Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome, and thank you for joining the first three quarters of 2022 results call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one. Press the star key followed by zero for operator assistance. It's my pleasure, and I would now like to turn the conference over to Mr. Harald Hagenauer, Head of Investor Relations. Please go ahead, sir.
Good afternoon, ladies and gentlemen. Welcome to this conference call of Austrian Post, where we want to discuss the first quarter, and I would directly like to hand [over].
Good afternoon, ladies and gentlemen. It's a pleasure to have the opportunity to present to you our Q3 results. A s a summary upfront, I think we can say that after a difficult Q1, our business portfolio has returned to revenue growth and has delivered solid results in a challenging environment. Let me start on page three, which provides you the, I think, well-known overview about our business portfolio and about the three segments along which we report our incumbent Austrian mail business, our parcel and logistics portfolio, consisting of nine parcel networks, including Austria, Turkey, and a number of Eastern European countries. Our third segment, retail and banks, which includes both our post office network as well as our recently founded bank99. Overall revenues for the first three quarters, EUR 1.8 billion. Page four summarizes the macroeconomic environment.
I think a number of headwinds, in particular, rising inflation, reaching double-digit figures in Austria, rising energy costs, a subdued consumer sentiment, and a very difficult, very challenging macroeconomic environment in Turkey, characterized by a substantially appreciating Turkish Lira, and a high inflation in the area of around 80%. Against this environment, I think, as already said, the business portfolio of Austrian Post has delivered a solid performance over the last three quarters. In Q3, in particular, we can report a revenue growth of 5.7% for the quarter alone, and -1% year to date.
I think very positive to mention that all three segments have shown a positive revenue development in Q3, including our mail segment, our parcel and logistics segment with a growth of +6%, and our retail and bank segment benefiting from the takeover of the Austrian ING Retail Bank last year. Based on that promising development, we are in a position to confirm our outlook for 2022, where we already said that our EBIT will come out in somewhere between the EBIT of last year and the year before.
I think today we can fine-tune this guidance saying that we are confident that we can come out at least at the midpoint of the previously indicated range with potentially some upside. On page six, I will continue giving you more details about our revenue development. As already summarized, year to date, we are - 1%. To remember the line over the last three quarters, we started in Q1 was - 7% Group revenues. After six months, it was - 4%, and now we are at - 1%.
I think we're confident that at the end of the year, we will come out somewhere around last year's revenues, maybe a little bit above, maybe a little bit below, but quite close. In Q3, as I said already, +6% revenue was a positive development. As already mentioned, across the three segments, mail has benefited from a combination of price increases, one-off revenues from a presidential election and a large project delivering a so-called Klimabonus to 1.2 million Austrian households. Parcel and logistics has benefited from a combination of positive volume developments across the business portfolio.
Basically, the whole portfolio has come back into volume growth, plus also the effect of price increases, and +91%. The retail and bank segment are a combination of organic growth plus, in particular, the impact of the takeover of the Austrian ING Retail Bank. Page seven summarizes our EBIT development. EBIT and margins continued to come out a little bit below a record year, 2021, where we had substantial tailwinds, in particular in our parcel and logistics business. Most of these tailwinds have been replaced by, rather by headwinds. As a result, parcel and logistics EBIT down EUR 22 million of those three quarters from record years last year.
This in particular is due to first the one-off revenues and EBITs last year from pandemic related revenues, both in the core parcel business as well as in value-added services, test logistics, delivery of masks and other things. The other important factor to mention is our Turkish business, where last year provided record margins, clearly not sustainable record double-digit margins, and normalization there in combination with the Turkish Lira, which in Q4 last year heavily depreciated, has led to a decline in EBIT contributions from our Turkish business. Parcel and logistics, I would say, coming back to rather normal margin levels of year-to-date around 7%. Mail EBIT stable on a very decent level.
Retail and bank improving, in particular in Q3, also benefiting from an improved interest rate environment, and the corporate quite stable overall. Let me continue giving you a few highlights along our strategy framework and highlighting a few developments in our four business lines, starting with Mail on page 10. As I think most of you are aware, over the last 10 years, a relatively stable, relatively moderate mail decline of around 5%, somewhat accelerated in the pandemic in the year 2020 due to the pandemic. Last year already saw some normalization with decline coming back to around 4% or 5%.
This year we see a combination of a continued structural decline in the order of magnitude of around 4%. At the same time, a number of one-off mailings around energy price increases from utilities and one-off mailings, as I mentioned, around various anti-inflation measures from our government. The already mentioned climate bonus and so-called energy bonus in spring, presidential elections in October. Net, these one-off mailings have pretty much compensated the structural mail decline so that we can report almost stable volumes and I think continue to show a quite resilient, stable mail business. On page 11, moving to our direct mail and Media Post business.
I think here, light and shadow, positive to mention recovery from lockdown losses last year, which was in particular in the first months of this year, where volumes recovered in the year-on-year comparison. Over the last months, I think we have seen more and more pressure on direct mail, pressure coming from increasing energy costs, increasing paper costs, where our business customers, in particular the food retailers and the non-food stationery retailers in Austria, had to make leaflets, unaddressed direct mail smaller in some areas, less frequent to save paper and to save costs.
Some of that has led to volume and revenue losses still in a relatively small order of magnitude, but this continues to be a significant risk. Year-to-date, on the other hand, as a sum of all these developments, we can report plus 3% volume change. Moving to parcel after the record growth over the last two years, where we over two years, our business grew by 50% volume-wise. We ended the year as many other postal companies and the whole e-commerce arena with volumes consolidating. I think now quarter-over-quarter we have come back into growth mode. Q2 already substantially better than Q1.
Now in Q3, we have seen in Austria + 6% volume, translating also into a substantial revenue increase, and we are, I would say, relatively confident for the Christmas business. Page 13, we continue in our investment program to substantially expand parcel sorting capacity and parcel delivery capacity, in particular in Austria, but also in the rest of the portfolio. As a result, we do expect to come out with a CapEx volume of around EUR 180 million this year. Similar order of magnitude is planned for next year.
After that, the majority of our expansion program in Austria should be finalized and we do expect our CapEx volume to come back to a more sustainable level, somewhere around our depreciation levels of around EUR 140 million. Page 14 shows you the history and the pipeline of capacity expansion project in Austria. You see here that we are in the final phase of this capacity expansion program. We finished and opened successfully in time and budget our second phase of our biggest sorting center in Upper Austria, in Allhaming. This center is now fully operational, and the biggest construction site currently is our oldest and historically biggest sorting center in Vienna.
This will lead us into 2023 and probably also into 2024. You see here that the majority of projects have been finished and are operational, and as a result, we have substantially upgraded our parcel capacity. Page 15 gives you an update on our staff development. The transformation of our staff structure from civil servant contracts to new employees under the new collective wage agreement is progressing. The new collective wage agreement are already for quite some time now the biggest part of our staff structure. Still there are more than 7,000 civil servants and employees under the old collective wage agreement still within our workforce.
We are working in a quite challenging, very tight Austrian labor market, where we would like to find more new employees than we can find. Page 16, moving to our international portfolio, in particular our international parcel portfolio. Here, as I already said, Turkey coming back into a revenue growth and volume growth mode with Q3 +1% after first six months, where we were substantially below last year. Eastern Europe actually quite stable over the last three quarters with year to date +11% volume growth. I think overall a good revenue development in these markets, of course, similar as in Austria. Also here, inflation becoming a substantial challenge.
Most visible and most pronounced in Turkey, where inflation is in the order of magnitude of around 80%. I will later come to it. Since the half year results, we are also applying the hyperinflation accounting standard IAS 29, which leads to some deviations from the numbers that we have been reporting so far. Page 17, moving to the third strategy pillar, our Austrian consumer market initiatives, where our bank and our post office network are the most important pillars. bank99, after the integration from ING's retail business in Austria, which we closed December 1st, last year.
Now a small focused bank with critical mass, 255,000 customers, a balance sheet of EUR 3.2 billion, EUR 1.6 billion credit. There are roughly EUR 1.2 billion mortgages and the rest consumer credit. I think most importantly, the change in the interest rate environment, of course, provides a tailwind here. The historical strength of postal banks to have access to cheap liquidity in the form of retail customer deposits now becomes a strength again after it has been more liability given the negative interest rate environment. I think month-over-month we see this tailwind also materializing in our P&L.
Still we are in a post-merger integration mode with the challenge to integrate two organizations, two product offerings and two IT systems. I think operationally the bank is performing quite well. Page 18 gives you an update on the numbers of our self-service facilities, which I think continue to be well received by consumers, and where we are continuing continuously investing. Let me now continue on page 20 with some more details on our group results. Page 20 gives you the usual overview of our financial KPIs.
I have already commented on revenue. EBITDA and EBIT margins show the already mentioned margin compression due in particular to the absence of the one-off tailwinds which we had over the last two years resulting from the pandemic. Still, I think 7% given the environment a decent margin for the group overall. Cash flow was an operative free cash flow before growth CapEx of EUR 150 million for this quarter's. I think we are well on track to not only finance investments, but also ensure that there is sufficient cash flow generation for a decent dividend to be proposed and paid out for the full year.
Page 21 shows you the details of our group P&L. I do not want to go into the details. I think I have commented on the substantial developments already or will do that on a segment level. As mentioned, since our half-year results, we apply the IAS 29 standard financial reporting in hyperinflationary economies for our Turkish business, which means that we basically adjust our numbers in the ways foreseen by the standards to the current purchasing power net in Q3. This has had a negative impact of around EUR 2 million. Let me continue with more details on our segment developments and segment financials, starting with the mail division.
The addressed letter mail business, including our business solutions business, I think is holding well despite the continued structural decline of addressed letter mail. Group revenues down 2.2%, where this decline is in particular coming from Q1, where there was a combination of some one-offs from 2021 missing with a difficult start into the new year, in Q2 as well as in Q3, we're positive deviations from last year due to a combination of resilient volume development, one-off mailings, and in particular since Q3, the impact of a tariff change that was implemented effective July 1st.
Direct mail, as I said, in Q1 and in the first six months, we saw recovery from difficult previous year. Q1 in particular was lockdowns last year. In the meantime, I think the negative impact from energy and paper price developments outweighs this recovery effects, and we are back into an environment where there is structural pressure on direct mail volumes. In Q3, mail volumes were down. Mail revenues, direct mail revenues, including Media Post, were down -2%.
As a result of these developments, page 23, our group revenue for the first 9 months. Our Mail division's group revenues on a cumulative level, year to date, relatively stable, down -0.7%. EBIT quite stable with EUR 110 million in absolute terms and a favorable EBIT margin. Moving to the parcel and logistics division on page 24. Group segment revenues are down -4.5% for the first nine months.
In Q3, as already mentioned, segment revenues up 5.6%, with growth here across the geographic portfolio, Austria +8.6%, Turkey +6.4%, and Eastern Europe +5.5%, logistics solution here with negative deviations compared to previous year due to the absence of one-off pandemic revenues. Overall, I think a quite positive trend here in the parcel and logistics division on the revenue side. On the margin side, on page 25, we see here the combination of a normalizing business, where last year we had, as I already mentioned, record margins in Turkey and in some other areas, we had one-off revenues with their contribution margins.
In particular, we see also the impact of the depreciation of the Turkish Lira in Q4 last year. Still, I would say, was around 7%, a decent margin for our parcel business. Page 26, moving to our retail and bank division. Revenue's up 64.2%. Most of this, or actually all of this revenue increase is coming from our bank, bank99. And here it's mostly coming from the acquisition of ING's retail business last year. Also some organic growth in our bank business. On the other hand, a small decline in our branch external revenue, mostly related to a small decline in provision income from telecom products and services. Moving to page 27.
Overall, this segment is improving, still showing ramp of losses for the bank in particular, but an improvement both year to date as well as in Q3 standalone. Page 28, balance sheet. I would say a stable, healthy balance sheet which continues to show expansion. This is mostly coming from our bank, where we continue to grow our balance sheet both coming from customer deposits as well as assets. The industrial part of the balance sheet quite stable. Also quite stable our equity position with total equity was EUR 371 million almost matching the end of the year number despite a dividend being paid out in between.
Page 29 shows you the usual cash flow waterfall cash flow from operating activities excluding changes in our bank assets. This is what's meant by excluding core banking assets. We try to show here the free cash flow resulting from our industrial business, our logistics business, EUR 195 million. Maintenance CapEx around EUR 43 million resulting, with some other cash flow developments, in an operating free cash flow before growth CapEx of around EUR 150 million, which I think after three quarters was a quite cash generating business. Even after growth CapEx of EUR 56 million a full free cash flow before changes in our security portfolio of EUR 93 million.
With that said, I'm coming to our outlook, the end of my presentation. As already mentioned upfront, we confirm our outlook with a small improvement on the EBIT guidance. I think we continue to see a quite challenging market environment. In particular, if we look into 2023, with inflation, which is still increasing in Austria and in our business, in the four countries where we operate, as being the dominant challenge. Also the economic environment deteriorating, and still a lot of uncertainty what this means for parcel volumes going forward. Still, I think for 2022 after now, 10 months already in our books, I think we can provide a well-based outlook.
We expect revenues for the full year pretty close to last year's level where we showed EUR 2.5 billion in revenues, probably the major uncertainty being the Turkish Lira. Although the exchange rate has been quite stable over the last months. I already mentioned our investment guidance for this year was total CapEx of around EUR 180 million, with maintenance CapEx around EUR 100 million and growth CapEx around EUR 80 million. On the earnings side, we do an EBIT at least at the midpoint of the range of our last two years, you know, the good year 2021 was EUR 205 million, and the difficult year 2020 was EUR 161 million.
While we do not yet provide detailed guidance for 2023, I think it is clear that we will continue to face, as I already said, a challenging macroeconomic environment with substantial economic headwinds, in particular, substantial inflation and limited visibility in the mail and parcel markets. Still, given what we know today and what we see today, we have a target to at least slightly increase revenues compared to this year, and try to compensate the rising factor costs and keep earnings as stable as possible. This will be the target for 2023. With that said, I'm at the end of my presentation and look forward to your questions.
Ladies and gentlemen, at this time, we will begin the question- and- answer session. Anyone who wishes to ask a question may press star followed by one. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. We have the first question from Ivar Billfalk-Kelly from UBS. Your question please.
Good afternoon, and thank you for the presentation. I'm taking the questions. Maybe if we start with the parcels in Austria, it was a strong quarter relative to some of your peers, both in terms of volume and pricing. What trends have you seen over October and the start of November, and what are your expectations for the fourth quarter as a whole? Maybe linked to that, what performance would you actually need to see from parcel to be able to achieve guidance towards the upper end of your current range? Secondly, Turkey does seem to be doing a little bit better and has stabilized a little bit compared to recent quarters.
Are you able to share the approximate EBIT contribution that the division is generating for you now, and what would be expectation for EBITDA next year? Then thirdly, I'll sneak in another one. Your banking division is performing quite a bit better now as well. In the context of the higher yield environment, has your expected run rate to break even changed at all or is it still the same as it was before? Thank you.
Yeah, thank you for your questions. Let me try to answer. I'm not sure if I fully understood the line was not that good if I understood all of them, but I'll try. Starting, I think, with the first question around parcel Austria, I think the disclaimer is that the Christmas business only is starting these days and I think but we do not provide your monthly transparency. I think we would expect some at least some small growth compared to last year. Otherwise we will not come to the revenue growth in Q4 that's needed to reach last year's full group revenues.
We do expect, I would say, single digit volume growth in the last quarter. I think it's really also for us hard to give a more precise guidance where exactly we will come out. Yeah. Because I think most of our customers don't know themselves how the Christmas business will develop. On Turkey, here I did not 100% understand specifically your question, but I think it was around EBIT level, where we come from, where we are today and where we can end up next year and beyond.
I think as mentioned, we come from double-digit levels last year that the company currently is operating in an 80% inflation environment where every six months the minimum wages are increased by around 40%, which directly ends up in the company's P&L. In this background, in this environment, the company continues to be profitable over the last nine months in the lower single-digit numbers, but we have seen a promising development in recent months, and we expect to come back to an industry typical margin in the order of magnitude of 6%-7% with some fluctuations on a monthly and quarterly level, given the developments I already mentioned.
Coming to bank99, I think we do confirm our target of breaking even in the course of 2024. I think with the tailwind from the interest rate environment, this target has become a lot more robust. Still there is potentially integration work, as I mentioned, still to do. For next year, we do expect our ramp-up losses, I would say, order of magnitude to be half from the current around minus EUR 30 million.
That's very clear. Thank you very much.
The next question is from Marco Limite from Barclays. Your question, please.
Hi, good afternoon. Thanks for taking my questions. The first question would be on repricing of letters and parcels in 2023. I think over the last six months or nine months, you have already announced a couple of price increases for letters. By how much and, you know, to what percentage of the revenues you will apply price increases on letters? Yeah, same questions on parcels, please. Second question is on your CapEx spends. If I look at your slide 29, year-to-date CapEx spend is at about EUR 100 million, including gross CapEx, which is quite below the EUR 180 million guidance. Are you planning to spend EUR 80 million of CapEx in Q4, or that guidance is simply be conservative? Still on this topic, can you remind us if you have a net debt EBITDA target that you would like not to go over? Very final question is if you can remind us the splits between fixed rate debt and floating rate debt on your debt. Thank you.
Yeah. Thank you, Marco, for your question. I think on repricing letters and parcels, of course, the target is to forward the inflation we have on the cost side to our customers. I think the reality is that there will be some time lag between inflation within our P&L and being fully capable to forward it to our customers. In some areas, this will be faster and maybe a little bit easier than in others. I think on the addressed letter side, we have already implemented potential price increases. As I mentioned, Economy Letter effective July 1st, Priority Letter effective October 1, so there we will see some impact in Q4. So this is on the regulatory side.
On the regulated side, on the parcels side, there is a mix of regulated business and non-regulated business, which mostly is with large customers with longer running contracts. There we also have implemented some smaller price increase on the regulated side in our post offices. There is a constant positive price impact from an instrument which we call diesel floaters or basically a clause in almost all our contracts where with increasing fuel prices, our prices change almost automatically. I think of course, the challenge we have is to implement the required price changes in the contracts with our big customers here, with particularly price negotiations and of course, also substantial negotiation power of some of our customers.
I think we have areas where this will be a little bit more difficult and will require some time. On CapEx, I think your observation is right. We have a strong Q4 ahead of us. I think we do expect to come at least close to those EUR 80 million. There are two big projects, partly, you know, being, I talked about this big project in Upper Austria, which went online in recent weeks. Where the final bills are coming in. We have a potential construction project in Austria, which is running at full steam. We have substantial fleet orders which we expect to be delivered in Q4, also a little bit delayed.
While I understand the CapEx development is a little bit non-linear and maybe hard to believe at this point in time, we believe EUR 180 is at least not purposely conservative. There might be deviations resulting from delivery delays which we cannot influence. The orders are out there and we believe we should conquer it. Net debt to EBITDA, I think there's no explicit target, but I think we would rather suggest to look at financial debt over EBITDA. Net debt in our case is a little bit misleading with all our provisions and in particular our substantial IFRS 16 assets and liabilities. We would suggest to look at financial debt over EBITDA. We do have financial debt of around EUR 160 million, which is fixed interest loan at around 1.5%, running partly five partly seven years, starting earlier this year. Still I think we would try to not substantially exceed a financial debt over EBITDA ratio of around 1. I hope I've answered all your questions.
Yeah. Sorry. The other question was, if your financial debt, how much is floating rate and how much is fixed rate?
Yeah. I'm saying that all the hundred is fixed at around 1.5%.
Okay. Thank you very much.
The next question is from Bernd Maurer from RBI. Your question, please.
Hey, good afternoon. One question. Media was reporting about the big fire you faced at the sorting center in Retz, Austria end of the last week, if I'm not mistaken. Will this show any noticeable impact in the P&L in the fourth quarter or with CapEx next year? I'm not sure about your insurance policy as, if I'm not mistaken, cars and most buildings are not insured given the big number of fleet and the big number of assets. Perhaps question regarding the insurance policy in general, and second, to the impact from the fire and fire attack.
Yeah. I think, like in front of you, at least from today's point of view, there is no substantial P&L hit to be expected. I think other than was mentioned in the media, this was not a [Verteilzentrum] which typically we use as a word for our large sorting centers. It was a relatively small delivery depot. For around 50 postmen start their work in the morning. It was fully demolished and fully burned down. As it was a rented building, we do expect the landlord's insurance to cover the building. There will be some interiors where the property of ours which we will have to take the damage, but we do expect this not to exceed a six-digit EUR amount. On insurance, I have to correct. We do have, of course, an insurance covering our buildings. There were no cars damaged in this fire.
Okay. Thank you for the answer on this. Just one clarification. Did I understand you correctly before that the net debt to EBITDA target is round about 1x ?
Yeah. It's not a target, but I would say it's a threshold which we do not plan to exceed in the foreseeable future.
Yeah. Perfect. Thank you very much.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one. It seems to be no further questions at this time, and I hand back to Harald Hagenauer for closing comments.
Well, thank you, ladies and gentlemen, for participating in this call. We are ready for today, and if you have some more questions today or next week, we are ready. We are here, so call us. Thank you. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you very much for joining, and have a pleasant day. Goodbye.