CTTOF - CTT - Correios De Portugal S.A. (CTTPY) Q2 2023 Earnings Call Transcript
2023-07-28 15:43:06 ET
CTT - Correios De Portugal, S.A. (CTTPY)
Q2 2023 Earnings Conference Call
July 28, 2023 04:00 AM ET
Company Participants
Joao Bento - Chief Executive Officer
Joao Carlos Sousa - Member of the Board of Directors
Guy Pacheco - Chief Financial Officer
Conference Call Participants
Marco Limite - Barclays
Filipe Leite - CaixaBank
Antonio Seladas - AS Independent Research
Artur Amaro - CaixaBI
Presentation
Operator
Good day, and welcome to CTT First Half 2023 Results Call. My name is Priscilla and I'll be your coordinator for today's event. Please note, this call is being recorded and for the duration of the call, your lines will be on listen-only. [Operator Instructions]
I will now hand you over to your host, Mr. Joao Bento, the CEO; Mr. Guy Pacheco, the CFO, to begin today's conference. Please go ahead, sir. Thank you.
Joao Bento
Thank you, Priscilla. Good morning, everyone. Welcome to our first half webcast where we are talking about the great quarter with all business areas performing very well. And I would emphasize the performance of Express & Parcels that through a robust growth in volumes, revenues and profitability, somehow renders the right results given the capacity investments that we have. This is indeed for Express & Parcels a record setting quarter.
If you follow me on the left-hand side of Slide number 4, we start exactly with parcels. On Iberia, strong volume rebound across our E&P platform, driving revenues and profitable growth in Portugal and Spain. In Portugal, we've seen a sustained acceleration of volumes and revenues and margin. And in Spain, it was mostly a very strong growth both in large and small clients that provided this very interesting result and outlook.
As for Mail, we are now grabbing the benefits of the new price mechanism, given that price increases compensated volume decline. Nevertheless, we remain focused on profitability and on cost cutting to deliver EBIT growth. And that's why with the flattish revenues performance, we had a significant improvement on EBIT.
As for the public debt, we are now back to what we are considering a normal or normalized demand of public debt following the changes in the economic conditions of the main product, the savings certificate. And we remain focused on transforming the retail network towards services, namely with this new acceleration on insurance distribution, where we are already observing the first very relevant results. As for the bank volumes growth and higher rate, both contributed to improve profitability, and the bank remained focused on strengthening client relations against the backdrop of healthy banking client growth in the quarter.
With all this, we've seen revenues growing 12.7% year-on-year, reflecting the, already mentioned, growth in all segments with E&P itself accelerating some 25% in the quarter year-on-year. And with that, we have produced a €22.7 million recurring EBIT or roughly 90% growth.
Finally, we are also showing strong operating cash flow generation, €55.6 million, in the first half, almost tripling the results from last year. Free cash flow went up to €48 million or 12.5x growth year-on-year. And this is also the quarter where we paid our dividend of around €18 million or €0.125 per share. Consolidated net cash position of €7.6 million, a significant improvement again. And with bank equity accounted, our net debt stood at now €174.6 million or down almost €18 million versus the numbers of year-end 2022.
With that, moving Slide number 5, the details of the revenue and margins that somehow reflect the comments I've already produced. So obvious growth on all business areas.
And then I would invite you to move to Slide number 6, where we describe our main features of E&P in Portugal. We have indeed registered the fifth consecutive quarter of sustained acceleration in volumes and in revenues, benefiting from operational leverage. And we have also seen very interesting results on margin. Indeed, this growth of revenues is based on growth in all types of clients. And therefore, we are showing this chart on the bottom left-hand side with the diversified client base, which implies resilience in this type of growth in the sense that, well, we cope with different dynamics in different parts of the economy that produce or induce last-mile deliveries.
Revenues have grown significantly in Portugal, double-digits. And growth in revenues is a combination of not only growth in volumes, but also an improvement in margin given better pricing. This is also a period where we have somehow absorbed all the main impacts of cost inflation that we've seen in recent times.
Moving to the right-hand side. This generated an increased operational efficiency and leverage that allowed for a 34% growth in EBITDA and a 70% growth on EBIT, producing again a double-digit EBIT margin, which is very, very relevant.
Moving to Slide number 7. We see the situation in Spain with record volumes driving increased profitability due to a much higher operating leverage benefiting from prior investments. As we've seen and we've referred many times in the past, we have built the capacity. We have the quality in Spain. And with volumes growing to numbers that we were aiming at and working towards this achievement, we are now seeing the results. Indeed we have 44% growth in the quarter, and in fact it has been accelerating through the quarter. And again, this is a result of growth not only in large clients, but also in small clients. And you can observe on the bottom left side, we've seen in the quarter a 59% growth on smaller clients.
Indeed moving to the middle charts, we see that the top five clients have, in fact, reduced their contribution to growth. We render this as an interesting feature of dynamics of the demand in Spain. We have produced a 36.6% growth in revenues, 75% growth in EBITDA, and if impossible to qualify growth on EBIT, with a significant growth of €1.2 million, which is a number we've never achieved before. So we have a very promising second quarter on E&P, both in Portugal and Spain as I said, but also we also have good prospects for the year.
And I would like to invite now my colleague, Joao Sousa, to comment on the Express & Parcels' outlook and following for Mail and Financial Services as well. Joao, to you.
Joao Carlos Sousa
Thank you, Joao. Like Joao Bento was saying, in Portugal, we have managed to have a diversified customer base in business sector and also in the dimension of the company that guarantees a better way to managing the uncertainties of the markets. And in Spain, the increase of the each of the SMEs and the consequent reduction of the dependence of the largest customers also give the security to manage in a better way the numbers in Spain. In both countries we see a very positive commercial pipeline that give us a very positive outlook for the future and for the rest of the year.
Coming for the Mail business on Slide 8. Despite the efforts of managing the drop mail traffic gaining market share in share of wallet in customers and managing churn with business solutions that is growing year-on-year, the addressed mail volumes decreased minus 7.3% against the same period of last year, but the average revenue per item increased 7.1%. This comes from the new price calculation formula also give us a clearer view for the future and, obviously, to control the decrease of mail volumes in the future from the price formula.
The increase in average price per item allow us to reach €90.8 million of revenue in this quarter. This is a very slight decrease compared with previous year of minus 0.8%. But also in this business area, we continue to control the costs to managing the drop mail in this business area.
Coming for Slide 9, Financial Services. After strong growth in the recent quarters, the public debt placements have already – we already have seen in the last week of June, debt placement equivalent to the historical values. So we come from the same data that we have seen before, this growth in the last quarters.
We are doing several initiatives mainly in customer experience to help to maintain these volumes and managing the churn of these volumes. So nowadays the customer can schedule the visit to a store in our website and upload all the documents. This helps us to reach the younger segment and also to manage in a better way this placement. So as you can see in the market, this is very important. But seeing this, the placement of the second quarter in 2023 grows compared with the same period in the previous year, more than 287%.
In Financial Services, where are the public debt placements, we reach a revenue of €17.6 million, so plus 42.9% and an EBIT of €9.9 million, an increase of 65.8% against last year. But what I want to highlight here is we continued to position the CTT retail network in a platform to sell savings, insurance and credit services to the Portuguese citizens.
We have a powerful brand. We have a very important walk-in in our stores that allow us to bring more services to our stores. And it's still early days, but we began selling insurance in April of this year and we are already very happy with the performance. Nowadays we have more than 85% of our stores already selling insurance. And we, as you can see the numbers, in June already reached more than 60,000 customers doing simulations and presenting our offer. This is very important also to managing the future. We do see this like an avenue of growth, because, as you know, insurance service is a monthly guarantee revenue and allow us also to protect our future.
Coming for the results of the Bank, I'm going to ask Guy to...
Guy Pacheco
Thank you, Joao. So in Page 10, we have some of the Bank's key figures. The Bank continues its accelerated growth path with acceleration in the overall customers. Accounts grew 7.7% since June last year, and also in results as we see acceleration versus the first quarter this year.
Volumes also keep growing, especially in auto loans, where we are growing 16.4%, and mortgages also accelerating 7.6% of growth. Nevertheless, originations are growing even higher. We are witnessing a lot of prepayments in the market right now. Yields also improving, especially on mortgages, of course, on the back of the improving interest rates. But we are also repricing – doing a repricing effort on auto loans, where we already see improvements in yield. And also to respond to the current market environment, we start paying or increasing our cost of deposits that now reach 0.28%.
On the next slide, we can see numbers of revenues and profitability. Revenues of the Bank grew 19.7%, namely driven by net interest income with the higher high loan proposal with the expansion on net interest margin, but now stands at 2.9%, grabbing all of that growth. Also coupled with a good cost performance, our cost-to-income improved in the period. And our cost of risk is pretty much contained and drove EBIT to €5.4 million in the quarter, which itself drove our RoTE that is now at 8.3% in an annualized way and pretty much in line with our mid-term targets.
On Slide 13, we can see our financial review with our main financial KPIs, where we have a very strong set of financials with strong growth in revenues, 12.7%. Our EBIT also growing 89.2%. And specific items of €8.4 million in the quarter. This is mainly two events.
First, we resumed our optimization of our structure in Mail & Others division, where we continue to see opportunities to optimize our structure. We booked a €3 million one-off related with the suspension of labor agreement of 62 people with a payback below two years. And we continue to see opportunities to further increase these optimizations that will then flow to our P&L in the next quarter.
We also have a €5 million booked due to the exit of our previous headquarters. Following a slowdown in the office rental market, we are taking longer than we expected to sublease the headquarters. We still have 2.5 years of contract and we provision one year of rent to encompass the time that will take to sublet the remaining of the buildings.
Net profit also with good progress, €9.9 million in the quarter. Free cash flow of €8.3 million. We continue to have enough [indiscernible] generation and operational cash flow.
On the next slide, we see our revenue evolution. So strong growth, which I would like to highlight with a very strong and positive contribution from all business units. Express & Parcel, of course, being the most significant progress with 25% growth, we also – with a positive contribution from the Portuguese operations that grew 13.6% and Spain with a very high growth of 36.6% with the onboarding of large accounts and growth on all of the segments, as I Joao already mentioned. We also see a very good progress on the diversification of customers. That remains our main focus on this area.
Mail & Other growing €0.4 million with a positive contribution of business solutions. Mail pretty much suspend, that is our main focus here in this area, with 0.8% decline. Financial Services & Retail still benefiting from an exceptionally high demand in April and May, as commented. Since the 5th of June, we saw placements resume on the previous trend, so the trend that we witnessed before the second half of 2022. So first half of 2022 and the end of the year of 2021 is the kind of placements that we are seeing. Nevertheless, placements reached €73.5 billion in the quarter and that drove the revenues growth of 42.9%. Banco CTT growing €5.9 million on the back of net interest income, both a factor of high volumes and expansion of the margin that now reach 2.9%.
In Page 15, we see our OpEx also increasing 8.1% in the quarter, mainly driven by Express & Parcels and Financial Services. In Express & Parcels, we saw an increase of 22.5%. Nevertheless, we see a unit cost reduction in Iberia at this point due to inflationary context, and that is basically the fact of Spain being more and more closer to reaching critical mass. And we continue to see the fruits of the focus on investment in efficiency to help the two geographies, where we see benefits of that starting to flow through the P&L.
Mail & Other declining €0.2 million, but I would like to highlight that we have to cope with wage inflation of €2.6 million on the quarter, that is the fact following the agreement with the union, the wage agreement with the union. Financial Services growing €1.4 million. That is basically linked to the increased activity in our stores, and Banco also growing €2.6 million. Also increase in activity-related costs. Our cost of risk pretty much contained and stable, 1.3%, stood at 1.3% on this quarter.
The next page, Page 16, we can see our EBIT that is growing €10.7 million in the quarter with also a positive contribution for all businesses and from all business units. Express & Parcels increasing €2.8 million, with margin reaching 11.8% in Portugal and 2.8% in Spain, but with a sustained – in Spain with a sustained improvement throughout the quarter and with very positive outlook.
Mail & Other also improving €0.6 million due to stable revenues and good cost control. Financial Services still growing on the back of the exceptionally high demand mainly we saw in April and May. And Banco CTT growing €3.3 million, a very strong quarter with positive trends be it on revenues, bet it on a good cost control and also risk performance.
Page 17 show our cash flow. In the first half, operating cash flow stood at €55.6 million, with a strong operational performance. Our working capital suffered on the second quarter from namely all that growth in parcels that brought more effort in terms of working capital, but also a negative evolution in [indiscernible] but something that we will be recovering throughout the year. Free cash flow of €47.9 million. And our – in terms of net debt, that is actually a net cash position, including the lease liabilities of €7.6 million in the first half.
And with that, I'll hand you over back to Joao Bento for his final remarks.
Joao Bento
Thank you, Guy. So summarizing, we had an excellent quarter with our Iberian Express & Parcels operation growing, expanding its margin and offering a solid outlook for the forthcoming months of this year. In Mail, we see the price increase protecting us from decline in inflation, but we remain very, very focused on cost and efficiency to compensate for volume decline and improving margins. We have also seen an intense commercial activity that is allowing us to grow significantly our insurance distribution now on the backdrop of the agreement with Generali, while savings are normalizing the previous levels of placements.
Banco CTT continuing to deliver growth on number of clients on volume and on revenue, thus enhancing its profitability and in route for the levels of profitability that have been announced in the Capital Markets Day. And all-in-all, we had a very strong quarter with consolidated revenue and recurring EBIT growing across all business areas. It was also a quarter for strong cash flow generation, and we see our financial flexibility improving.
We have launched during this quarter our new €20 million share buyback, which complements the annual dividend that, by the way, were also paid in this quarter in May. And with all this, we believe that it enables CTT to reaffirm and the management to reaffirm our recurring EBIT guidance of at least €80 million in 2023, thus rendering each opening, on the right-hand side, to be probably better than this.
And with that, I thank you for your attention and we remain available for Q&A.
Question-and-Answer Session
Operator
Thank you, sir. [Operator Instructions] We will now take our first question from Marco Limite from Barclays. Please go ahead your line is open.
Marco Limite
Hi. Good morning. Thanks for taking the question. I've got actually two questions. One is on parcels in Spain. Clearly, volume growth of 44% is kind of a very big number, especially if we consider the first quarter where volumes, if I'm not wrong, were actually down year-on-year. So just wondering what happened there? Have you onboarded some very large new customer? So yes, just if you could give a bit more color on the different drivers of the growth. And still on Spanish parcel volumes, revenues are up year-over-year, but a bit below volume growth. So unit price is going down. And therefore, yes, if you could explain again what's the mix in that volume growth also referring to the price mix?
And the second question is about the Financial Services. So we have seen in June, as you show in your slides, a normalization in public debt placement. And if you can give a bit more color on what are your expectations? Should we wait – should we expect the June run rate as the new run rate for the second half of the year? Or June maybe it was lower than what you think is the run rate for the second half of the year because, I don't know, very hot weather and people are not going out much, not sure. Thank you very much.
Joao Bento
Thank you, Marco. So coming to your first question, we have, in fact, onboarded a large client that was already a client of ours. But not only one large client. We have, in fact, a couple of new large clients, and we have grown substantially on SMEs. But even for those large clients that we are acquiring and that are increasing their volumes, it's also a result of interesting commercial activity and the new dynamics in the market that we are observing.
Some of the Chinese sellers are now trying to reduce the number of agents in between the launching of products and last-mile distribution. And so we are now operating directly with some large clients that we were distributing through other partners. But the main note I'd like to make is that it's been a contribution of several clients, two of them large clients. And we see this tendency to probably to improve for the future.
The revenue is higher, but below volume growth. That's exactly because we have, in fact, smaller packets. So a higher contribution of Chinese e-commerce flowing through Spain, and therefore, a smaller price per packet. And there could be other ways to produce that, but in any case – to have that result. But in any case, we see very interesting margins associated with this growth.
Finally, on the question on Financial Services. In fact, as Guy already mentioned, June was influenced by a strong, let's say, movement that we had from before. In the last days of June, we have seen demand coming – falling to the numbers that we used to have before. So our guidance would be more on the €1 billion, €1.1 billion as our average placement, which is what we are observing in the final days of June. And sorry, this is per quarter, of course. So the – roughly a little bit more than €0.5 million we have in June is still higher than the normalized number.
Something that we have – that – in which we have, I would say, a strong confidence is that the limitation that this new series for €50,000 per account will be removed when the year starts because – one of the reasons why government has done this was that the percentage of public debt that was placed in retail was too high in their view and they wanted to limit that, but also remain – leave an option for retail to save throughout this type of product. We believe that next year we have a new budget and we will have – well, it's – I would say, more than sure that we're going to have a new higher limit, which probably could bring the normal placement to a slightly higher number than it will be for the rest of this year. Thank you.
Marco Limite
Thank you. And if I can just ask a quick follow-up question. Just want to confirm what you have said on your expectations for parcel volume growth in Spain. Can you confirm you said that you think that the trajectory will remain similar to second quarter, if not further accelerating into the second half of the year? Did I get that right? Thank you.
Joao Bento
Thank you, Marco. We need to take into account seasonality. So we are now starting summer. And so normally, summer would observe, especially in Spain, even more than in Portugal, lower economic activity and also – from the consumer side. In any case, we see a strong demand and volumes remaining high. But of course, you need to – one needs to take into account that there is some seasonality. So probably slightly lower demand throughout the summer and then a build up for the peak season. In any case, we are now acting at levels of last year's peak season, which is somehow I wouldn't say unexpected, because we believe it's a consequence of our commercial activity, but indeed very high numbers.
Marco Limite
Thank you.
Operator
Thank you, Marco. We'll move on to our next participant, Filipe Leite from CaixaBank. Please go ahead your line is open.
Filipe Leite
Hi. Good morning, everyone. I have three questions, if I may. First one on Express & Parcels because I'm still trying to understand the evolution of margins in Portugal because the improvement was significant. And correct me if I'm wrong, but I believe that it was one of the best margin ever in this unit. Was this related only with higher volumes? Or there was any significant cost cutting, cost of structure? Are you using more your own distribution network to justify this margin in Portugal? And for the future also if you see the more than 11% EBIT margin of this quarter as recurrent and normal going forward? Or should we expect some stabilization more close to historical levels of high single-digits?
Second question in terms of guidance for full-year, because in the first half you already did 60% of the €18 million recurrent EBIT target for full-year and it's still missing the seasonal strong quarter of the year, which is typically the last quarter. Do you see your guidance as too conservative because you are keeping it as you mentioned? And last question regarding real estate, if you can provide us an update on this?
Guy Pacheco
I'll take the first one and the last one, and I will leave guidance to Joao Bento. Express & Parcels in Portugal a good performance. What we are seeing, as Joao already mentioned, in Spain, we are seeing this market trend of having smaller and smaller size of objects that enable us to increase the synergies between our networks in Portugal, where we – with this new kind of profile of volumes, we can leverage more on the mail network. Also lower volumes on the mail side enable us to increase those synergies.
We also have been very much focusing on the improvement of margins in both countries, especially on this inflationary context and we see all those measures bringing or delivering results. We see margins I wouldn't say above the current margins, but pretty much stable around these levels in Portugal. Spain has still room to improve – in Spain, still room to improve because I should highlight that the growth was sustained growth throughout the quarter from the levels that we saw in the third quarter, where margins were still negative in Spain. So I think the average is negatively affected, but we remain sustained – confident with our midterm guidance that is high single-digit numbers of margins in Spain as well.
In terms of real estate, we reaffirm our belief that we will do the closing in the fourth quarter. We are now with this legal and administrative process of detaching the assets and sorting out all the legal requirements and permits that are needed and all the tax issues around the portfolio. But I should say that we are up-to-date on the timetable, so nothing to highlight. We reaffirm our objective of closing in the fourth quarter.
Joao Bento
Okay. Thank you, Filipe. Giving the guidance. Well, we have provided from the beginning of this year guidance opened in the right-hand side. And that was justified by the fact that we have an obvious uncertainty regarding the behavior of the public debt placements. That was extraordinary and in a way was not dependent solely on CTT's behavior. Of course, we had to prepare the network and – the retail network to be able to answer to the high demand, which we did, but we never knew how long we could take.
As we all know, that extraordinary effect ended in the beginning of June. And so we have part of that extra contribution throughout the first months of this quarter. But it's not going to be here anymore. And so what I would like to – we aim that or we – according to our expectations, this should produce €8 million to €10 million decline on that extraordinary contribution. And so the fact that we reaffirmed the guidance to be at least €80 million and leave it again open on the right-hand side, we believe it's not conservative, as you said, and provides and is associated with the, well, confidence that we have that – provided all the businesses continue to deliver as we expect, it could be even better. So in a way, you can read this at least €80 million as having upside risk despite the end of the extraordinary contribution of public debt. Thank you.
Operator
Thank you. [Operator Instructions] We'll move on to Antonio Seladas from AS Independent Research. Please go ahead your line is open.
Antonio Seladas
Hi. Good morning. Thank you for taking my questions. And thank you for the presentation. So I have two. First one is related with the Bank and the nonperforming exposure that keeps increasing. And one of the reasons, if I understood well, is related to the credit card loans. So I don't know if you can update us on your partnership – ex-partnership with Universo? And what should we expect over the second half related with the credit card loans? Because it shows that they should start to come down. But at the same time, I'm just seeing NPEs increasing. And as I mentioned, partially explained by credit card loans that are increasing.
So second question is related with Financial Services. On average, in the past, you usually played more or less 80% of the total certificate. So I noticed that over the second quarter, the average figure was just 75%. So apparently, the online application from the government or from the authorities are increasing the market share. So could you elaborate on this or explain or say something about this trend? Thank you very much.
Joao Bento
Thank you, Antonio. I'll be taking the first one. Yes, the NPE evolution is pretty much driven by our credit card partnership with – between Banco and Universo that as you mentioned should start to come down. And because of the dynamics of the portfolio, the runoff portfolio, we should expect the NPE exposure to continue to increase until the end of the partnership because of the mechanics behind those kind of dynamics on the portfolio. In the rest of the portfolio, we don't see any big increase on risk, pretty much the opposite. We should see stabilizing trends on the risk profile of the Bank.
Guy Pacheco
Thank you for your question. About the second question, the number – the market share we see right now is the same that we had before of this huge growth. As you know, to open an account the Portuguese citizen needs to come to the CTT stores. And after this growth, we see the same market share. So now – the growth of the last week of June it was – or sorry, the market share was of the people that still already have the accounts and just putting more money.
Saying this, we are developing – like I told before, we are developing also a better customer experience in digital. So a customer right now can schedule a visit to our stores and upload already the documents so to create this better experience. And in the future, we're going also to have more developments that allow us to compete with this – if I can say this, with all the digital platforms from the IGCP. What we see with these first weeks of this new solution customer experience is more young people putting these savings in public placements. So we – I think we are reaching even another segment to this offer.
Antonio Seladas
Thank you very much. Just regarding the NPEs and the partnership with Universo, when do you think that partnership will end – effectively will end? Through the year or just in the next year?
Joao Bento
No, it will be before year-end. Just on the year-end. It will be in December.
Guy Pacheco
So when we finish, NPEs should come down?
Joao Bento
Yes.
Antonio Seladas
Okay. Thank you very much.
Operator
Thank you. We will move on to Artur Amaro from CaixaBI. Please go ahead. Your line is open.
Artur Amaro
Hi. Good morning, everyone. I think this question was already mentioned by Filipe Leite, but just to understand what are the main reasons behind the difference of the profitability between Express & Parcels in Spain and in Portugal. Because EBITDA margin in Portugal at least from what I've seen in the presentation, they're close to the double of EBITDA margins in Spain. So if you can give us a little explanation on what's the difference between the substantial difference? Thank you.
Guy Pacheco
Thank you for your question. It's basically the factor of two things. First, because Spain, although with a very strong growth, is still reaching critical mass. So throughout the quarter, we saw an improving – a sustained improvement in margin that doesn't translate on the others over the quarter. But nevertheless, that underlying trend is there and we should expect on average, the margin of Spain to increase closer to Portuguese. But never forget that in Portugal we have this – I should say we have this good synergy between networks in – or advantages.
Yes, it's – thank you for the word I was looking for. We have the advantage of the mail network, where we can lower unit cost to deliver a parcel through that installed capacity. And that with the current mix of volumes that are smaller profile in terms of volume that we had in the past, increase the efficiency of that distribution. We also invest in technology in order to decide within each object which network delivers it according to the profile of the object. And that has been proving very helpful on maximizing the parcels in the base network that in – during the second quarter increased 18% versus the second quarter last year. In Spain, we see this improvement profile, although we'll always be, in a way, at discount to margin versus Portugal because of the advantage of the mail network.
Artur Amaro
It's very clear. Just a little follow up, if I may. So this – would you say that the current EBITDA margins in Portugal are sustainable by saying this? So can we assume this kind of margins going forward? There is no one-off event here increasing – artificially increasing the margin. So we can assume this kind of margins going forward?
Guy Pacheco
Yes, around this number, couple of percentage points below or above. I think it's sustainable margin. No big one-off to highlight. It's – actually there's improvement on all the efficiency in we – we use each network that we have available in Portugal.
Artur Amaro
Okay. Thank you very much, Guy.
Operator
Thank you. We'll take our next question from Marco Limite from Barclays. Please go ahead your line is open. Hi, Marco.
Marco Limite
Hi, there. Sorry, I was on mute. Yes. Thanks for taking my follow-up question. During the presentation, if I'm not wrong, I think you mentioned €6 million one-off in staff costs. Can you confirm I got that right? And can you clarify if that was in the second quarter or was across a number of quarters? And so if that was €6 million, we should expect that €6 million to drop off from the cost base. And what are the cost benefits coming from restructuring related to the one-off costs? Thank you.
Joao Bento
Thank you, Marco. I think you are referring to the specific items. So on the specific items we booked a €3 million provision for – to account for the suspension of labor agreements of employees on the Mail & Other business units. This is a one-off that we book every time we do one of these movements. We have a payback below years on this kind of initiatives. We should see the benefits of that movement throughout the next quarters. And we see a further improvement – or further opportunities to do more of these actions in the near future. And just to highlight that this movement was also made on the end of the quarter, so still to flow the benefits through the P&L, but already booking the one-off.
Marco Limite
Should we expect the benefit real equal to the one-off? So now it's a €6 million one-off and then we should expect €6 million less cost in the future or something like that?
Guy Pacheco
So it's a two-year payback on a €3 million one-off. So it should be €1.5 billion, €1.6 million benefit throughout one year, I hope throughout, yes.
Marco Limite
Okay. Clear. Thanks.
Operator
Thank you. Dear Speakers, it appears there is no further question at this time. I'd like to turn the conference back to Mr. Joao Bento for any additional or closing remarks. Thank you.
Joao Bento
Thank you, Priscilla. Well, thank you all for attending and for your very interesting questions. We remain available to interact throughout our IR team as always. And I also would like to announce that we are now aiming at having a road show event about the Bank, about the strategy update for the Bank by the end of September. And you should receive a set date notice at any time now. And with this, I thank you once more. Good to be here with us enjoying the results of a great quarter. Good morning.
Operator
Thank you for joining today's call. You may now disconnect. Have a nice day, everyone.
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CTT - Correios De Portugal, S.A. (CTTPY) Q2 2023 Earnings Call Transcript