CTT - Correios De Portugal (CTT) Q2 2024 earnings summary

Executive summary

• Revenues in 1H24 reached €524.3m, up 9.1% year-over-year, driven by strong Express & Parcels growth, which now accounts for 40% of consolidated revenues and saw record-high margins, especially in Spain.

• Mail & Other segment stabilized revenues through price increases and mix, partially offsetting volume declines.

• Bank and Financial Services saw increased client engagement, deposit growth, and improved profitability, despite lower net interest margin and public debt placements below normal.

• Recurring EBIT was €35.0m, down 27.6% year-over-year, mainly due to lower public debt placements in Financial Services.

• Net profit for 1H24 was €19.8m, a decrease of €6.2m compared to 1H23.

Financial highlights

• 1H24 revenues reached €524.3m (+9.1% y.o.y.), with EBITDA at €70.8m (-11.6% y.o.y.) and recurring EBIT at €35.0m (-27.6% y.o.y.).

• Net profit attributable to equity holders was €19.8m, down 23.9% year-over-year.

• Free cash flow for 1H24 was €10.6m, a 77.9% decrease from 1H23.

• E&P recurring EBIT margin reached a record 7.4% in 2Q24, up from 5.6% in 1Q24.

• Net financial debt at 30 June 2024: €162.7m.

Outlook and guidance

• Recurring EBIT guidance (excluding Financial Services) raised to at least €70m for 2024, a 36% increase year-on-year.

• Consolidated recurring EBIT guidance set between €80m and €90m, contingent on Financial Services recovery.

• CTT targets consolidated revenue growth in the mid-single digit for 2024.

• Expectation of improved public debt placement conditions in H2, with potential for €10–20m additional EBIT.

• Continued investment in Express & Parcels capacity and digital banking channels.