InPost stock down 6% as Q2 EBITDA growth slows despite solid parcel volumes

InPost's Q2 results showed adjusted EBITDA up 13% and parcel volumes increasing 23%, both in line with consensus, yet shares dropped 6% as the EBITDA margin narrowed by 550 basis points to 28.3%, missing expectations. This margin pressure was largely attributed to the consolidation of loss-making UK acquisition Yodel. Despite the immediate market reaction, the logistics company reaffirmed its full-year guidance for robust growth, with its shares trading at a significant 45% discount to historical valuation.

Analysis

InPost shares declined 6% following second-quarter results that, while meeting consensus on key metrics, revealed significant margin pressure from recent UK acquisitions. Adjusted EBITDA grew 13% to PLN 999.5 million and parcel volumes rose 23%, both aligning with forecasts. However, the consolidated EBITDA margin contracted by 550 basis points to 28.3%, missing expectations of 28.7%. This margin dilution was primarily driven by the U.K. segment, where the integration of the loss-making Yodel acquisition caused margins to plummet to 5.1%; excluding Yodel, the U.K. margin would have exceeded 20%. In contrast, the core Polish market demonstrated robust profitability, with its EBITDA margin expanding 220 basis points to a record 49.3% on 12% EBITDA growth. The company is aggressively expanding its footprint, with its automated parcel machine network growing 31%, but this resulted in a 38% increase in capital expenditure and a minor free cash usage of PLN 9.2 million for the quarter, while net leverage ticked up to 2.1x EBITDA. Despite the margin headwind, management reaffirmed its full-year guidance, which includes EBITDA growth of 20% to 25%, signaling confidence in its operational outlook. The stock's 26% year-to-date decline has pushed its valuation to 7.5 times expected 2025 EV/EBITDA, a 45% discount to its historical average.

Key Decisions for Investors

• Investors should closely monitor the profitability of the U.K. segment in coming quarters, as a successful turnaround and integration of the recently acquired Yodel is critical to reversing the group's margin compression.
• The reaffirmation of strong full-year guidance presents a key bull case, suggesting management's confidence in overcoming near-term integration challenges, which should be weighed against the execution risk associated with the U.K. expansion.
• Considering the stock is trading at a 45% discount to its historical valuation multiple, investors with a higher risk tolerance might see a value opportunity, contingent on the company delivering on its growth and margin recovery projections.