Operator: Ladies and gentlemen, hello and welcome to the bpost Q3 2026 analyst conference call. On today's call, we have Mr. Chris Peeters, CEO, and Mr. Philippe Dartienne, CFO. Please note, this call is being recorded, and for the duration of the call, your line will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing pound key 5 on your telephone keypad to register your question. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. I will now hand over to your host, Mr. Chris Peeters, CEO, to begin today's conference. Please go ahead, sir.
Chris Peeters: Thank you. Good morning, ladies and gentlemen, and thank you for joining us today for our Q3 results presentation. Joining me are Philippe, our CFO, as well as Antoine from Investor Relations. The presentation materials were published on our website earlier this morning. We will first take you through the presentation and will then answer your questions. As always, we kindly ask you to limit yourselves to two questions each to ensure everyone has the opportunity to participate during the call. Philippe will first take you through our Q3 financial performance. I will then update you on our strategic and transformation initiatives and conclude with our outlook for the remainder of 2026. Philippe, over to you.
Philippe Dartienne: Thank you, Chris, and good morning, everyone. As you can see from the highlights on page 3, group operating income for Q3 amounted to EUR 1 billion 5 million, representing a year-on-year decrease of EUR 24 million, or -2%. The quarter was characterized by the usual seasonal softness combined with weaker-than-expected demand trends across several parts of the group. Most of the revenue decline was driven by bpost, where the accelerated mail volume decline reached 16.4%, while parcel volume growth remained limited at 1.3%, with September momentum falling short of typical back-to-school trends and our expectations. At the same time, Paxon Europe delivered revenue growth of 6.6%, helping to mitigate the impact of the previously announced customer churn at Radial US and the broadly stable revenue performance at Staci Americas.
Philippe Dartienne: At Landmark Global, revenue was slightly higher year on year, despite the volume pressure on Asian flows following the introduction of the three-euro levy on 1 July. This pressure was partially mitigated by temporary business opportunities with existing customers, but at a less favorable mix profile, and that's a point I will come back on later. Turning to our adjusted EBIT, which came at -EUR 21.2 million, the year-on-year decline of EUR 18 million was primarily driven by bpost, where the EBIT decreased by close to EUR 20 million, reflecting the termination of the 679 banking activities and the accelerated decline in mail volume, as well as inflationary pressure on payroll despite ongoing FTE reductions. At Paxon, EBIT increased by close to EUR 9 million year on year.
Philippe Dartienne: In Europe, revenue growth translated into higher profitability, while in North America, profitability improved despite lower revenues, reflecting the benefit from the cost-cutting measures and operational improvements that we already discussed during the previous presentations. At Landmark Global, as I just mentioned, revenues remained broadly stable year on year, but this resilience was supported by temporary business opportunities. This also came at the expense of profitability, as European and US regulatory measures weighed on the product mix and overall margin profile. As a result, despite relatively stable revenue, the EBIT contribution decreased by a bit more than EUR 7 million year on year. While Q3 is typically impacted by seasonality and summer softness, we recognize that the performance came in below our expectation.
Philippe Dartienne: In particular, parcel volume momentum remained subdued in September, while the impact of the new regulatory measures on Asian cross-border flows proved more pronounced than initially anticipated. As a result, and given that part of these headwinds are expected to persist into Q4, we have revisited our outlook to reflect the trends that we are currently observing across the businesses. Chris will walk you through our updated expectation at the end of the presentation. Let me turn to the performance of the three business units. I am on slide 5, covering bpost segment. Revenue declined by EUR 26 million year on year to EUR 487 million. Domestic mail revenue decreased by EUR 24 million, or 9.4%.
Philippe Dartienne: Mail and press volume contracted by 16.4% during the quarter, compared with 10.1% last year and 15.5% in H1, and in line with the mid-teens volume decline guidance we provided earlier this year. Besides the lower transactional mail volumes following the introduction of the mandatory B2B invoicing at the beginning of the year, as well as the termination of several advertising contracts, the volume decline also reflects an accelerated decline in press volume of 29.5%, driven by the ongoing newspaper volume transition in the northern part of the country. Overall, mail volume decline had a negative revenue impact of around EUR 40 million, only partially offset by a positive price and mix effect of 7%, that translating EUR 16 million. Parcel revenues increased by a modest EUR 3 million, or 2.2% year on year. In terms of volume, we saw a growth of 1.3%.
Philippe Dartienne: However, this figure benefited from one additional working day, and on a daily average basis, volumes were broadly stable at -0.3% year on year. In Q1, parcel volume were growing at around 5% on an underlying basis, broadly in line with our expectation. Since the disruptions experienced in Q2, volume momentum has remained subdued, and growth has not returned to pre-strikes level. This was particularly noticeable in September, where we did not observe the usual post-summer acceleration, leading us to adopt a more cautious assumptions for Q4. For Q3, several factors contributed to this softer volume development. Consumer confidence continued to deteriorate throughout the quarter, while household spending remained resilient but subdued. In addition, we experienced a temporary operational disruption at one of our largest e-commerce customers, which negatively impacted volumes during the period.
Philippe Dartienne: Finally, exceptionally warm weather in September delayed seasonal apparel purchase and weighed on apparel-related e-commerce activity during what is normally an important back-to-school month. Despite this muted volume environment, price and mix contributed positively by close to 1%. Finally, revenue from other activities, including retail, value-added services, and personalized logistics, declined by EUR 4 million year on year. This mainly reflects lower revenues following the termination of the 679 banking activities at the beginning of this year. However, one should note that this impact was partially offset by continued strong growth at DynaGroup, which delivered more than EUR 30 million, or 14% of additional revenue year to date. Let's move to the P&L of bpost on page six. Sorry. Including intersegment revenues from inbound cross-border volumes processed through the domestic network, total operating income declined by EUR 23 million, or -4.4% year on year.
Philippe Dartienne: On the cost side, OPEX, including D&A, slightly decreased by EUR 4 million, or 0.7%, mainly driven by two effects. First, we reduced our workforce by approximately 1,730 FTEs and interim staff, representing a decrease of 7.2% year on year, compared to approximately 1,500 reported at the end of H1. This corresponds to an EBIT improvement of more than EUR 20 million year on year, and reflects the continued benefit from the ongoing reorganization of our distribution and retail operations. These savings were partially offset by higher cost per FTE following two salary indexations over the past 12 months, resulting in an increase of close to 3%. Second element, transport cost increased, primarily due to volume growth in personalized logistics and the impact of temporary fuel surcharges.
Philippe Dartienne: Despite significant productive effort and continued progress on the reorganization agenda, these benefits were more than offset by inflationary pressures, as well as a decline in high-margin mail revenue and the termination of the 679 activity. In addition, lower cross-border volume from Landmark Asia to Belgium activities, following the implementation of the three-euro levy, reduced the absorption of bpost fixed cost base, creating an additional drag on EBIT. As a result, and against a backdrop of muted parcel from growth, the adjusted EBIT declined by EUR 20 million year on year to -EUR 29 million. Turning to Paxon on slide seven. As in previous quarters, the performance reflects two contrasting trends. At Paxon Europe, revenue increased by 5.5% year on year. Across our European businesses and geographies, we delivered growth of around 6.6% in line with Q2, with several activities continuing to grow at high single-digit rates.
Philippe Dartienne: This positive momentum was partially offset by the performance of Staci Americas, which I remind you is reported on the always impacts on Europe, where revenues at constant FX rates continue to decline following contract termination announced during Q4 last year. In addition, and to a lesser extent, revenue was impacted by customer departure late in the quarter and by reduced service scope with certain existing customers. While overall growth remained solid during the quarter, we are seeing increased commercial delays. As a result, the contribution from recently signed customers is ramping up more slowly than initially anticipated, which is beginning to weigh on our near-term growth expectations. At Paxon North America, revenue declined by EUR 12 million. At constant exchange rate, this corresponds to a decrease of around 10%, driven by three factors. First, the expected revenue churn from customer contract termination announced last year.
Philippe Dartienne: Second, mid-single-digit negative same-store sales, representing a slight deterioration compared with the previous quarter. Third, this effect was only partially offset by the contribution from recently signed customers, which generated around EUR 30 million of revenue during the quarter. The ramp-up of new customer wins continued to progress more slowly than initially anticipated and remained insufficient to fully offset churn, which is increasingly weighing on our near-term growth expectation here as well. Let's move to the P&L of Paxon on slide 8. Against this backdrop, total operating income remained nearly stable year over year, while operating expense, including D&A, decreased by close to 3%. The development of our cost base reflects the different dynamics across our two regions. In Europe, excluding Staci US, operating expense increased broadly in line with top-line growth.
Philippe Dartienne: In North America, note that Staci currently experienced some temporary customer profitability issues, but Radial cost adjusted downwards along lower activity levels while maintaining strong variable contribution margins. This was further supported by ongoing fixed cost initiatives and headcount reduction at Radial, contributing to the continued improvement in profitability despite lower revenues. As a result, adjusted EBIT increased by close to EUR 9 million to EUR 7 million in the quarter. Turning now to Landmark Global on slide 9. At Landmark Europe, the main development during the quarter remained the impact of the three-euro levy, which came in force on 1 July and weighed on Asia to Belgium volumes, with an impact broadly in line with what market participants have reported over the recent months. Importantly, we did not observe any meaningful sequential recovery throughout the quarter, with volume remaining under pressure from July through September.
Philippe Dartienne: This volume pressure was partially mitigated by a temporary business opportunity with existing customers, which helped stabilizing overall volumes. However, this incremental volume came with a less favorable mix profile, resulting in a slight dilution of both revenue and profitability. Beyond Asia to Belgium, we continue to see healthy momentum across most other European and UK flows, which contributed positively to the quarter and ultimately allowed Europe to deliver a modest year-on-year revenue growth of close to 2% despite the regulatory headwinds. At Landmark North America, revenue was slightly higher year on year at constant exchange rate. Next to a modest volume growth consistent with a softer macroeconomic backdrop, this performance also reflects an unfavorable mix effect driven by higher proportion of US domestic volumes and lower US to Canada flows, which continue to be impacted by tariff-related measures. Overall, Landmark Global operating income increased by 1% year over year.
Philippe Dartienne: As shown on slide 10, OPEX and D&A increased by close to 7%, primarily reflecting two factors. First, higher transportation costs driven by volume growth, but also by temporary fuel surcharges and lower carrier rebates compared with the prior year. Second, an unfavorable phasing terminal dues. As a result, despite volume resilience across most our commercial activities, adjusted EBIT decreased by EUR 7 million to just under EUR 10 million. Reflecting an unfavorable business mix effect already visible in previous quarter, but further exacerbated this quarter by the regulatory change impacting Asian volume in Europe, and unfavorable phasing of terminal dues, which is expected to normalize over the remaining of the year. Moving on to corporate segment on slide 11.
Philippe Dartienne: EBIT improved modestly year on year from -EUR 9 million, driven by continued cost discipline and a workforce reduction of around 4%, more than offsetting the annual salary indexation of just under 3%. Let me turn now to cash flow on slide 12. Net cash outflow for the quarter amounted to -EUR 770 million, compared with an outflow of around EUR 60 million last year. This primarily reflects the repayment of the 2018 bonds at maturity in July 2026. Excluding this financing effect, free cash flow remained broadly stable year on year at around EUR 63 million. This reflects, on one hand, cash flow from operating activities of around EUR 91 million, broadly stable with last year. The lower EBITDA was largely compensated by favorable working capital evolution, notably at receivables level. On the other hand, CapEx amounted to approximately EUR 28 million, remaining broadly stable year on year.
Philippe Dartienne: As a result, underlying cash generation remained resilient during the quarter despite the lower profitability performance. Chris, over to you.
Chris Peeters: Thank you, Philippe. I am on slide 13 with the strategy and transformation highlights. As part of our transformation journey, we delivered several important milestones during the quarter, most notably the transformation of bpost operating model and the commercial launch of Paxon as our unified global 3PL platform. At the same time, as just explained, our financial performance remains affected by a combination of softer demand trends, regulatory developments, and slower-than-expected commercial ramp-up across several activities. While some of these factors are clearly external, others require stronger execution on our side, particularly in commercial development, which is now a key area of focus for management. To look at bpost, we see that the revenue pressure remains significant. The accelerated decline in mail continues to outweigh parcel growth, while commercial development in logistics activities is progressing more slowly than initially anticipated. Another important area of focus remains our IT transformation.
Chris Peeters: The realization of IT efficiency gains assumed over 2025 to 2027 has been slower than initially anticipating, resulting in a gap versus our longer-term cost trajectory. We completed a comprehensive review of our IT cost base and identified approximately EUR 30 million of annual savings potential. We have now established a phased implementation roadmap running from 2027 to 2031. While this confirms our ability to capture meaningful efficiencies, the timing of these savings is now expected to be later than originally planned. Despite these headwinds, execution of our transformation agenda remains on track and continues to deliver tangible milestones. To look at the operating model, in September, bpost implemented significant changes to its distribution model to support the transition towards a parcel-focused operating model.
Chris Peeters: These changes include the implementation of dynamic distribution rounds, more efficient pre-sorting of mail at sorting centers, and later delivery start times, allowing customers to inject parcels later into our network. At the same time, the rollout of our dense/non-dense operating model continues according to plan and remains a key lever to further improve workforce efficiencies in the coming years. Our out-of-home strategy also continues to gain traction. The bpost network now exceeds 3,000 lockers, with more than 600,000 new users acquired through targeted customer campaigns, and we are on track to reach approximately 3,300 lockers by year-end. We also successfully secured the renewal of the Belgian license plate production and distribution contract for another five years, ensuring a meaningful recurring B2G revenue stream through 2032. In parallel, we continue to increase the relevance of our retail network through new partnerships.
Chris Peeters: The home security provider Verisure and the telecom operator Digi are now available across the entire post office network, while our partnership with the energy provider Luminus has started in an initial wave of offices ahead of a broader rollout next year. Finally, one should note that uncertainty remains regarding the aid management contract with the Belgian state, with the year-end deadline approaching and no further clarity having been provided at this stage. While these transformation initiatives are progressing according to plan and already contributing to workforce efficiencies, the financial benefits are currently being absorbed by the challenging revenue environment. Turning now to Paxon and Landmark, and I am on page 14. The launch of Paxon in September 2023 marks an important milestone in the creation of a unified global 3PL brand.
Chris Peeters: By bringing together Staci, Radial, Active Ants, and Base Logistics under one commercial identity, we strengthen our positioning and our ability to serve customers globally. In Europe, we continue to deliver revenue growth and cost synergies. However, commercial execution remains below our ambitions, both in new business acquisition and cross-selling activities. While top-line development remains positive, commercial ramp-ups are taking longer than initially anticipated. As a result, we have launched a dedicated growth plan focused on accelerating sales execution, strengthening lead generation, and increasing commercial conversion. In North America, operational performance continued to improve, and the fixed cost and overhead reduction initiatives launched over the last quarters are delivering tangible profitability improvements. However, here as well, commercial momentum remains softer than expected. Customer churn, slower market growth, and delayed ramp-up of new customers continues to weigh on revenue development.
Chris Peeters: Strengthening commercial execution in North America is therefore a clear priority for management going forward. Landmark continues to demonstrate commercial resilience in an increasingly challenging regulatory environment. The introduction of the 3-euro levy weighed on Asian volumes throughout the quarter without any meaningful recovery from July through September. Targeted commercial opportunities with existing customers helped mitigate part of this pressure and supported revenue resilience. However, these opportunities were temporary in nature and came with a less favorable mix profile, and therefore impacted profitability. Looking ahead, the introduction of the additional 2-euro handling fee will further increase regulatory pressure on Asian flows and reinforces our focus on continuing to expand the range of commercial services offered to our customers. Finally, at group level, we recently adapted our executive committee structure and organization to support the next phase of our transformation.
Chris Peeters: These changes are designed to strengthen customer focus, improve execution, and accelerate decision-making across the group. As Nicolas Baise prepares to become CEO of bpost on 1 January 2025, I will return fully to my group CEO responsibilities after a period during which I combined both roles. This additional focus at group level will allow us to further accelerate execution of our strategic priorities across all business units. To conclude, the transformation continues to progress and confirms the strategic direction we have set for the group. While recent market developments and commercial headwinds have impacted our short-term performance, our priorities remain unchanged. Beyond productivity initiatives, we are now placing even greater emphasis on commercial execution and customer profitability across all business units. This will be one of management's key priorities going forward. This brings me to the outlook update for the remainder of 2026. I am on slide 15.
Chris Peeters: As Philippe highlighted earlier, Q3 performance came in below our expectation. More importantly, several of the trends observed during the quarter are not showing the improvement we had anticipating heading into the year-end peak season. Parcel volume momentum remained muted during September despite the usual back-to-school period. Commercial ramp-ups are progressing more slowly than expected, and regulatory pressure on Asian cross-border flows continues to intensify, all these in a challenging macroeconomic environment. As a result, we now expect Q4 adjusted EBIT to be between EUR 55 million and EUR 65 million, with weaker revenues expectation across all of our major business units, as detailed on this slide. This translates into a full-year adjusted EBIT outlook of EUR 95 million to EUR 105 million, compared with our previous expectation of around EUR 140 million communicated at the time of our H1 results.
Chris Peeters: At the same time, we remain disciplined on capital allocation and have therefore reduced by 10% our expected full-year CapEx from EUR 150 million to approximately EUR 135 million. While we are clearly disappointed by this revision, we remain fully committed to delivering on our transformation agenda, accelerating commercial execution, and reinforcing profitability growth across the group. With this, we are now ready to take your questions. Again, two questions each.
Operator: Ladies and gentlemen, as a reminder, if you would like to ask a question or contribute on today's call, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. Please also ensure your line remains unmuted locally. You will be advised when to ask your question. The next question comes from Michiel Declercq from KBC Securities. Please go ahead.
Michiel Declercq: Yes, hi, and thanks for taking my questions. A lot to digest during this results release. My first question would be a bit on Paxon, and more specifically the outlook for Q4. In Q3, your revenues were broadly flat. You guide for high single-digit decline in Q4. Can you help me understand the dynamics a bit better here? I understand at Radial North America, the same-store sales, they deteriorate a bit from mid-single digits to mid to high single digits. Then in Europe, you guide for low same-store sales. How does this compare to Q3 for Europe? How I interpret this guidance is that Europe should also experience a meaningful decline in Q4.
Michiel Declercq: I understand there is still that US Staci customer that is lost, but help me understand a bit here what is changing in terms of same-store sales for Europe as well, and what the impact maybe is of potential new onboarding customer delays and how you look at this going into next year. Then the second question would be on the, looking a bit into 2027. You lowered your guidance two times this year. You now guide at around EUR 100 million at the midpoint. Next year, you should have some tailwind from the strikes that will hopefully not reoccur. At the other end, at Radial US, there is no improvement in sight. Looks like the EU is deteriorating a bit as well at Paxon. Then you have, of course, the de minimis impact at Landmark Global, which is expected to intensify further in November, if I am not mistaken.
Michiel Declercq: Quite a lot of headwinds despite hopefully no strike impact, but how are you looking at EBIT for 2027? Do you think you can increase there, or what measures can be taken to offset these challenges? Those would be my questions, please.
Philippe Dartienne: Thank you for your question. Indeed, it is a lot, but I think with what we have announced, it is absolutely logic and normal, and those are very good questions. In the US, I am speaking former Radial, sorry, to go back to the old terminology, but you refer to it too. Indeed, what we are seeing is that the same-store sales really is accelerating. I think, I am looking at Antoine, but it is maybe, what, more than 12 or 15 quarters that we see a degradation of the same-store sale. We always believe it is the last one, but it still continues. We do not see, based on the forecast that our customers are providing us, that the peak season will be a great season in the US this year. It is part of the element.
Philippe Dartienne: On the other end, you also noticed that when it comes to variable contribution and efforts made to adjust the structure to the current volumes, we are continuing, and I am repeating that quarter after quarter, but it is still the case. It helps mitigating the lower development. This being said, we have also to acknowledge the fact that in terms of rebate rates that we are receiving from transporters, so the providers, the discounts we are getting are lower also. There is a huge overcapacity in transport capabilities in the US, and it weighs also on the rebates that they are offering us.
Philippe Dartienne: When it comes to Paxon Europe, indeed, there will be further degradation in Q4 2026, but it is just, quote-unquote, the annualization or the follow-up, if you want, of what happened in the third quarter, namely a low growth rate and the same-store sale, which is not also picking up in Europe, and the impact of loss of certain customers at Staci Americas. So, it is more like what we observed in Q3 was not applicable to the entire trimester, but it will be annualized or quarterlized, if I could use that word, in the first quarter that really explains why we are more concerned for the first quarter than we were some weeks ago.
Chris Peeters: Good. On the EBIT guidance, as you know, of course, this is not the moment to give EBIT guidance for next year. We are still in the middle of the budgeting process. But I agree with you that there are a couple of, let us say, negative external trends that play against us. Most importantly, of course, the one on the tariff and handling fee from Europe versus Asian volumes, which both are affecting Landmark and the unit bpost. That is an important negative trend that we see, and the overall consumer confidence, which gives a slower-than-expected parcel growth environment and still an acceleration on the mail volume, mainly coming from digitalization, such as Peppol in Belgium, that has accelerated decline in mail, and we expect that to continue.
Chris Peeters: That being said, of course, we are putting in place a bunch of measures against that, both on the cost reduction side and on the sales stimulation side. So, we will ensure that on those different fronts, we will look for an acceleration. There are also new opportunities in the market, and as you clearly said, the big impact that we saw last year or this year in April on strike, we at least hope that there is no reason for a similar thing. The transformation now has been realized. We see that the, let us say, the dynamic in our personnel overall in general is positive against the changes that we have done. So once the implementation was there, we see that we have a positive dynamic for most of our employees at this point of time.
Chris Peeters: We continue, of course, to do changes, but none of them with the same level of impact as the ones that we have just executed during the month of September. Therefore, we are pretty confident looking at that side. When we will come back to you with a better guidance, it will be a little bit the sum of those two, an increased focus on some cost reduction measures that we have, very much focused on how do we see alternative for top-line growth. As you know, many of those Chinese platforms are looking for fulfilment opportunities in Europe as we speak, and also for logistical opportunities there. So, there will be new sources of volume likely being in Europe soon as well, and we are looking at those as well.
Chris Peeters: But it will be a continued focus on those dimensions where it really matters for us, where we can make a meaningful change in the light of the transformation we have done. I think the important message here is that the transformation as such has advanced well. Couple of external headwinds that I mentioned, internal headwinds, the strike. Looking forward to that external remains the same. Internally, probably allows us to have more focus on both cost and revenues in the coming year. So, the balance of that, we will communicate with you at the moment that we have the full-year results of 2026.
Michiel Declercq: Okay. Thank you.
Operator: The next question comes from Frank Claassen from Degroof Petercam. Please go ahead.
Frank Claassen: Yes. Good morning, gentlemen. My first question is on Radial US, because on one hand, you have still got the client churn, and on the other hand, the commercial delays. Can you elaborate when we can expect some kind of turning point for Radial US? Will also be client churn still weighing on 2027, or when could we expect some kind of inflection point? My second question is more on, let us say, the Capital Markets Day you hosted last year. Of course, obviously there have been much more headwinds than anticipated since then, but how should we look at the strategic progress so far and also the targets you gave at the Capital Markets Day? I remember also a target for next year. How should we look at that in the current context? Thank you.
Philippe Dartienne: On Radial, it is a combination of two things. It is the customer churn, 2025 in 2026 having impact in 2026, and some of them will also have impact in 2027. Also, just want to remind, as I mentioned it before in the answer to the previous question, in Radial, what is positive is they are capable and have demonstrated the capability to adjust the cost base on a variable basis, but also on a fixed cost basis to the level of activity. Okay, you might tell me that reducing cost is not a sustainable way of developing a company. Totally agreed. But at least this continue to go while operational excellence is delivered to customers. In fact, the turning point, I think it is a bit too early to come to that one.
Philippe Dartienne: It will come with the announcement of the 2027 numbers, as Chris referred to, that we will bring to you with the Q4. Yes, we will be turning into a positive momentum, but the question is, what is the full-year impact of the customer lost in 2026 that will still have an impact in 2027, and the pace at which we can onboard customers? Of course, we will have also, conversely, the full-year impact of the customer that we have onboarded in 2026 that will have a full-year impact in 2027. But for more details on that one, ask you to have a bit of patience and wait for our budget exercise being completed, and we will come back to you on that one. On the Capital Market Day, Chris?
Chris Peeters: Yes. On Capital Market Day, we will obviously have to revisit that given the more complex external environment. That being said, the fundamental drivers of our transformation remain solid. We had intense review of all the drivers that we had. As always said, we are in a transformation, which, given the context of the company, we came late and we have to accelerate on many of those dimensions. Obviously, the strike of this year has not helped us. A lot of focus on the operational transformation that we should do, and that was fairly successful in the end after the strike. That is something that we do. Now we will reemphasize the focus on some of the delays that I mentioned, the one that we have seen in the digital transformation and the one that we have seen in the commercial transformation.
Chris Peeters: So that focus will be there. I think that there will be for sure a delay in execution compared to the announcement what we have done in the Capital Markets Day at that moment due to the combination of headwinds and some delay of transformation. But overall, the fundamentals that we have, the kind of company we will become after the transformation, and the way how we will create profitability and value creation remain solid and the same.
Frank Claassen: Okay. Thank you for your comments. Thank you.
Operator: The next question comes from Marco Limite from Barclays. Please go ahead.
Marco Limite: Hi. Thanks for taking my questions. A similar question on Q4 high single-digit decline, but rather than on bpost and into Landmark. I mean, I am aware that, of course, we have had several regulatory headwinds in summer and from 1 November, but just checking that the acceleration in revenue decline in Q4 versus Q3 is basically all driven by new regulatory headwinds, or if there is anything else there. The second question is just to go back on this IT transformation. Are you able to quantify by how much you are, let us say, behind the plan? So, in EUR million terms, how much cost savings, let us say, are missing? If I can stick a third one quickly, on this license plate distribution contract, you are talking about lower annual value. Can you just remind us how lower? Thank you.
Philippe Dartienne: On the Q4 forecast, Marco, in Landmark Global, it is really, really driven by the regulatory impact. It continues. We had that two waves, so the three-euro levy, and we have now the additional 2-euro handling fee for processing fees that will come into effect. So it will have an impact. This is really the main driver for the decrease that we are seeing. Historically, when we have seen a change in regulation, you have a drop, which is typically around 10% to 20%, and then over a period of four to six weeks, it goes back nearly to the same level. Here, we experience, I mean, we as a business, we experience, or the profession, if you want, we experience a drop of between 30% and 40%, and it has not come back.
Philippe Dartienne: There will be an additional layer of 2 euros, which weighs a lot when you make purchases of an average value of EUR 3 to EUR 5 for the product itself. If you have to add another EUR 5 on top of it, now it is really an impact on the decision of the customers. Do I buy? Yes or no? We are really seeing an acceleration of that. When it comes to bpost, again, it is just the continuation of what we have observed in Q3. Those customers will have left us or reduced scope in the context also of a lower sales or sale. It will have an even more important impact in Q4.
Philippe Dartienne: When it comes to IT transformation, we said that we revisited what we could achieve in terms of IT efficiencies, and we mentioned a number of EUR 30 million over a four-year period, which is a revised version of what we had anticipated two years ago. So it came out a bit lower, so meaning that it has an impact on non-delivered saving, if you want, in 2026, more than EUR 10 million. On the license plate, I do not have the number in my head. We will refer back to you on that one.
Marco Limite: Thank you. Just a quick follow-up on the first question around Landmark Global. So, you are talking about 30% to 40% decline in volumes, which makes sense, the number I have seen elsewhere. But then how we reconcile the -30% to -40% to only, let us say, only high single-digit percent decline? I guess the other traders are growing.
Chris Peeters: Yes. We successfully reached out to those clients, so we increased our market share in a declining volume. We still are affected by some decline in volume, but we increased our market share in those Asian volumes coming to Europe. Obviously, that came based on a new product offering that we had with a lower margin than the previous one, but we took the opportunity to focus on ensuring that we would have a market share increase in the flows from Asia to Europe, and that was successful already starting from, let's say, H2 of July throughout the month. You see that it has a stabilizing effect at the top line, but you do not see it fully translated in the EBIT lines because you have some volume decline that we still see, even net of that, we still lose some volume.
Chris Peeters: big market share increase, but on 40% decline, obviously, even with market share increase, you still lose some volume and some mix effects, price mix effects that you see in the overall result of Q3.
Marco Limite: Very clear. Thank you.
Operator: The next question comes from Henk Slotboom from the IDEA!. Please go ahead.
Henk Slotboom: Yeah, good morning, and thanks for taking my questions. I've got a lot, but I'll try to wrap them into two long questions. The first one is on Landmark. Chris, you already elaborated about increasing your market share in the Asian volumes and that sort of things. At the end of the day, you already said it is a temporary thing. We see a lot of Chinese platforms moving their warehousing and fulfillment to Europe. That means that effectively, you should increasingly switch from Asia, Europe into a network that is intra-Europe cross-border. How are your chances there? I asked the same question to CTT earlier this week. Everybody is talking about the same, whether I talk about Spring or I talk about Cacesa, or I talk about Landmark Global. How are you going to build a position or extend the position here, and what are your advantages?
Henk Slotboom: Is it very much the strength of Liège as a hub? That's my first question. The second question is more on Paxon, and especially on Paxon Europe. First of all, if I look at what the Chinese are doing, it looks as if they are creating their own dedicated fulfillment and warehousing capacity in Europe. Is it right to assume that Paxon is not benefiting, or Active Ants or Radial Europe or whatever, is not benefiting from the relocating of the Chinese or the How do you call it? The move from the Chinese to local warehousing and fulfillment in Europe. That's one thing. Secondly, I'm a bit puzzled, and maybe the explanation is easy, about what you say about the prospects of Paxon Europe for Q4. It says low send or sales. Paxon Europe is mainly B2B.
Henk Slotboom: Is this being caused by Staci US, or are there any other things I don't see at this moment?
Chris Peeters: It's a long question, so let's try to structure it a little bit. If you look at the Asian volume, so indeed, the commercial repositioning that we did, increasing market share, is of temporary nature, as we also mentioned in the documentation that we sent out today. That being said, of course, we are of the opinion, as you also underline, that those tariffs will be there to stay, and that the change in the nature of the business that we will do with the Asian platforms, Chinese mainly, will change. As you know that we still have some of the business as well coming from other Asian countries coming to Belgium. There we see less of a change today than that we see on the Chinese platforms.
Chris Peeters: They are equipping themselves for today a buildup of fulfillment capabilities within Europe, some of them already active and running. From everything that we can see, also from every discussion that we have, they run fully on their own warehouse management systems, on their own order management systems, and they want to operate most of those facilities today, mainly positioned in Eastern Europe themselves. That being said, you have seen that we also did big steps already in the carving out, well, not carving out, but splitting off inside of the legal entity of our transport entity. There will be increased line haul activity coming in the first phase of this transformation, coming from Poland, Romania, towards the Western Europe. That is an opportunity that we are investigating as we speak.
Chris Peeters: Second thing is, in what we understand from our conversations with those platforms is the first wave will be Eastern Europe with this kind of still have few days before you can deliver after you order, will be also complemented with more local fulfillment in the second wave that they will do once they have established their position. We are looking at what the opportunities would be there. So we consider that for Paxon fulfillment opportunities in the, let us say, the big volumes that you will see that still have a day +3 to day +7 kind of delay. We do not think that we play any fulfillment role into that. We think that likely no major fulfillment player in Europe will play a role in that.
Chris Peeters: That being said, around the markets that you serve, there will be opportunities when they want to increase their quality of delivery. That is an active discussion that they have, that they want to move those platforms as a digital platform which is Chinese-owned, but with a logistical activity which is regional. In that regional play, we look if there are opportunities. A bit too early to say if they continue to what they say, "We want to partner on those ones," and they execute on that one. But at least they were very clear for the first bulk, they do not look specifically at partners in fulfillment. For the second one, they announced that they would look for partners, and obviously, actively we look for that at this point of time with Paxon.
Henk Slotboom: That is clear.
Chris Peeters: Then your other question was on Q4.
Philippe Dartienne: Yes
Chris Peeters: Maybe you can talk through that, Philippe.
Philippe Dartienne: Yes. You are absolutely right, Henk, that we are mostly in Western Europe having B2B customers. Nevertheless, those B2B customers are also impacted by the global economic environment, where we see less development in their top line, and as a consequence, a ripple effect on us as well. Also in the US, we said we have some customer churn, customer totally exiting us, also reducing their scope of services. We also experience, both in the US and in France, some temporary profitability issues with, in fact, three customers that weigh quite significantly on the result, and that will take a bit of time to be brought back to an acceptable level of profitability.
Henk Slotboom: Okay. Maybe a clarification, not so much a question, because otherwise I would violate the rules.
Chris Peeters: Be careful there, Henk.
Henk Slotboom: The EUR 50 million subsidy, the federal government wanted to cut the subsidy with EUR 50 million. Given what is taking place in Belgium, I believe the prime minister is heading towards the king for a second time this week.
Chris Peeters: He should be there at this moment, yes.
Henk Slotboom: Okay. What is the status there? Because on one hand, you said, "If the subsidy is cut by EUR 50 million, we will act correspondingly." But is this still to be expected as of 1 January, or are we going to see a push-out of this whole phenomenon?
Chris Peeters: There are a couple of, let's say, legal safeguards around that. It is fairly unlikely that there will be any plan that needs to be fully implemented as of 1 January, given the timeline that we are on now. Meaning as well that in any case, there needs to be a European approval in case that there is this proposal of a revisited network with different opening hours or different size of the network, which depends on the government choices that we take. But we have a reasonable implementation time of that once that decision is taken. As you can see, the political standstill that we see in this country today will also make it unlikely that we will have that decision, let's say, in the coming weeks. I think that we are not the highest priority file.
Chris Peeters: Household serves the budget, and you have a couple of other, let's say, very sensitive files, as was published in the press. The nuclear file, the file around the banking situation are probably the ones that are higher on the list than the bpost one. We expect that we will miss. Well, we not, the government will miss the deadline in giving us clarity before, which would mean that we would roll over next year for a couple of months in the current system. At the moment that we have an agreement, we will probably then see what reasonable timing is combined with the approval of Europe to get it right.
Chris Peeters: I think what is important in this for us is that in all the negotiations that we have, I think that every party participating in the current government has also made clear that they agree that this needs to be a phased approach that can be handled by bpost in a reasonable way without big hiccups in it. A little bit like what we do in the reorg situation in distribution, where we adjust volumes with the speed of the natural attrition curves that we see within this company. So that are the kind of scenarios that we have on the table. Now it is a little bit, of course, difficult to see when and which scenario they will choose.
Chris Peeters: But once it is there, we will have an execution plan which will continue to have the logic of the management agreement, which is the NAC+ agreement, where we have a, let's say, accepted return by Europe of 7% on that activity. That is the one that we likely will continue to have also in the next phase of that.
Henk Slotboom: Okay. That is very clear. Thank you very much.
Chris Peeters: Thank you.
Operator: Ladies and gentlemen, there are no further questions, so I will hand it back to Chris to conclude today's conference. Thank you.
Chris Peeters: We would like to thank everybody in the call for having taken the time to be with us and for your interesting questions. We look forward to staying in touch. We will have, of course, more outlook, as some of you asked, for 2027 at the moment that we have the full-year results. And we thank you very much and have a nice day.
Operator: Thanks for participating in the call. You may now disconnect.
