstwhile excluding nan deconsolidation of Ubiway. We notably scheme for a message measurement diminution of 8% to 10%, offset by value summation and operation impacts, while connected our Parcels revenues will beryllium driven by a mid-single-digit percent measurement maturation and a mid- to precocious single-digit percent price/mix. Adjusted EBIT separator is expected to scope betwixt 6.5% and 8.5%, which reflects higher payroll costs from nan afloat twelvemonth effect of nan 5 net indexation of 2% successful 2022 and nan ones of 2023, but besides higher power costs, partially mitigated by ratio gains successful cognition and continued costs simplification initiatives. For E-Logistics Eurasia, we expect a debased digit percent maturation successful full operating income, relying connected our continued maturation of Radial Europe and Active Ants and nan increasing cross-border commercialized activities, including nan improvement of caller lanes and much than offsetting nan structural diminution successful cross-border postal activities. In 2023, astatine Radial Europe and Active Ants, we expect to person a standard up of our income statement and immoderate start-up costs for caller customers arsenic good arsenic a antagonistic operation effect crossed border.

The adjusted EBIT separator is frankincense expected to scope betwixt 3% and 5%. For E-Logistics North America, assuming a EUR-USD complaint astatine 1.08 for 2023, we expect apical statement to somewhat alteration compared to 2022. This reflects, connected 1 hand, a diminution successful apical statement astatine Landmark Global owed to Amazon in-sourcing and immoderate wide value pressures, and connected nan different hand, a little maturation momentum astatine Radial successful existent marketplace information and overcapacity, and explained by Koen, starring to value pressures. Similar to our guidance for 2022, adjusted EBIT separator is expected to scope betwixt 4% and 6% successful 2023, pinch value unit connected apical statement and higher OpEx and D&A from caller sites being mitigated by a tighter labour management, a favorable costs complaint effect and immoderate continued costs measures. For corporates, inflationary pressures will effect connected our Belgium payroll costs.

While our costs containment and overhead simplification measures stay successful place, savings will beryllium reinvested successful nan ongoing translator of nan group. Note that we besides foresee immoderate OpEx from nan ongoing property concession investigation. The maturation CapEx letter cover successful 2023 is expected astir €200 million, of which a portion is simply a phasing of nan 2022 nether spend. We're now fresh to return your questions. Operator, please unfastened nan lines.

Question-and-Answer Session

Operator

[Operator Instructions] We'll now return our first mobility from Ivar astatine UBS.

Ivar Billfalk-Kelly

Maybe fto maine commencement pinch value concessions because I deliberation that's connected apical of everyone's mind. Can you please thief america quantify nan merchandise that you've earned successful nan property concession that's -- complete nan period, that's nether investigation to effort and thief america quantify immoderate excess net that you mightiness person earned complete nan period? And secondly, why you opportunity it's not probable, but it is possible. Have you had immoderate guidance from advisers successful respect of what a imaginable good mightiness look like? And past secondly, successful nan North American business, fixed that we look to beryllium astatine nan commencement of nan inventory destocking shape successful nan U.S. and successful past downturns, we've seen unit inventories dropped by 10%. If that were to materialize again, I mean what incremental unit would that airs connected your revenues and earnings? And successful that benignant of scenario, would you beryllium capable to support revenues level versus past year?

Philippe Dartienne

I propose that, Koen, you return nan questions of Ivar, mostly connected nan value concession. I deliberation astir of them...

Koen Aelterman

Sure. I'm not judge I afloat understood nan 3rd question. The statement was not that great. So we mightiness request to travel backmost to that, but fto maine commencement pinch nan value concessions. So I deliberation your first magnitude was and what was nan magnitude received successful nan past years successful nan arena that location would beryllium immoderate overcompensation, fto maine travel backmost to that successful a moment.

But conscionable connected nan amount, to reply your question, we get location betwixt €165 cardinal and €170 cardinal per year, which you tin besides find successful our yearly reports complete nan past years. In position of benignant of nan overcompensation risk, I deliberation it's important to accent again what Philippe said that nan amount, successful fact, they are already audited exempted by nan European Commission whenever location is simply a notification process and connected an export ground by nan College des Commissaires, which really consists of nan Court of Audit and our ain auditors. At nan moment, we person nary visibility connected what nan caller governmental audit will beryllium about. So it's very difficult to pronounce ourselves connected nan risk. But I want to accent that, successful fact, nan figures are already audited.

So return that for what it's worth. But fixed that we person not taken a proviso present arsenic well, it gives you immoderate denotation connected really we measure this risk.

Philippe Dartienne

And also, sorry to beryllium a spot dense connected that one. In that case, location would beryllium an accommodation arsenic a consequence of audit. It would not beryllium for nan afloat concession for nan magnitude deemed "overcompensated." So it's not nan afloat fact. Would thing emerged from that audit, it would surely not beryllium for nan afloat amount.

Koen Aelterman

Exactly. Then your 2nd mobility was astir a imaginable fine. And I deliberation I've seen nan fig of €430 cardinal circulating a bit, some successful nan property and successful nan different expert reports. First, fto maine accent that arsenic of nan commencement of this, bpost has been collaborating pinch each nan competent authorities successful bid to protect our champion interest. So that's been nan measurement we've been approaching this.

Should, astatine nan extremity of nan day, location still beryllium a fine, it's important to item that nan €430 million, which is circulating, is, successful essence, is simply a cap. It's maximum 10% of nan group gross worldwide. Although successful general, Competition Authorities effort to make judge that you cannot estimate reliably a fine. We do spot from past practices that it is typically based connected a number of factors, nan concerned revenue, nan long of nan offense, immoderate aggravating aliases attenuating circumstances. And erstwhile we look astatine nan imaginable good successful -- pinch these factors successful mind, we are successful a very different ballpark than nan €430 million.

And past connected nan North America question, I don't cognize whether you understood it, Philippe, but if not, I cognize it would beryllium awesome if you could repeat. The statement was not great.

Philippe Dartienne

Absolutely.

Ivar Billfalk-Kelly

Sure. I'll travel up connected nan first 1 arsenic well, though. I admit nan revenues were successful nan region of €175 cardinal aliases so. But conscionable successful position of nan profits that we're earning, because that would thief america engage, whether location was immoderate complete earning aliases not.

But nan 2nd mobility successful position of North America was whether -- if we person a terrible downturn, fixed that we're astatine nan commencement of an inventory destocking shape successful nan States, successful nan past, we've seen a autumn astir 10%. I mean did you make immoderate allowance for a script for illustration that successful nan guidance that you provided?

Koen Aelterman

So successful position of our macroeconomic assumptions for nan U.S., but successful fact, likewise for each nan markets we're progressive in, we're starting disconnected from a GDP growth, which is flattish. But connected apical of that, we expect a batch of inflationary pressure, which evidently will effect purchasing power, and truthful measurement much heavy connected nan bpost activities than connected others.

In position of inventory destocking, that would not needfully beryllium a bad arena for america because it would still make activity successful our fulfillment centers. So location is nary circumstantial downside lawsuit foreseen for that successful our guidance to date. And we are not unsocial truthful far.

Philippe Dartienne

Exactly.

Ivar Billfalk-Kelly

And I'm sorry, connected nan net for nan value concession, tin you quantify that, please?

Koen Aelterman

So I cannot springiness an nonstop number. And additionally, again, it's relating to immoderate complete compensation, which is thing which will beryllium assessed by nan audit and frankincense unrelated successful principle to nan separator we person connected this officially. I deliberation I shared past clip that nan concession, it has a reasonable separator limit of 7.5% and that bpost was presently beneath that limit. So that's nan only point I tin stock astatine this stage.

Operator

We'll move connected to our adjacent mobility from Frank Claassen astatine Degroof Petercam.

Frank Claassen

My 2 questions, please. First of all, connected nan payroll cost, you've indicated that you had a headwind of €80 cardinal successful '22. What would beryllium astir nan number for '23, given, say, nan afloat twelvemonth effect of nan 2% -- nan 6 steps of 2% and nan upcoming steps? And past secondly, besides connected Radial. Previously, you talked astir customer statement values you won.

Can you elaborate connected that? And besides possibly connected nan churn, did you spot galore customers leave? And what benignant of effect does that have?

Philippe Dartienne

Thank you, Frank, for nan question. I'll return nan 1 connected nan payroll, and we will jointly reply nan 1 connected Radial pinch Koen. On payroll, truthful yes, we mentioned an magnitude of €80 cardinal successful 2022. In 2023, we expect thing astir that, nan aforesaid amount. In fact, there's 2 effects.

The afloat twelvemonth effect of what we have, nan 6 and nan 5, 2% summation successful '22, that's 1 authorities again into further costs successful '23, positive nan expected summation arsenic a consequence of nan improvement of nan wide scale successful 2023. So roughly, it's astir €80 cardinal besides successful 2023.

Koen Aelterman

So it does mean that from a costs unit perspective, it will beryllium very akin successful 2023 arsenic it was successful '22. Then connected nan Radial question, conscionable astir ACV, we signed successful 2022 for $94 cardinal of caller ACV, which is beneath what we signed successful 2021 and 2020. But location is simply a large quality location successful 2020 and 2021. A batch of nan ACV; was besides coming from cross-sell aliases large description s astatine existing customers. In 2022, nan magnitude we signed was almost exclusively caller customers, afloat caller customers.

So those customers, we do expect to onboard complete nan people of 2023, together really pinch immoderate of those, we still signed successful 2021, which were delayed besides into 2022.

In position of nan churn, truthful we person seen a important number of customer churn linked to nan wide marketplace context. And location are immoderate contracts, which travel up for renewal astatine definite points successful nan year. And fixed that nan marketplace has shifted, arsenic we mentioned from that undercapacity to overcapacity -- sorry.

Philippe Dartienne

The different around.

Koen Aelterman

Sorry. Yes, from nether capacity to overcapacity. Indeed, it intends that location is simply a overmuch bigger driver to tender astatine this shape to return advantage of immoderate costs savings that mightiness beryllium gained, and we are seeing that to immoderate extent. We're besides seeing that customers who person a operation of in-house and outsourced fulfillment that, obviously, they thin to put volumes backmost in-house successful bid to leverage arsenic overmuch arsenic they tin their ain fixed costs base. So we mostly spot those effects astatine play, which bespeak nan marketplace circumstances and not needfully thing Radial specific.

Operator

We'll return our adjacent mobility from Marco astatine Barclays.

Marco Limite

I've sewage a fewer questions connected nan parcel volumes successful Belgium. First mobility is connected your outlook of mid-single-digit measurement growth. Given that intelligibly each the, let's say, caller customer maturation from 2022 will annualize successful 2023, I'm conscionable wondering what's your presumption for underlying measurement maturation for 2023 as, to me, it seems that nan mid-single-digit measurement maturation is chiefly driven from annualization of caller customer acquisition. Second mobility is connected pricing for nan parcel volumes. In nan missive business, you are expanding prices by double digit.

You are now guiding for parcels price/mix mid-single digit to precocious azygous digit. So conscionable wondering what's your presumption connected pricing maturation for parcel and why repricing successful parcel is beneath message repricing. Third question, very quickly, what's nan exit complaint connected parcel measurement maturation successful January?

And nan 4th mobility is if you tin guideline america connected what's your presumption astir firm halfway EBIT nonaccomplishment including your guidance?

Koen Aelterman

Okay. Let maine commencement possibly pinch parcel volumes successful our outlook. There were aggregate sub questions. Let maine possibly commencement pinch nan annualization of what you mentioned connected nan caller customers onboard. It's important erstwhile we look astatine nan year-over-year comparison to recognize that, successful Q1, Amazon was still ramping up its outsourcing.

So that will still year-over-year beryllium a antagonistic effect successful nan first quarter. While for nan caller customers onboarded, galore of them -- aliases it was a progressive onboarding passim nan year, I should say, wherever even, arsenic of Q2, we had immoderate of those caller customers onboard.

So that -- a portion of that effect was already again successful our numbers already of this year. But obviously, location will still beryllium a affirmative effect from that adjacent year. In fact, and that leads to your underlying measurement mobility successful position of nan measurement maturation we foresee, it's still mostly from those -- let's say, a spot much than half of that is really expected to travel from nan hunting plan, while nan different -- nan remaining portion is from nan underlying parcel maturation we foresee.

Then fto maine conscionable -- a second, because I wrote down your questions. I deliberation it was nan price/mix effect connected parcels you were wondering about. So I deliberation here, I'll mention besides backmost to what we communicated already successful nan Q3 results connected this because it does not change. First, for Parcels, we request to separate betwixt prepaid parcels and contractual parcels. For prepaid parcels, nan look is controlled by nan value cap.

It's approved by nan regulator, and it's a value summation of 13%, successful statement pinch nan ostentation complaint we spot successful those. For contractual parcels, location is immoderate much flexibility. But mostly speaking, astir of our contracts foresee a value increase, which is 80% of carrier sector-specific index. That value summation would beryllium 10.7%, but we already passed connected portion of that pinch a midyear value summation successful '22. So nan remaining value effect would beryllium adjacent to 8% successful 2023.

And past finally, for our biggest contractual customers, location are typically immoderate different clauses successful nan contracts pinch fixed value increases complete time, which will not afloat screen nan ostentation levels. So that leads to nan wide price/mix effect we're guiding on. Then I deliberation you asked astir parcel volumes successful January...

Philippe Dartienne

Let maine return this. Let maine take...

Koen Aelterman

Yes, spell ahead.

Philippe Dartienne

So parcels measurement successful January grew by debased to mid-single-digit percentage, successful statement pinch our expectations. But besides we request to support successful mind that January '22 constitutes immoderate precocious comps, and we're still preceding nan commencement of nan warfare successful Ukraine and Amazon was still progressing ramping up its in-sourcing until March 2022.

Koen Aelterman

And past nan last mobility was connected corporate. So we don't guideline specifically connected nan number, of course, though I'm judge you can, by difference, get a very bully estimate. The large effects location are evidently that, conscionable for illustration each our different Belgian activities, that will beryllium impacted by nan costs pressure. So nan €80 cardinal mentioned by Philippe conscionable earlier is besides partially impacting corporate.

On apical of that, we expect little building income because we person -- successful nan past, we've done a number of waste and leaseback transactions because we typically person buildings, which we were going to exit connected comparatively short clip frames. Looking astatine our portfolio today, we don't person galore of those left. So we're putting a banal to that waste and leaseback program. So that will effect nan revenues there. Then finally, there's nan costs linked to nan ongoing value concession investigation, but immoderate related measures we're taking successful position of reinforcing compliance and truthful on, which will measurement connected that result.

We will proceed to activity connected overhead simplification arsenic we've ever communicated. But successful ray of nan things I've conscionable mentioned, you will understand that, that will not offset astatine an EBIT level fully, nan antagonistic impacts. So I dream that answers nan question, Marco.

Operator

[Operator Instructions] We'll now return our adjacent mobility from Henk astatine The Idea.

Henk Slotboom

First of all, connected nan CapEx, nan €200 million, I judge you said it's partially catching up pinch nan shortfall successful 2022. But if we look astatine nan economical ambiance successful wide than fundamentally successful nan U.S., location is already immoderate overcapacity. What is trigging you to upgrade nan CapEx fund again to nan €200 million? And wherever do you expect to walk it? My 2nd mobility relates to nan North American business, nan sanction of Amazon pops up again this clip successful narration pinch nan Landmark operations.

How delicate aliases really limited is nan U.S. cognition connected Amazon? I wasn't alert that Amazon was a customer of you location arsenic well. So possibly you tin shed immoderate ray connected that.

Philippe Dartienne

We return both, Henk, truthful we complement each other. So Henk, connected nan CapEx -- arsenic it's already mentioned earlier, we had immoderate rollover from 2022 to 2023 because we person a strict financial policy. And we do not want to build successful beforehand capacity that could stay unfilled waiting for imaginable customers. And especially, arsenic you rightly pointed out, if we person overcapacity successful nan U.S., we will not build successful beforehand capacity. This being said, we still person immoderate caller customers coming in.

And if anyone these customers are coming in, immoderate CapEx are needed, and past we will invest. So successful different words, if I would usage an affinity pinch different businesses, we'll not build merchant warehouse, but we will make nan finance erstwhile nan contracts are there.

We besides person existing installation that requires immoderate attraction CapEx. And of course, we request to proceed investing successful them to protect nan ratio and besides nan assets themselves. So nan portfolio, successful fact, is wholly -- it's -- nan portfolio of activity requires different floor plan of CapEx. Sometimes we person to build it earlier end, typically successful progressive ends. Like we did successful nan U.K., we person to build successful advance, but it's not nan mostly of our business.

The mostly of nan CapEx request of our business are triggered erstwhile we motion a statement earlier onboarding customers.

Koen Aelterman

And to adhd to that, wrong nan €200 million, location is, I would say, 1 benignant of an exceptional CapEx, I would almost say. We person an opportunity successful nan U.S. to put our equilibrium expanse astatine work. There were 2 sites complete location wherever we've been for a very agelong time, and we expect to stay for a very agelong time, which came connected nan market. And wherever we are doing, we are purchasing those sites outright alternatively of keeping nan ongoing lease agreements.

And that is an finance of astir €35 million. So that explains astir of nan quality betwixt what you spot successful 2022 and 2023. So this is really putting our rate to activity to amended our returns.

Philippe Dartienne

And it's possibly a different measurement of moving compared to nan past because we not forestall ourselves from opportunistic investments. Of course, it needs to beryllium related to our halfway activities. We would not do truthful for administrative buildings, but wherever we judge we -- this benignant of business is based connected -- logistics is based connected location erstwhile we are successful a premier location pinch bully numbers of existing aliases imaginable customers. And arsenic Koen mentioned it, we judge we're going to enactment successful nan agelong run. We see we are creating much worth by investing ourselves alternatively than paying it to a 3rd statement because besides erstwhile you are ranking this benignant of stuff, yes, astatine nan extremity of nan contract, we're exposed to a value summation of renewal of nan lease.

But besides you person to proceed paying. While nan owner, you could bask for astir endless period, this type of plus because, basically, they require a constricted attraction finance arsenic well.

Koen Aelterman

Exactly. And past conscionable 1 much point, you besides asked wherever is nan CapEx being spent. As Philippe already referred to nan attraction portion of it, wrong our e-commerce logistics businesses, automation is besides highly important successful bid for america to scope nan productivity improvement. So that's wherever different portion of nan CapEx is going. Moving to your 2nd mobility connected North America and nan value of Amazon successful that.

So Amazon is simply a customer of Landmark Global, which you tin astir apt estimate much aliases little successful position of size by looking astatine nan circumstantial number we disclosed from Radial and nan full for North America arsenic nan bulk of what remains is, successful essence, Landmark Global. And wrong that, Amazon represents, successful a normal time, location betwixt 25% to 30% of nan revenue. So it's a very important amount. In our outlook, our anticipation is for Q1 and Q2 to beryllium astatine a akin level arsenic Q4 was, meaning an astir 50% decline, whereas arsenic of Q3 and Q4, we are moreover expecting those volumes to driblet down to zero. So that would beryllium a very important apical statement hit.

Now location arsenic well, we spot that complete nan past years, we've had beardown commercialized efforts wherever we are getting caller clients onboard. So that arsenic good we will beryllium capable to compensate. And portion of it astatine nan North American level is besides compensated by Radial. If you look astatine it quarter-per-quarter, it intends that for nan North American results, we will see, for LGI, nan antagonistic effect expanding passim nan year, while for Radial to beryllium precisely nan other arsenic customers are onboarded wherever we expect much antagonistic results successful Q1, which will past gradually amended passim nan year.

Operator

We'll now return our adjacent mobility from [ Joe Kurmaskie ] astatine DEFA Endeavour AS.

Unidentified Analyst

I sewage 2 questions. So anterior to nan concession you ended up in, you scheme connected having a superior position during nan 2nd half of this year. Could you talk a spot astir your OMEGA task and really do you spot your expertise to bring retired nan ratio of your business successful nan adjacent 2 to 3 years successful imaginable scope? And nan 2nd 1 is, what is nan effect during 2022 from nan debased utilization of recently opened centers, particularly Radial Europe and Active Ants? And what would nan effect person been if those person been astatine nan mean utilization level?

Philippe Dartienne

So I'm not judge I afloat captured nan first question. Would you mind repeating that one?

Unidentified Analyst

Sure. So you person OMEGA task wherever you benignant of revamping nan Belgium message and parcel business. And I'm funny connected what imaginable you spot successful bringing retired efficiencies present and nan imaginable scope of that complete nan adjacent 2 to 3 years.

Koen Aelterman

So successful position of longer-term guidance than 2023, I erstwhile again request to mention you to our Capital Markets Day, which, arsenic I'm judge you'll understand successful nan existent circumstances and pinch nan uncertainty surrounding nan macroeconomic situation, nan value concession and successful absence of a caller CEO, we are pushing backmost to nan infinitesimal wherever we person a caller CEO onboard. So I won't remark connected that. Maybe conscionable connected nan OMEGA exemplary specifically, successful fact, nan OMEGA exemplary was envisaged backmost successful 2021, when, I would say, nan entity was nan limit successful position of parcel measurement growth.

Philippe Dartienne

What would you mean by that is conscionable compensating -- much than compensating nan alteration of nan message activity.

Koen Aelterman

Exactly. We spot coming that nan parcel maturation is apt going to beryllium somewhat slower. So it intends that nan scheme we had pinch OMEGA, it will besides beryllium implemented astatine a overmuch little pace. However, this is why arsenic portion of nan priorities for adjacent year, Jos and his teams will beryllium looking astatine really to optimize wrong nan existent marketplace circumstances. So pinch a overmuch bigger stock of message still arsenic compared to parcel and pinch that attraction connected flexibility, value that we request to person passim nan network.

You tin spot though that from OMEGA, nan elements which were applicable successful nan existent context, we are implementing them. We said astir nan 800 FTE simplification we had successful 2022. We will proceed on those lines pinch operational improvements successful 2023. But nan wide clip statement for nan implementation is thing to beryllium adapted past pinch caller measures to beryllium implemented. Then connected nan recently opened center, truthful I will not springiness a circumstantial effect connected that.

But conscionable successful general, I deliberation it's important to -- and here, I tin mention backmost to thing we shared successful nan past. Our wide separator target for these e-commerce logistics businesses is successful nan 5% to 7% range. If you look astatine our -- wherever our numbers are today, you will spot that we still person ways to spell towards that, which illustrates nan effect of those ramping up costs. which are, by nan way, not only linked to those caller centers which are not yet afloat occupied, but besides to nan beforehand loading we are doing successful position of income capacity to beryllium capable to prolong nan maturation trajectory we person successful mind for nan adjacent mates of years.

Unidentified Analyst

And arsenic a follow-up connected that one, truthful if you return your existing centers, is nan capacity location matching nan separator goal?

Koen Aelterman

That depends very overmuch connected a center-by-center ground depending connected to what grade their capacity is so utilized.

Operator

There are nary further questions successful queue. I will now manus it backmost to nan CEO, Philippe Dartienne, for closing remarks. Thank you.

Philippe Dartienne

I would for illustration to convey everybody connected nan telephone for having nan clip -- taking nan clip to beryllium pinch america this greeting and your very absorbing question. We will perceive from you astatine nan convention we're going to be successful London opening of March. Please statement that we will merchandise our yearly study 2022 connected March 16. We look guardant to staying successful touch pinch you, and nan first 4th results will beryllium released successful May. Thank you very much.

Have a awesome day.

Operator

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You whitethorn now disconnect.