Ladies and gentlemen, hello and welcome to the bpostgroup Second Quarter 2025 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 key pound five on your telephone keypad to register your question. If you wish to withdraw your question, please dial pound key six 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.
Thank you. Good morning ladies and gentlemen. Welcome to all of you and thank you for joining us. I'm pleased to present our Second Quarter Results as CEO of bpostgroup. With me I have Philippe Dartienne, our CFO, as well as Antoine Lebecq from Investor Relations. We posted the materials on our website this morning. We will walk you through the presentation and will then take your questions. As always, two questions each would ensure everyone gets the chance to be addressed in the upcoming hour. Philippe, over to you for the financials. I'll then come back with the financial outlook and a follow up on some of our strategic priorities for 2025.
Thank you very much, Chris. Good morning everyone. Welcome. As you can see on the highlight on page 3, our group operating income for Q2 stood at EUR 1,092,000,000, an increase year-over-year by 10.5% at constant perimeter. Excluding the EUR 195 million consolidation impact of Staci, our operating income decreased by 9% or EUR 91 million, mainly driven by the following factors, persistent headwinds in North America following contract termination announced in 2024 and in the earlier part of this year, lower price revenue driven by the new price contract that came into effect in July last year combined with decline in domestic mail against high comps i n 2024. Our group adjusted EBIT came at EUR 58.3 million with a margin of 5.3% or EUR 37.7 million excluding the EUR 20.6 million EBIT contribution from Staci on a like-for-like basis.
This reflects a year on year decline of EUR 20.1 million at constant perimeter with the exception of our BeNe Last Mile segment where EBIT is down, primarily driven by press as lower revenue have a significant impact on profitability. All our other segments are growing, notably supported by continued margin actions at Radial US where we managed to absorb the revenue decline and maintain a stable EBIT. More broadly at bpostgroup level, the results we are presenting today are in line with our expectations. Before diving into the financial performance of our business unit, you will note on slide four that below EBIT our financial result decreased by EUR 44 million. This is mainly due to four factors, most of them being non-cash.
Within the cash item we note that high interest expense reflecting the increase in the debt following our bond issuances in October last year and mid-June this year and lower interest income driven by lower money market rates and a lower cash balance following the acquisition of Staci in August last year. Together these factors account for roughly between EUR 10 million and EUR 15 million. As a reminder, following our capital market day, we successfully issued a EUR 750 million bond in mid-June in anticipation of the EUR 650 million bond maturing in less than 12 months. Through a cash tender offer, we have already repurchased just under 30% of this bond. The remaining amount will be repaid next year using the proceeds temporarily placed in money market instruments, securing a positive net carry compared to the coupon of the maturing bond.
Most of the variation in the financial result is linked to non-cash items, including unrealized FX impact mainly on our USD intercompany loans and the absence of last year higher IAS 19 results. Let's move now to the details of our three segments. I'm on page five. With the Last Mile segment, we see that revenue declined by EUR 40 million to EUR 536 million. Domestic mail recorded around a EUR 42 million decline in revenue, of which EUR 22 million comes from the press, mainly due to new contracts with the editors following the end of the press concession in June last year. Excluding press, mail recorded a sharp revenue and volume contraction this quarter, mainly due to a base effect as last year performance was uplifted by notably the European Federal and Regional elections. Mail recorded an underlying volume decline of -12.4% for the quarter compared to only -3% last year.
The decline in mail volume led to a revenue impact of EUR 30 million overall, though this was partially offset by a positive price and mix impact of +4.1%, equating to EUR 10 million. As a result, the domestic mail revenue decreased by 8% or roughly EUR 20 million year-over-year. On parcels, our revenue increased by EUR 4 million or +3.1% year on year, reflecting a volume growth of 4.1% and a negative price /mix effect of -1% this quarter. On the volume side, the reported 4.1% actually corresponds to an underlying growth of 1.6% when adjusting last year for the volume loss caused by the April strikes in 2024. Over the past month, this growth has been mainly driven by the outperformance of marketplace and strong momentum in apparel, supported by favorable weather conditions in June this year. As for price /mix, it stood at -1% this quarter.
When adjusted for commercial one-offs, it's in the low single digit range, consistent with our full year guidance. Revenue from our other activities, including retail, value-added services, and personal logistics, declined by EUR 2 million year-over-year, mainly due to the repricing of state services, while DynaG roup's revenue remained nearly stable. Let's move to the BeNe Last Mile o n page six. Our total operating income decreased by EUR 37 million or -6.2%, and on the cost side, our OpEx including D&A slightly declined by 0.7% or EUR 4 million. This mainly reflects lower FTE resulting from lower mail and parcel volume and efficiency gains, notably with the resumption after the appraised trials of the organization in our distribution rounds and in retail offices. On the other hand, some other higher salary costs per FTE with a +3.4% year-on-year increase driven by salary indexation in June 2024 and March 2025.
Starting next quarter, our performance will be assessed on a like-for-like basis following the end of the press concession in June this quarter. However, the EUR -33 million decrease in adjusted EBIT is mainly attributable to the drop in parcel revenue and to a lesser extent to lower mail revenue against a strong comps prior year. Moving on to 3PL, on page seven, 3PL revenues increased by EUR 143 million overall but declined by EUR 54 million or -20% when excluding the EUR 197 million contribution from Staci consolidation in the quarter. In 3PL Europe, Staci's revenue remains broadly in line versus last year. Radial and Active Ants sales were +1 3% year-over-year, continuing the trend of previous quarters fueled by customers onboarding as part of our international expansion efforts and upscaling activities targeting existing customers. In 3PL North America, revenue decreased by EUR 59 million at constant exchange rate.
This corresponds to a decrease of 23% resulting from revenue churn from contract termination announced in 2024 and early 2025 and lower sales from existing customers. We so-called the same store sale which offset the contribution from new customer launches mostly coming from the Radial Fast Track initiative. Let's move to the P&L on the 3PL on slide eight. Excluding Staci, while the total operating income decreased by 20%, our operating MD were down by 22% primarily driven by lower variable OpEx in line with Radial US revenue trend and a continued and stronger improvement in Radial US variable contribution margin rate. VCM increased by approximately 6% year-over-year, reaching its highest level to date and delivering a gain of EUR 10 million this quarter compared to the same quarter the year before.
At constant perimeter, our adjusted EBIT improved by EUR 6 million year-over-year from -EUR 5.5 million to just breakeven in Q2, mainly reflecting Radial's effective margin action d espite a 23% top line drop. Regarding Staci, the EBIT contribution came at EUR 21 million with a margin of 10.6%. Moving on to cross-border on page nine, cross-border Europe revenue increased by EUR 3 million or +3.4%. This growth was supported by solid volume increases from China across all key destinations including Belgium, which helped offset adverse market conditions in the U.K. As in previous quarters, our top line in North America remains under pressure. Cross-border North America revenue declined by EUR 4 million or -7% as Landmark Global continues to face volumes at wind, while the broader tariff environment is slowing down existing business and delaying new business opportunities. Overall, our cross-border operating income slightly increased by roughly 1%, as shown on page 10.
Our OpEx and D&A decreased at the same time by 2.7%, driven by lower volume-driven transportation costs reflecting lower North American and U.K. volumes alongside improved transport rates. This quarter, we also benefited to a lesser extent from a favorable cost phasing, which is expected to reverse in the third quarter. Coupled with the productivity gains in North America, this resulted in a EUR 5 million increase in EBIT. Moving on to the corporate segment on page 11, adjusted EBIT improved by EUR 3 million to EUR -8 million, as lower consulting costs helped offset higher payroll costs driven by more FTEs and inflationary pressure from two salary indexations. We move to the cash flow on slide 12. The net cash inflow in the quarter amounts to EUR 482.5 million, mainly reflecting the bond issuance and the cash tender executed in June this year.
Besides that, the main items to flag are the cash flow from operating activities before change in working capital stood at EUR 134 million and decreased by EUR 30 million versus last year, mainly reflecting higher EBITDA and lower corporate tax payment. Change in working capital and provision amounted to EUR -125 million. The plus EUR 4 million variance is primarily explained by the termination of the press concession in June last year. As a reminder, under the former press concession, compensation was typically prepaid, whereas the revenue under the new press contract is now invoiced according to the standard billing cycles. This quarter also includes the impact of the settlement of some terminal dues. The net cash outflow from investing activities totaled EUR 27.5 million, driven by our CapEx for international e-commerce logistics parcels, brokers in Belgium, and capacity extension in our domestic fleet.
This item constitutes the main variation in our free cash flow and in the net cash outflow from financing activities amounted to EUR 500 million, mainly reflecting the insurance of the entire cash tender on the maturing bond as well as the absence of dividend payment this year. This now brings us to the outlook and our strategic priorities of 2025.
Thank you, Philippe. We can happily announce an improved outlook. As you remember, in February this year with the results of 2024, we had an initial guidance of EUR 150 million - EUR 180 million of group EBIT. In May at the Q1 results, we had an unchanged outlook but with a reduced exposure to the low end of the range. If we look today, we can announce an EBIT of around EUR 100 million for the first half of the year, which is largely in line with the results with the plan that we had. It allows us now to reaffirm our guidance but even also to say that we target now the higher end of the range. Several elements will support in the second half of the year this result. Let's zoom in maybe first in Radial US.
At Radial US, we see that we continue to reach productivity gains with an improved variable contribution margin. Secondly, we have increased our lease exposure there, so we have a better occupation rate that will kick in as of July going forward. Also, in Belgium there is some good news. The reorganizations have been at full speed over the last quarter and will continue to do so, which makes sure that we have our cost under control for the BeNe Last Mile activity. Obviously, we are living in an uncertain world, but we are confident that we can actually target now the higher end of the range. If we then zoom in on our strategic initiatives, at the Capital Markets Day we already said that we were making speed, that many of the pilots were in good shape.
I'm not going to elaborate fully in this quarterly update, but at least give you some highlights on the progress that we've made. If we zoom in on 3PL Europe, meanwhile the new organization structure has been installed and we continue to deliver synergies. As an example, you see that Staci has already onboarded meanwhile one of its clients in the Polish market, so that moved from France to Poland as well. We are serving them now in multiple markets, and also Active Ants has now a client that they onboarded for the French market recently. That is actually also an element of cross-selling that we do today thanks to the bigger geographical reach that we have. In the U.S., Fast Track is really starting to create momentum. There are already six clients that we are actively serving while the product was only launched in March.
We have six other ones in the pipeline that will be onboarded soon and will also contribute to our revenue growth. Obviously in a market where same store sales is a challenge, but we see that the new product is really compensating for what we see happening there in the U.S. If you look in Belgium, we have launched already a year ago the renewal of our products. Most of them become more hybrid and more quality products. In the funeral notices we see that the quality that we needed to achieve is achieved. Meanwhile, high quality product to believe with little complaints in it anymore. We also launched a new product for the license plates. The government has decided that the emulation of a license plate in a postal office is abandoned as a public service. We launched a commercial product on that side.
If you look at the side of the bboxes or locker product, we are soon reaching 2,000 lockers and we still aim to have 2,500 of these bboxes installed by the end of the year. We are fully in momentum over there and that's quite important. To better serve our clients both at the sender side as at the receiver side. As said before, many of the B2 pilots are in good shape. We already know to scale them up. If we look at cross-border, we have been focusing on two new lanes, the reverse lane in North America from Canada to the U.S. Seven new clients have signed up for that new lane. In Spain we have a first large e-commerce player that has been onboarded as we speak and will start to deliver as of Q3 of this year.
Obviously, given the fact that the group is further expanding, we also realize more and more synergies at the transportation side. As you can see, we are building up momentum. We're preparing there where we can to scale up and to speed up. This is all in an environment with some challenges. We have an optimistic outlook going forward and therefore we are now ready to take any question that you would have. Again, two questions each please, so that everyone gets the chance to be addressed during the session. Operator, please open the lines.
Ladies and gentlemen, as a reminder, if you'd like to ask a question or contribute on today's call, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six 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.
Yes, hi and thanks for taking my questions. I have two. The first one is on Radial. Can you give a bit more color on the Fast Track? And what to expect in the second half and the phasing of it because it was still down more than 20% this quarter. That should improve in the second half and then especially going into the start of 2026. A bit more color on that and maybe more important, you were able to keep your profitability in the second quarter at Radial US quite improving versus last year. What should we expect for the second half here? Especially that you have some real estate management and some benefits from the leasing coming into effect into the second half. Should we maybe even expect an improvement in the profitability in the second half for Radial US? That would be my first question.
The second one is on the parcel volumes in Belgium, of course a bit of a tailwind compared to the strikes from last year. However, underlying it's still 1.6%. You guided at the start of the year mid to high single digits, later you came back and said it was maybe more around the mid single digit range, but evidently still a bit of a catch up in the second half, which is more of a good comparable. How do you expect to achieve this? What should accelerate this trend? Those would be my questions, please.
Okay, thank you. Maybe on Fast Track, we onboarded six clients, meanwhile with an ACV which is in the higher EUR 40 million. Checking with Philippe, I think that's correct. We have another six that signed but that we still have to onboard. I think what is important is that you see that the time between signature and onboarding has become much shorter than what we had in the past. There we actually have a relatively optimistic view. Second thing is as well, we have in that new vertical portfolio, we have less cyclical clients. Means of course that we have less of an effect of a peak season in the end, but also that we continue to onboard clients throughout the peak season in this specific product.
If you look at the profitability, yes indeed, the teams have done a really decent job in controlling the cost in the light of some client losses that we have announced earlier this year. I have to congratulate our teams over there for the good performance they had over there. However, I would say I would now not expect additional profitability coming in from that side anymore because they right size the organization, they have managed the lease exposure, we don't have in the pipeline at this point of time any further improvement coming from that side. You will still have a little bit of Fast Track effect, but the profitability improvement, we captured it fast, we could turn around fast, but we don't expect additional things coming in in the second half.
For Radial, if you look at the volumes in Belgium, indeed what you see is we could win back some of the client volumes. However, we still are impacted by some of those clients that went dual carrier as a consequence of strike. Still working on capturing a higher share of wallet within those clients. It's a little bit, let's say, difficult to have a precise view of that. For sure it will not be at the higher single digit. It will be closer to somewhere in between where we were now and the middle single digit as announced. Our teams are working every day to win back those clients. As you know, sometimes it takes a little bit of time before we win back the full confidence of that. Those volume forecasts, I would be at the cautious side as we speak.
Okay, that's very clear. Thank you very much for the answers.
The next question comes from Marc Zwartsenburg from ING. Please go ahead.
Yeah, good morning. One quick follow-up on Michiel's question. You mentioned the onboarding of the six new clients at Radial US with a EUR 14 million annual run rate, is that correct?
The ACVs on the already onboarded clients, in which, as you might have seen in some of the communication we've done, there's one large client which is actually above the typical Fast Track size, which means that we actually have a higher EUR 40 million ACV of the already onboarded clients. The size of the clients that we have in the pipeline are typically the size of the client that we expect, which is, let's say, in the range between EUR 2.5 million and EUR 5 million. That is a typical, let's say, client in the Fast Track range. The six ones will not add the additional volume that you would have seen in the first one because there was, let's say, an outsized client in that portfolio of the first six.
One is just from my understanding, one is EUR 40 million and the rest is EUR 1 million - EUR 2 million.
We are typically in the range of 2.5- 5 per client, but you have one which is substantially above in the first six.
What is then the EUR 40 million?
The sum of the six together of the first six onboarded clients.
Exactly. Okay. Is there already some revenue in Q2, or is everything coming in now?
There is some revenue in Q2, but it's rather limited so far.
We started, and that may be on your shippings in May, I think. Yes, for shippings in May we had for Fast Track.
Okay, I'm watching it then quickly. On your outlook, you made almost EUR 100 million in the first half, just adjusted EBIT. Your average says at the higher end, they're suggesting that there's a maximum of EUR 80 million to come. Last year you made almost EUR 100 million in the second half. You have some extra tailwinds coming, onboarding of new clients, still some lower lease cost, potentially no impact from strikes, etc. Let's hope so. You have a few positives as well. You have one month extra from Staci. How would it be that the result for the second half which you're guiding is so much lower than last year? Is that logical?
In fact, the situation is different business unit by business unit. Typically, if I start with cross-border, mostly H1 equates H2 or the other way around, it's more or less the same. They are not so much impacted by peak. When it comes to Radial US, H2 is by far higher than H1 because it's very much peak sensitive driven. It has always been the case, there is no change in the pattern on that one. When it comes to 3PL in Europe, we will see a higher Q2 H2 than H1 because the synergies would start kicking in in the second half. They already start kicking in, but mostly in the third and the fourth quarter. That would lead to having H2 that would be significantly higher than H1 based on what I've explained. In Belgium, it's the opposite.
We always have seen that H1 was significantly higher than H2. Again, it's not 2024, it was 2023, 2022, and before. The highest quarter is typically the first quarter. The second one is the second in rank due to the low volume in the summertime. The third quarter is close to zero in terms of EBITDA. Then there is the impact of the year-end peak, which has always demonstrated to have higher top line. From a percentage margin contribution, it's lower than the first half. If you mix all together, that explains why we are guiding on those numbers.
That would mean quite a significantly marked down on average last mile. There's lots here as well.
You have a domination of postal impact and an increase in parcel volume. It's unfortunately also compensated by higher cost to handle because it's based on flexibilities that we have to bring into the system, and we don't make a substantial better EBIT. There is a higher revenue in the fourth quarter, but a, let's say, a stable or slightly increase of EBIT. The third quarter actually is the one that is, let's say, the least attractive quarter for us. There you see that the impact of the sum of the two makes the total result combined with mail in BeNe Last Mile of the Belgian business. The postal business combined with parcel business will be lower than in page one, which is fully in line with what we've seen in the past and with the announcement we've made around there. There's no surprise in that.
It's just what we have always said.
Yeah, true, true. If you look back, also the second half is not that much weaker than the first half. We have a few extra tailwinds and some headwinds you had now in the first half and the strikes and stuff, which would mitigate a bit the difference between first half and second half. That's why I'm feeling that there's a bit of caution building.
It's really the fact that to deliver these higher volumes, we really need to add a lot of additional resources, and it comes at a cost. That's really what Chris explained. This is something that we have observed since many years. Of course, when you were comparing face value of it, you read in those numbers in the past the press that was extremely stable quarter-over-quarter, so it was diluting a bit that impact or hiding a bit that seasonality impact. Now it's really come at full life.
Okay, maybe one quick follow up. The price mix on the parcel side was a negative. I think initially always guided for a positive full year impact. Is that because of the client mix changing, and is that continuing that we should also expect maybe a negative price mix in the second half?
That's still an impact of the strike, where we see the large clients, which typically have a lower margin, have come faster back in terms of the volume than the ones that we see on the smaller clients. As you can imagine, of course, our salesforce is full out to capture back those clients. You start obviously there where the biggest volumes are, and then you have to go one by one with the other clients, which takes more time. We are still in the process of winning them back. That gave this negative impact of product mix. The compensation that we have seen in the volume loss due to the strike, the win back was faster on the larger clients than on the mid-sized and smaller clients.
That's very clear. Thank you very much.
The next question comes from Marco Limite from Barclays. Please go ahead.
Hello, good morning. Thanks for taking my questions. I've got two. The first one is on your financial expenses this quarter at EUR 42 million. I mean it disclosed that there are some other elements in that number, but just wondering what could be, let's say, a normal run rate for financial expenses for Q3, Q4, and also what we should expect directionally in 2026. Again on the financial expenses number. The second question is on Staci. If I look at your slide on page seven, you are basically showing that all of the 3PL Europe revenue increase is coming from the consolidation of Staci. At the same time, you've got Radial Europe and Active Ants growing 13%. Am I right in thinking that Staci revenues are actually down year-over-year and if overall Staci revenues and business performance is developing in line with your expectations. Thank you.
Let me start with the financial expenses. Thanks for your question. What we said is that in the financial result there is some cash and non-cash element. If I come on the cash element, which the variation equates for variation between EUR 10 million and EUR 15 million, which is just the situation that before, prior to the Staci acquisition, we had cash that was invested at higher interest rate and now we have a lower level of cash and, by the way, interest rates went also down and we have additional debt coming from the acquisition of Staci. Basically, based on what we share with the market, the issuance of the bond that we did last year and this year, you have a pretty fair view of what is going to be going forward. This is for the cash part.
The non-cash part, which is, as I said, if the cash part is between EUR 10 million and EUR 15 million, the non-cash, you could do the math compared to what I said, is highly volatile and depending on the evolution of the U.S. e uro exchange rate since we have intercompany loans, so between bpost [NV] to the U.S. market, and since the U.S. dollar weakened, of course we had to do a mark to market of this or revaluation if you want, at the end of the quarter, since it's a balance sheet item, then explain most of the variance. If we would be making the close of the book as we speak, we would have already regained a quarter of the shortfall that we are seeing due to the exchange rate evaluation.
To guide you, I think you should take the rates that we have seen on the issuance of the bond. This is what is the best proxy for future interest expenses on a cash item. On a non-cash item, I cannot predict the evolution of the U.S. dollar euro rates. On Staci, I start and you continue, Chris. On Staci 3PL and Europe, indeed you're absolutely right. We continue to see significant growth on Radial and Active Ants since we were enjoying that one since many quarters, and Staci itself delivered a good profitability because we, as we said, 10.4% EBIT to Staci, which is a very reasonable one. It's fair to say that the top line development on the portfolio of Staci was a bit less strong than we could have expected while having different situation. We have U.S. really growing very well, U.K. being a bit difficult.
By the way, this is what we have mentioned also on other part of the business. We see that the U.K. market in terms of volume development is difficult. Our colleagues of cross-border also experienced that one, and in France the activity was equal to the year before but profitability was in line with expectation.
Okay, if I can follow up on that topic. I think you're still looking for management with role for 3PL Europe, is that right? How is the process going? Thank you.
The process is on track. It's not yet in the phase that we can communicate, and we will communicate at the moment that this process is coming to a conclusion.
Okay, thanks.
The next question comes from Marc Zeck from Kepler Cheuvreux. Please go ahead.
Good morning. Thank you for taking my questions. I'm afraid I need to come back or follow up on the H2 profit.
That is implied by the guidance.
I guess I understand what you said on BeNe Last Mile H1 versus H2 expectations, but still I believe your guidance implies then that BeNe Last Mile H2 this year versus H2 last year there will be quite a step down in profitability, and if you can help me understand how that happens. The second question, more like a macro question on Radial US, and if you could elaborate if you expect any impact on Radial US from the abolishment of the U.S. de minimis regulation that end of August will basically now affect all countries in addition to China, Hong Kong. Will this have any impact on Radial for Q3, Q4 or for 2026, or is Radial not at all exposed to any e-commerce business that was coming into the U.S. under the de minimis regulation? Thank you.
You take the first one.
H2, I want to emphasize the fact that the peak execution comes at a higher cost than the normal operation. Also, in terms of absolute EBIT, the EBIT contribution will be dependent on the volumes themselves. The top line, we see that the consumer confidence in Europe is not at its highest, to the contrary. If we combine the two, we believe that it's the best forecast that we could make at this stage. This being said, we will continue to improve on an operational standpoint. We will not take a potential lower growth rate on top line as a fact and not do something. I think operational measures are taken, as already started in the first quarter. The second one and some additional will come to be able to compensate for that.
We do not believe that it will make the fourth quarter very high in terms of EBIT, unlike what we can see in the first and second quarter where it's more base loaded, where we have the best operational efficiency.
At the de minimis change. What we see is quite some activity around discussions on local fulfillment but not yet leading to specific contracts. What we see that is realized in the pipeline was already, let's say, in a discussion before that discussion of the de minimis. We could expect when it comes through that there is an increase of local fulfillment, which is positive for the business of Radial US. Obviously, the whole tariff discussion in the U.S. has quite an impact on what is happening in our cross-border business. You see shifts in lanes. Luckily, our teams have been able to go with the shift in lanes, and we see that they're managing it fairly well so far. It's a very complex environment where we see that, for instance, the U.S.-Canada lane is under pressure.
It is compensated to some extent with the Asia-Canada lane, where we have now higher volumes coming in. We see as well that we're developing new lanes: the reverse lane from Canada to the U.S., the lane in Spain that we're developing. Teams are working well and are still delivering on the plans. What you see is quite some important shifts in the flows within the business that we see today. On the side of the fulfillment, I think that you have two effects that we can expect. One is likely more possibility in the fulfillment space to grow the business.
On the other hand, probably pressure on same store sales in the longer run given the decreased purchasing power as a consequence of a tariff war that we see, which is expected to leak at some point in time unless, say, consumer confidence in the U.S.—not today as we see, of course, but something in the long run. We see those two parameters that will weigh on each other. Hard to predict fully in detail which one will win in that dynamic. I think the good news is we have a very active sales team today really hunting on the opportunity side, both in the cross-border and in the Radial US business. We're confident that we try to get the best out of these changes in markets.
Something we have not seen, that could have potentially seen is in anticipation of these changes, higher volumes. We have not really seen it.
Yes. We looked as well in the lease optimization if there was an opportunity for earlier inbound into the U.S., which we have not seen.
No.
Okay, thank you.
Canada, by the way, as well.
No, no.
Under Northern.
The next question comes from Henk Slotboom from the IDEA! . Please go ahead.
Good morning, Chris, Philippe and Antoine. Looking at today's figures, I guess you can say the first blow is half the battle. I've got two questions. One is a follow up on the previous question with regard to cross-border. Chris, you said you were seeing higher activities on the China-Canada lane and at the same time we see you've been adding clients in cross-border on the Canada-U.S. routes. Is that a structural thing? The de minimis rule is now affecting all countries in the world. We all know that the relationship between the U.S. and Canada is not at its best shape ever. The second question I had is on the parcels and that's on the negative impact of the price mix effect. Is that more like a mix effect or is it something like I even had a strike in the first quarter?
Is it a sort of peace offering to the clients to keep the clients in? Have you seen any material damage to your client base on the back of the strikes we've seen in the first quarter of this year?
Yeah. Okay, let me take them one by one on cross-border. It's of course hard to predict because what we saw already in the Canadian situation was even before de minimis change and even before tariff impact on Canada, we saw already a changing buying behavior of Canadians. There was a lower volume on the U.S.-Canada lane and an increased volume on the Asia-Canada lane. It's not only driven by tariffs, it's also driven by sentiment. Of course, predicting the sentiment with the current situation in North America is a little bit hard for us to say. I think that the good news for us is of course that we are present on both lanes, so whatever will shift in those lanes and also looking at other lanes towards Canada where we can reinforce our presence.
We try to make sure that we continue to be a very strong player on that Canadian market. What you see is new, which is that before the flow Canada to the U.S. was fairly lower and we have actually seen an increase of activity also pushed by extensive sales efforts for our team. We see now that we are reinforcing our position in the reverse flow that we see from Canada to the U.S., and that is probably something that we think will be a structural trend also to be admit as well today. It's not that material that we should make it a big point, but it's important that we see that there's a new dynamic starting there and at least we're part of that new dynamic. Price mix effect is really a volume mix effect that you see today. That is an effect of the strike.
We have a number of clients that deviated. There were already dual carrier that deviated to the other carriers some of that volume and it took us time to bring it back. Overall, actually these are typically the larger accounts who were, let's say, really good in rebuilding that confidence with them and ensuring that they would come back. What you see is of course in the, let's say, the clients that bring lower volumes. It takes more time for us because it's more sales effort linked to that. That's typically volumes that come at a slightly better price mix than the ones that you have in the larger site. It's today not a we discount to win clients back. We spend time to get the right volumes back. We have a little bit of a negative mix effect on the speed in which volume comes back to our facilities.
Neither temporary discount. No, we have not done that.
No temporary discount. It's really building on that. Obviously I'm not going to reveal the details of that, but there's a lot of commercial discussion on that, which are more to do about reliability, ensuring to have backup plans and all these kind of elements to ensure that we can deliver high quality to our clients in any circumstance, which we have spent quite some time. It has not been about commercial discounts to keep volumes.
If I understand you correctly, you're saying there's no structural damage in the client base as a result of the strikes. As far as the negative mix effect is concerned, with a bit of luck we might see it turning positively again if the smaller clients come back again.
I'm happy to see your confidence. We're a little bit more cautious than you are in the sense that, of course, we have to talk to these clients every day. I think that there have been some confidence issues with some of those clients. I don't think we're back to normal level yet, but we see that we're on the right track to build it up again. Obviously, if we're able to build it up again and build that confidence, that is a very good base for future growth of our activity. It's a little bit early to already cry victory on this one.
Would you allow me?
We will not cry victory on the war, but the battle may be because in the quarter, the second quarter, the price/mix effect was slightly positive.
Okay, would you allow me a small follow-up on the first answer you gave? Is it fair to assume that the growth in clients on the Canada-U.S. lane could be a prelude to clients opting for local fulfillment as well?
Yeah, it's clearly linked, the one to the other. That's a good observation, I would say.
Okay, that's all. Thank you very much.
Ladies and gentlemen, there are no further questions, so I will hand it back to Chris to conclude today's conference. Thank you.
Okay, thank you then, everybody in the call for having taken the time to be with us and for your interesting questions. As a reminder, our third quarter result will be published in early November, exceptionally this time on a Wednesday, November 5th, instead of the usual Friday. Until then, we look forward to staying in touch. For those who haven't taken their holidays yet, I wish you a great break. Thank you very much and have a nice day.
Thank you.
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