InPost SA
AEX:INPST
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InPost SA
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I'm Mike Harris, transitional Head of Investor Relations at InPost. Welcome InPost Q1 2020 Results Call. Today, we will have comments on our clear last mile differentiation and operational performance in Q1 from our CEO, Rafal Brzoska. Michael Rouse, our Head of International, will run us through our progress towards bringing automation to Europe's last mile; and Adam Aleksandrowicz will, as always, guide us through the financials.
A quick disclaimer, today's call includes forward-looking statements that are subject to risks and uncertainties, and it is possible that actual results may differ materially. The call is also being recorded.
Rafal, over to you.
Thank you, Mike, and good morning to everybody. First, I just want to remind everyone of our main mission. We seek to do nothing less than just transform the consumer experience, merchant economic sustainability of Europe's e-commerce last mile. In Poland, alongside to our merchant partners, already 2 of every 5 parcels delivered, goes through our highly productive APMs. That's, of course, not a cultural specific, this literally reflects the reality that, when you make lockers convenience for consumers with best-in-class service, consumers love both the standardized, efficient experience and naturally, their full control over the collection times. And clearly, in a world where every e-commerce business is focused on reducing delivery costs and improving sustainability, efficiency and automations are a key part of our story, resolving those problems. But first and foremost, we are about consumer convenience, which drives both loyalty to our machines and more business for all our e-commerce merchants.
On the next page, you see 3 charts that demonstrate why we should not just have a role in the markets we are tackling, we believe we have a rightful claim to win in this market. As mentioned before, when lockers are convenient, consumers love the predictable high-quality experience, and of course, they love to control their collection times. As you can see, our Locker NPS in Poland, which is already in another league versus our to-door competitors, remained at a very high 75 points in our just completed survey. What that drives? A satisfies consumer is job one for merchants. And as our NPS indicates, we elevate the consumer e-commerce experience. And by the way, this consumer satisfaction comes with clear economic benefits for merchants SVUs, of course, depending on the size of the city or deliveries, but about 1/4 of the fuel and a fifth the labor to parcel versus traditional to door deliveries, and that's just in a non-peak time, because there are even more benefits in peak times as we deliver more parcels than courier can.
Another valid point, while inflation impacts us all, our automation list is, of course, less exposed to these pressures. Meaning our top gap versus to door keys will only rise in 2022. Crucially, everyone on our planet and in our communities, benefits from the reduced need for vehicles with lockers versus to door deliveries. Society gets all the benefits of less congestion and a dramatically reduced carbon footprint per parcel is around 75% carbon footprint reduction per every single parcel.
And why I believe we are in front of another tailwind for us? In current geopolitical situation, as we see European Union want to completely diversify away from Russian oil, and that will elevate cost of fuel to a level we've never seen before. Merchants will be under a huge cost pressure, cost of logistics, and we saw that already looking at the recent financial reports, the pressure may go away only if they switch from door-to-door to out-of-home. And InPost, being the largest pan-European player in out-of-home deliveries, will definitely benefit from that shift.
On the next page, a quick reminder, the drivers of the flywheel that reflects the truly unique and transformational last-mile solution we've created. As we increase the density of lockers and decrease proximity to the households, no one can offer a better service for consumers. It's simply very close. And that statement embraces literally every angle from delivery speed, quality, standardization, ease of use, controlling pickup times, and at the end of the day, again, sustainability and getting more convenience for the consumer, that drives their increased usage and adoption, adoption of merchants, the pool effect. And this is not just because we have industry-leading economics for merchants. It's not about price. It is because consumers, once exposed, they integrate their neighborhood locker into their lifestyle. And this growing consumer stickiness and widening merchant adoption, creates significant economies of scale for automated lockers.
As mentioned, automation of the last mile requires significantly less fuel and labor and, of course, has lower variable cost than to door and our higher fixed cost base drives meaningful operational leverage that widens the gap, versus to door as we grow. And cyclically, higher costs are a change for us, like they are for much of the world, and this was clear in our lower Q1 margins which was expected, as the spike in oil, in particular, impacted cost, while we didn't begin to adjust prices until April 1st. So the simple reality is, higher inflation in a still structurally growing market creates a competitive advantage for us. As our contracts roll and our inflation mechanism kick in, in those contracts, we expect it will become obvious that we are a business with pricing power. And Adam will discuss this in more detail later in the presentation.
Let's jump into the next page. So our flywheel helped contribute to market share gains in each of our markets in Q1. Even with the rising uncertainty and inflation pressures on consumer wallets, we grew volumes a solid 19% in like-for-like markets, while Mondial volumes grew 10%, and this translates to more than 50% 2-year volume CAGR in Poland and 27% in France.
As you will see on the next slide, we had market share gains in all core markets, including Poland, and I will show an excellent chart later, that also demonstrate the resilience of our lockers, with nearby competition deployed already. With high levels of consumer satisfaction, you remember the NPS, and the regularity of use, we added another 400,000 active app users in Q1, which is another 1% of Polish population using our app. And this is now bringing us to 9.6 million active app users, and that's a best app in terms of quality as well.
Across all our markets, we continue to roll our machines. In Poland, we are entrenching our consumer proximity end mode. And in France, we also advanced the automation of Mondial's Relay existing out-of-home network, without shutting down the PUDO points. We continue to add on top of them up to 3,000 machines this year. And also in the U.K., our rollout aligns with high-profile supermarket storefronts, with Sainsbury's as our most recent addition. So in all our markets, we are enjoying significant merchant wins, as you saw on e-commerce -- being an e-commerce enabler, we added more than 3,000 merchants of all sizes in Q1 and in Poland only. In the U.K., we have had good progress with return heavy fashion merchants and the younger generation with ASOS being a big win in Q1. Michael will give more details later on.
Next page, please. Here we are. This is the very high -- based on the very high Q1 of 2022 -- '21 base, we show strong end market bidding volume performance across all our key markets. Here we show InPost outperformance in each of those markets, and in Poland, these gains came despite the competition trying to win something, but our overall market share gains make it clear, that the core of the Polish consumer acceptance of lockers, is driven by consumer choice, not by price. Moreover, consumers get the quality and convenience of their most preferred InPost option. And as a side effect, merchants benefit of lower cost and the more active consumers. Michael will later talk about international markets, but as you see, we dramatically outperformed the French market. And in the U.K., we enjoyed triple-digit growth, as we continue to sign up merchants to our differentiated returns proposition, especially in the fashion industry, while we were highly successful as well, signing and deploying around high-traffic supermarket storefronts.
Next page, please. We are extremely proud that to have this last mile e-commerce service that is head and shoulders more sustainable than traditional to-door delivery. And beyond having a best-in-class ESG product, we have also significantly enhanced the importance of the ESG across our entire business, which is reflected in the comprehensive ESG report we recently published. I'm pleased to say that our supplier network is also very aligned with us from an ESG perspective and motivated, as we are, not just by our significant number of Ukrainian employees, but our heartfelt sadness at the tragedy unfolding on our Eastern border.
And together, we have been able to harness that motivation to provide a kind of relief, as the refugee crisis exploded in this past quarter. And like many Polish companies, we, as InPost, we donated directly, but also did the same, our suppliers, and we are proud to have a kind of coordinated meaningful response from the wider InPost family and our subsidiaries. As we continue to remain focused on our business mission, we also want to say, we will continue to leverage our network to provide support for our Ukrainian friends.
And now let's jump into the business update, Page 12. Here, we can see some of the most recent advances in our firewall. Some of them I already mentioned by the kind of summary. It starts with the improved consumer experience in all our markets. We really showed progress from the number of active app users in Poland. The elevation of Mondial's Relay delivery times in France, where we are accelerating the delivery speed, but also rising Trustpilot scores in the U.K. and the consumer traction leads to rising merchant adoption, with more than 3,000 more merchants added to our Polish business, and U.K. and France gaining meaningful merchant partners at the same time.
And these rising volumes drive our operating leverage as a part of the flywheel, which definitely was kind of masked by rising inflation, but should we assume -- as we adjust our prices, which we are well positioned to do.
As our flywheel continues to spin an inflationary and deflationary environments alike, we continue to deploy machines with meaningful scale in all our markets. And in Poland, we ended the quarter with over 70,000 machines. And it's not just a physical expansion. Recall the data we've shown with the full year presentation that demonstrated the consumer tendency to purchase more, the closer they are to one of our machines. And we are pretty confident that the current pace of machine deployment is proper to volumes for that year, and the scope for margin improvement is there, as pricing kicks in.
On the next page, my favorite one, favorite chart that demonstrates the resilience of our consumer loyalty, that's driven the competitive mode. Let me explain the chart. We track the performance of all our machines from the moment a competing machine is introduced, deployed nearby. And while all the trends for all the catchment businesses are similar, here, we are showing last 2 quarters' performance for all the machines that have a competitor within less than 100 meters. So our machines volumes are indexed relative to all other APMs that don't have any neighboring competitor. So you can compare, you see that impulse lockers that are attracting competition, they were -- yes, the best one, naturally allocated in the highest performing locations. Hence, the index starts a little bit above 100 points.
While gaining share is much more complicated than we know that, than just deploying physical lockers, physical metal boxes, even we are somehow surprised, because the relative performance of our lockers facing competition nearby, has actually improved. We see a kind of halo effect, and at its core, our consumers are highly satisfied with our service. We know that. They see -- they completely don't look at pricing, and they tend to visit our lockers on a frequent basis as a habit, as mentioned before. So we are best-in-class on services, and literally miles ahead on proximity. We don't take the threat of competition lightly. That's clear. But we are firm believers, that if we continue to spin our flywheel, adding more and more added services on top of it, we are and will remain the best proposition for both merchants and consumers in Poland. And this data has shown us already.
One of our key points on the next page in differentiation, is our mobile app user base, which is now the most powerful in Poland. In Q1, all the new functionalities we added on top, that included quick returns, Google Pay, but also we launched a Ukrainian version, already downloaded by more than 100,000 of new consumers. And we saw active app usage rise from 9.2% to 9.6% just in the quarter. This is on top of our current base, additional 1% of the Polish population. And also, we increased a total number of APM users, so all, not only the app users, it has grown from 14.8% to 15.3% just in Q1. And within this user base, the overall percentage of what we classify as hard and super hard users, rose from 39% to 40%, which means more and more, ordering more parcels per week per month than before.
Now I will hand over to Michael, our Head of International, who will highlight our gains in our newer markets. Thank you very much.
Thank you, Rafal, and Good morning, everyone. As you can see on the left-hand side of this chart, we've really made notable strides, in both the integration and the investment into the Mondial Relay business, as we continue the transformation to really create what we believe will be France's leading consumer-centric offer, within the delivery field. As Rafal has already touched upon, we have had also tremendous outperformance of the French market in Q1, with an 8% volume growth versus estimated 16% decline in the overall market. And really the foundations of that growth in Q1, was cemented with the post-acquisition signing of a 5-year cross-border agreement, as well as our continued existing strong performance in the overall C2C category.
But our main strategy with Mondial, is the automation of the out-of-home experience. And this really can be demonstrated what we can see in the middle chart and on the right-hand side. We've continued to make really good progress, doubling the number of APMs, as you can see, to 651. But what is even more important is as we track the performance of those APMs and the benchmark we're using is 2017 in Poland, we continue at pace to really outperform what we saw in Poland in that period of time.
But one other further data point that is not on the slide, but I shared with you the last time and I actually want to give you a further indication, is really how do we track both the consumer usage and the consumer voting power to choose the APM ahead of PUDO, and really, the important data point that we track there is the dwell time, and we continue to see that our dwell time is nearly 50% less than 0.7 a day. So you can -- really confident voting from the consumer to choose the APM, as we continue to build the network.
So now going into sort of Q2 and beyond, we continue to be very focused on the pillars and transformation of the consumer experience, but in principle to improve the speed of delivery, which the consumers have tended to forgive in exchange for Mondial's economic pricing. So as we execute the transition to next-day delivery, which will be transformative for the French market, we expect to see clear gains in the B2C market share, as we go forward. Coupled with the margins having normalized after COVID windfalls, we expect this will provide a strong base, from which spinning the Mondial flywheel will increasingly materialize.
So let's now move on to the U.K. Here, we don't have the pre-existing benefit of a strong established locker culture, as in Poland or a strong out-of-home customer base as Mondial has. But here, we -- taking a very surgical approach via returns on spend, working with C2C partners such as Vinted and eBay to address the first mile, which is a market of hundreds of millions of packages and provide significantly superior customer experience to the broken services of what exists in the market, and can already be seen in our Trustpilot scores which Rafal touched upon earlier.
In the case of returns, we solve a problem for retailers and shoppers alike. Our market expertise with [indiscernible] returns no means, we've now launched with the key marquee brand, ASOS in Q1. And already after 8 weeks, is our largest returns partner. Coupled with both the C2C marketplaces that we're working with, we continue to expand on our growth in Q1. It was in excess of peak volumes, which demonstrates both the share of checkout consumer pickup and cohort maturity development starting to resonate with the U.K. shopper.
Finally, [ though with no means ] in the U.K., we have meaningful relationships with the top U.K. fashion retailers. 45 out of the top 50 are either now live or signed and their continued focus to find a sustainable, cost-effective last mile alternative only becomes more relevant, with the current inflationary pressures and with the pending launch of our logistics model in the second half, to provide us a great platform to attack, what affected is the U.K.'s biggest prize. So to go after the U.K.'s 1 billion-plus parcel market within the last mile, we need to control our own logistics.
This is a transition we have now started, which is ahead of plan, but our success will also lead to a removal of a pre-existing profitable, but strategically less valuable rental of our lockers. So as we now focus our efforts on logistics control, our deployment is now more heavily focused on fewer, but larger machines in high-traffic dense locations, as I've already mentioned, such as supermarkets, our major transport hubs.
In Q1, as you can see in the middle chart, we grew our longer compartment rate faster than APM locations, actually grew at a rate of 17%, thanks to the higher demand in supermarket and chain locations, where our focus is about deploying larger and bigger machines. So with the signing of Sainsbury's in Q1, we've now got all the top U.K. supermarkets really under our stable, with the only real last holdouts being Asda and Aldi. Plus with the already penetrated TFL and the density of network that we've already been building in London, Manchester and Birmingham, we feel super confident that we're now present in the everyday trip of a sizable number of U.K. consumers in the post-COVID world.
And thank you, and let me hand over to Adam, to take you through the financials.
Thanks, Michael. Again, good morning, everyone. So starting with the summary of our financial performance for the quarter. We've grown our revenues by 94% on a reported basis and 19% like-for-like, excluding the impact of Mondial Relay acquisition. In Poland, we reported 17% revenue growth, and in the U.K. off a low base, we grew 167%, lifting the overall Group revenue growth, excluding Mondial Relay to 19% year-on-year, with a sharp rise of inflation of about 10% year-on-year across Q1, other losses in the U.K. and the surge in fuel price reimbursement for our couriers, we saw a rise in costs that drove margins down.
While our consolidated adjusted EBITDA margin fell over 1,500 basis points on a reported basis, a good portion of that, of course, reflected consolidation of lower margin business of Mondial Relay. On a like-for-like basis, the margin was down by 660 basis points, with Poland's adjusted EBITDA margin down just above 340 basis points to 41.3%. Reported EBITDA was up by 23% to PLN 409 million, and like-for-like EBITDA was flat with Poland's adjusted EBITDA growing by 8%, just under half of the revenue growth rate.
CapEx as a percent of revenue remained unchanged at 20% with the Mondial Relay consolidation. Big year-on-year step-up in nominal CapEx spend in Q1, was mainly driven by international, where the number of manufactured APMs was roughly up by 3x versus previous year. Also, Polish APM CapEx is more front loaded this year to Q1 and Q2, as we built inventory of production components, given continued tough landscape of the global supply chain. Net leverage was at 3.3x on a reported basis. However, factoring the full year impact from Mondial Relay acquisition, the figure would fall to 3.1x on a pro forma basis, so just slightly up from the full year of 2.9x.
Moving on to Page 19 and Polish market. off a very high base of Q1 2021, which was really challenging, Poland has seen 16% volume growth, bringing a 2-year volume CAGR to 51% year-on-year. We are quite satisfied with this outcome when taken in the context of the overall macro situation and particularly the start of the war in the neighboring Ukraine. Volumes in Poland, as we mentioned already, took an initial hit immediately postwar outbreak, as the shock of Russia stock and the flow of refugees impacted consumer sentiment in Poland, but we have seen quite swift recovery here. While we are not seeing a renewed deterioration in demand yet, going forward, we are sensitive to the likelihood that the inflationary pressure caused by the war associated sanctions and full supply issues, will put pressure on consumer purchasing power in Poland in the later part of the year.
As you look on the revenue, you will notice some marginal positive pricing impact in Q1. This was mostly driven by positive customer mix, as we see higher price point customer channels grow faster in our volume mix.
I have mentioned already the EBITDA margin erosion, driven by cost pressure, and that will be even more pronounced in Q2. But at the same time, as Rafal noted, we have seen already 2 price increases in April and May, on some portion of our volume. So while cost pressures will have a full quarter impact only in Q2, both seasonality of volumes and obviously, stronger seasonality towards the second half of the year, and the impact of the price rises, should partially counterbalance the full quarter impact of the cost inflation in Q2. So at this stage, we remain comfortable with our previous full year margin communication.
Moving on to Page 20, to Mondial Relay performance. As mentioned already, we had a strong 10% growth in Mondial Relay with 8% growth in France, which, given the situation of the French market and estimated 16% e-commerce decline in the quarter year-on-year was quite exceptional. Much of this volume outperformance was driven by our strength in the C2C channel. Accordingly, pricing was lower on a per parcel basis, driven by the channel mix, but also impacted by Vinted contract price adjustment from 2021 that we already mentioned a couple of times.
As anticipated, adjusted EBITDA margin fell from 19.1% to 12.8%. While this was partially driven by pricing, the main impact here was normalization of the inflated Q1 2021 margins, heavily driven by the COVID productivity peak. So during COVID, Mondial had the ability to swap PUDO capacity more than a typical environment. And as expected and as we mentioned a couple of times, with the reopening, capacity utilization has moderated, it had to come down and the margins have normalized towards the level that we initially expected. So the margins are now much more in line and consistent with the pre-COVID levels, and what would be normal for this type of the business. But very important to mention, they come more on the top end of our full year guidance and our expectations for the year.
Moving to Page 21, International. We have seen both very strong volume growth internationally, a meaningful reduction in SG&A cost per parcel. At the same time, the U.K. losses have increased year-over-year, reflecting negative unit economics, driven by the logistics third-party costs. EBITDA losses hit in excess of PLN 44 million in Q1, but this includes significant one-off elements associated with our strategic logistics transition and exit from the current contract framework.
As we move to a new arrangement, we expect logistics cost per unit to reduce starting second half of Q2 this year. This should allow us to start generating economies of scale on the back of growing parcel volumes, and with the continued fall of per parcel cost and our volume leverage, we remain confident that the trajectory of EBITDA will be more favorable in subsequent quarters.
On to Page 22, so here, you see a bridge from adjusted EBITDA to net profit, and a few points to go out. First of all, operating EBITDA, that was up by 53% year-on-year at 26.2% EBITDA margin. Second point, obviously, depreciation-amortization has increased quite significantly, driven by the scale of asset rollout, both on property, plant equipment, as well as IFRS 16 component. There was some impact of Mondial Relay acquisition, especially on the intangibles as a result of purchase price allocation accounting.
And then net financial costs, which have obviously increased very materially, but driven by 2 key things. So first one is 65% of the absolute cost increase for that line was driven by the unrealized foreign exchange losses, driven by the balance sheet valuation of our CapEx payables and receivables, and of the remainder of that absolute cost increase, vast majority, roughly 3 quarters, was driven by the increased debt quantum, arising from Mondial Relay acquisition financing that we incurred effectively end of June, early July last year. So obviously, not being part of the Q1 2021 results. And only a small part of the increased cost, around 15% of the nominal increase, was driven by the interest rate increase, although, of course, this element will be more visible in Q2.
Moving to Page 23, here, we include a bridge from adjusted EBITDA to free cash flow as we did for the full year results. So our EBITDA conversion in the quarter was 52% pre-CapEx and 50% post maintenance CapEx, while growth CapEx resulted in negative 93 million free cash outflow, the combination of volume seasonality and rising prices, as mentioned before, should mean that we should move towards free cash flow neutral, post growth CapEx in the later part of this year. And the reason for this, as I mentioned earlier, our CapEx this year, especially for Poland, but not only is this front loaded towards first half of the year, as we scheduled the production to build inventory and address continued squeeze in the supply chain on the critical production components.
So that is all on the financial performance. Thank you very much, and we're, I think, open for Q&A now.
[Operator Instructions]
Operator, just before we take the first question, I just wanted to say that we recognize that because of COVID, many of our IPO investors have not had a chance to kick the tires on our lockers in Poland, or our operations. Additionally, we have yet to provide a format beyond these calls to fully introduce the workings of and opportunity for Mondial Relay. So we are soon hosting a number of investors in Poland, some of which are being organized by our covering brokers. We will also be attending a number of upcoming conferences in May and June. And in due course, we also intend to announce an event, to help provide more on-the-ground understanding of our differentiated APM proposition.
Thank you, operator, if we can move over to questions, that would be great.
We'll now take our first question from Sathish Sivakumar from Citigroup.
I've got 3 questions to start off. Firstly, on the -- Poland actually. If I -- wanted to get an understanding on the volumes. What was the exit rate in Q1 that you saw in Poland? And how does it actually, the Q2 trend so far compared with what you have seen in March? Then on the utilization rate across Poland and even in Mondial Relay, [ tinkle ] around the APM utilization in Poland as well as in France would be highly helpful? And third one, again, on Poland, if you could actually share the color on the revenue growth in APMs and of the gross profit margin that you achieved -- would be helpful?
Yes. So let me maybe start with the last one. So essentially, if we speak growth rates for Poland in Q1 across the 2 main channels, so APM and to-door. APM continues to be the main growth driver for the business. The growth rate for the quarter was 17%, so higher than the average, while to-door was 12% year-on-year growth for the quarter in Poland.
In terms of gross profitability, as you can imagine, it's the decline in profitability in general, being driven mostly by the fuel costs in Q1 or second half of the Q1 was much stronger pronounced in the to-door delivery. So the proportional loss in profitability in the to-door franchise was much stronger than in APM. But overall, if you look at the gross -- basically gross profit erosion in terms of basis points, the scale of that was actually comparable to the EBITDA decline year-on-year for the quarter. So pretty much all of the margin dilution was driven by the operating costs. So that is growth rates and profitability.
In terms of exit rates. So actually, I think when we're speaking of the growth dynamics, what we've seen end of March and then continuing in April are very similar -- are very similar growth rates, and they continue still to hold. So actually, when we think -- our comment in the presentation in general, around the consumer resilience or consumer demand resilience still continues to be the case. And I think those absolute exit rates still hold across April and early May.
And then utilization, utilization in France, I think, is -- as we continue to deploy, obviously, the average utilization is still continuing to be flattish. But actually, if you split the utilization into cohorts or vintage cohorts and you take into account the fact that we have doubled [ real estate ] across the quarter -- or sorry, more than doubled across the quarter. Actually, that flat utilization rate actually tells you that there is a very strong underlying performance of the old cohort versus new cohort. And that essentially tells us that the consumer adoption is strong, and actually, we continue to be very encouraged by what we see in there, in terms of utilization rate.
So just a follow-up on the gross profit margin. If I look at, say, you did like 41% in Poland overall on EBITDA. If you come past that, say, versus 100 -- 200 basis points lower. So is it fair to assume that actually your to door is similar reduction in gross profit margin, whereas it's been kind of -- been slightly resilient?
Sorry, Sathish. I'm not sure I get the question. Was your question whether...
The gross profit margin -- on the gross profit margin, right, between the APM and to door, you said that it will be similar to what we have seen drop in EBITDA. But with that similar drop in percentage, I think you've been from 44% to 41% on EBITDA margin. Would it be a similar downward trend across APM and to door, or...
No. My point was the consolidated gross margin would be similar level, whereas due to the drop in to-door profitability would be probably anywhere between 1.5 to 2x higher in terms of basis points margin erosion. Does it make sense?
Okay. Got it.
We will now take our next question from Muneeba Kayani BoA.
Firstly, I just had a clarification on this previous question around the exit rate. So you said that -- did you say that the exit rate was similar to the number for the first quarter? I didn't quite catch that. So if you could clarify that, please, for Poland? And then a similar question for France, actually on the exit rate and the performance in 2Q so far? And then on net finance costs, what should we expect for the full year, and can you just remind us how much of your debt is fixed versus floating rate? On Mondial Relay, on Slide 15, can you talk about the expansion of the depot network in France, kind of where you are with that right now and what to expect for the rest of the year? And just a housekeeping question. You've provided full financials for the first quarter, will you be providing kind of quarterly full financials going forward, and what's driven the change in disclosure?
Yes. So clarifying the exit rates, that's exactly what I was trying to say, which was April exit rates were very much at the level of March for Poland. Mondial Relay performed better than in March. So that's the first one. Expansion of Mondial Relay, I think we're planning to add something like 8 depots in France across the year, with the new sorting hub being operational end of Q4 or launch end of Q4, but really getting fully into operations and taking on volume from the previous locations and ramping up its operations across Q1 of this year and Q2 of this year. So in terms of capacity -- would be [ stepping ] with capacity quite significantly. But given the lead times that you have in the market for both physical locations, but also equipment and automation, most of this is expected to come into -- transferred to operations Q3, Q4 of this year. And in terms of debt, I think we were indicating that roughly 60% of our debt is PLN denominated, and that's floating rate versus the remaining 40%, which is fixed rate...
And what can we expect for the full year net finance costs?
I think we are not giving any specific number here. I think the math to be done is pretty straightforward. So the currency split of the debt and the fact, as we said, we are not really expecting to add any gross debt, other than any debt that will be driven by the increase in IFRS 16 lease liabilities, which will be more expansion driven. But in terms of the financial debt per se, so loans and borrowings, we don't plan to add anything on a gross debt level. So basically pretty much the opening balance and the split -- currency split and therefore, the fixed versus floating rate for the debt should be stable across the year. So I think that's a pretty straightforward exercise to be done.
And just on disclosure, if you could just clarify kind of what has driven that, and is that what we should expect going forward?
We'll continue to provide full disclosure across the year, at the quarter end.
We will now take our next question from Lisa Yang from Goldman Sachs.
I have a few questions, please, as well. The first one is on Poland. I'm just wondering why your outperformance to the total market volume seems to have reduced to only 1 percentage point in Q1? I think last year was like 1.7x. So just wanted, like to what extent this is due to, maybe some share shift to other local providers, or what's the impact of the reduction of [ MOB ] by Allegro? And what sort of like outperformance do you expect going forward? That was the main surprise to me, the level of performance in Q1 which has reduced.
The second question is on your EBITDA margin for Poland. So given all the sort of price increase you're putting through, and the part of cost inflation, what was your expectations for margin in Q2 for Poland? Do you think it could be weaker than Q1, or was Q1 the trough at 41%, any color on that would be helpful? And the third question is on the price increase that you said you put through in Poland from April and -- like in April, another [ price hike ] in May, Could you comment on what percentage of your customers have actually seen that price increase, so we can basically model the part of the price increase more appropriately?
I think you previously said some customers are seeing lower price increase in others, because you have accepted a higher volume commitment. So just wanted to get a bit more color? And also, have you seen churn from any customers following this sort of price increase? And finally, for a follow-up question, you said Poland volumes in line with March, but what was the March number, because I think March was also impacted by the war. So wondering whether or not it was lower than the first quarter number?
So maybe I'll hand over to Rafal for the commentary on pricing in general. But before I do that, just let me comment on the first 2 questions. So first one was around the market outperformance and why only 1% ahead of the market. I think 2 elements. First one is, if you go back to Q1 '21, and you take into account -- in that quarter, we have grown year-on-year by 99% in the APM business, which was more than double of the market growth. That just shows you how challenging that comp was. So I think we've been really comparing ourselves to a super stretch target. And I think growing on top of that, is really a great achievement, whereas you've had a market basically being stretched from much less challenging comp, would be probably one observation.
But a second one, as I mentioned, 16% total volume growth, if you split it into APM and to-door, APM has grown by 17%, so actually 2 percentage points ahead the market. Obviously, as mentioned, Q1 was the most challenging quarter. Then we think into the year, at least from the comp perspective, the reference base is much less challenging. And therefore, I think, we're quite confident reiterating our guidance for the year to grow ahead of the market by 3 to 4 percentage points. That's point number one.
In terms of profitability, I would expect Q2 and Q3 actually be a bit dilutive compared to Q1. And the reason for that, again, as I mentioned during the presentation. I mean, first of all, we'll have a full quarter effect of the macro disruption that we have from the Ukrainian war and the impact on the general CPI, but also on the fuel prices even more. And obviously, there are price increases, Rafal will comment on that, but they will not fully compensate. And only in Q4, we'll actually see a meaningful step-up in average pricing, and therefore, the trajectory of EBITDA profitability for Poland, I think we expect Q2 and Q3 to be slightly weaker and then see a very solid rebound in Q4, driven by a pricing dynamics and the timing of those pricing dynamics driven by the contractual provisions. And then secondly, obviously, by the volume seasonality, as is the case every year. So I think this is the case.
And I'm handing over to Rafal, for the further commentary on price increases.
Yes. I'm happy to comment. Maybe one on top of Adam's comments. In Q1, we continued our much faster growth in Non-Allegro channel as well, which gets you kind of feeling that we continue being an agnostic enablers for -- also for the new entrants and for Polish verticals, that are growing literally faster than the market on average.
In terms of the repricing, so a quick reminder, that's something what we discussed a month ago. We have 3 groups of clients. Group #1, our partners or friends from Allegro. And here, November, that's the moment where they were pricing [ thin ]. Then we have a group of big strategic players, with whom we signed our framework agreements few of them like colleagues Vinted, Shopee and others that decided to create a kind of framework agreement for a few years, with price indexation mechanism in the contract and strong volume commitments. And those players in exchange for that framework agreements, most of them we signed and negotiated end of last year, they already -- we already agreed that 2022, the pricing is set, and the first repricing window is Jan 2023. And this is around 15% of our volume.
The rest, the 35%, this is exactly the group of clients that we repriced 1st of April. And part of them, we repriced as well with -- in May. Some of them, we offered a kind of less aggressive repricing, in exchange for volume commitments that were set on a level much above our expectations of the market growth for 2022. So we are creating a win-win scenarios for the merchants that want to be even more sticky with InPost. That's why the full repricing you will see in Jan 2023 across the board, all the groups of clients we reprice.
Is that half of the 35%, which you're seeing that price increase or more?
It depends. Definitely, 1st of April was 8%, 5% was probably on a group of 20% of clients. So 20% of clients were affected by 13% price increase. What's the level for the next repricing? It's not something what we may even estimate, because that will be driven mostly by the CPI and fuel cost and labor cost inflation, we'll see end of the year.
Great. Could you -- just a quick follow-on. Could you also comment on the repricing strategy by other players? Have you seen any changes by some of your competitors, particularly to-door and local players?
Yes. So many of them already repriced and they repriced massively. So for instance, our average fuel surcharge level was 7 percentage points, and we added those extra 5. So we ended up with around 12% fuel surcharge, whereas the other players went up from 15% on average to 25% on average. So this gives you a kind of feeling that the gap between door-to-door delivery and APM delivery is simply increasing. And that's why we have this conviction, that the more expensive the fuel is, the more expensive, the whole logistics for e-commerce becomes, and that's pretty visible in recently revealed financial reports of most of the e-comm players, where all of them stated that logistics cost, that's the main challenge for them. And here, with our out-of-home proposition in 9 markets, we see visible acceleration of the discussion with the merchants, that were so far reluctant even to consider integration of our InPost lockers, and now they are chasing us to do it as quickly as possible. So that's a very remarkable sign that we already observed.
And so question on the March growth, could you comment on that as well?
I think, Lisa, we would not want to go month by month, right? I mean, essentially, March was not too far away from the average quarterly dynamics year-on-year. As I said, April, very much in line. So I guess that's probably the answer.
We will now take our next question from Stefano Toffano from ABN AMRO.
Yes. So a few questions on my side. Just to be very specific and also just to have a very tight model, could you just maybe exactly state the partial volumes split between APM and to-door for Poland? You mentioned the percentages, but just to be very precise. And if you can add also on average, the number of lockers in Poland at the end of the quarter, that would be very helpful. Another question that I have is exactly on something that you stated during the last question. So you mentioned visible increases in the discussions with clients that previously even did not want to consider an APM. Can you maybe tell us more about that? Because that's exactly, I think, the bottom line of the investment case over the next year or so during this inflationary period. How fast do you think these discussions will be moving? When do you think we might see a very clear impact on volumes based on this one. I know it's a very crystal ball type of situation, but it's obviously very important in -- over the next couple of quarters. So that's from my side.
I'd be happy to answer the second question, and then I will hand over to Adam regarding the split of APMs and door-to-door. So this is all about priorities. And most of the merchants, they are very busy on their IT. This is where we see the real bottleneck. So people do understand that out-of-home lockers and PUDO points, this is a very important, a very valid tool they have to offer in the checkout. But still, so far, most of them, they had DNA door-to-door oriented.
And I will give you a few examples, but let's take Amazon, for instance. Amazon -- the first time in their history, they applied surcharge for the deliveries. Moreover, Amazon in the U.K. today, is encouraging people to shift from door-to-door, which was purely 100% DNA of Amazon, and they give them vouchers to use Amazon lockers. So this process has started, and we see that as a tailwind for us, because we are the only player in out-of-home, that may offer a framework agreement for every merchant, giving visibility on SLA pricing, long-term agreement and capacity, which was always an issue, especially in peak times. And by the way, we are more and more cheaper than total door. And on top of this, more and more important sustainability [indiscernible] that we are offering to them.
So to give you a sense of acceleration in this adoption among the merchants, just in the recent 2 quarters, out of top 25 fashion retailers in the U.K., Michael, correct me if I'm wrong, but we are lacking of 2 or 3, not yet in discussion or not yet an integration, or not yet already deployed and launched. And we see that across the board, that merchants are shifting because they realized that it's not only cheaper, but by the way, by using lockers, they get best-in-class customer experience, which makes the end users even more sticky to their websites and mobile apps. And that's exactly something. What we are already like disclosing during our IPO, some of the investors ask us a question, where we see the market in 10 years from our IPO. I was saying, majority of the volume will go to out-of-home, not 10%, not 20%, majority. Today, we are living in a completely different environment, and I'm more and more in [ camp ], that within 5 to 6 years from now, we will see door-to-door as a premium service, very expensive, very pollutive to the environment, and it will be less than 30%.
Yes. And regarding the first question. So the exact volume split was -- we've delivered -- in Q1 this year, we've delivered 112 million parcels in Poland, out of which 18.7 million was actually to-door parcels and 93.3 million was APM Parcels. And in terms of number of lockers, we've had 2.6 million operating lockers as of end of quarter.
Sorry, the 2.6% is overall or Poland only?
No -- that's Poland only.
We will now take our next question from Henk Slotboom from The Idea.
I got one question left, and that's concerning the rollout of APMs. Given the fact that you enjoy so much popularity from the side of merchants now as well, so that it is not only a consumer pool, but in a way, also a merchant push type of growth-driven model. In relation to the rollout plans you have for the APMs, a couple of months ago, when you presented the full year results, you said that you might turn down the rollout speed of APMs in England, and you might not do the same number as you had initially in your mind, in France. If I look at the first quarter, then it looks as if the rollout speed is continuing at a fairly high speed. Could you perhaps allude what your plans are for the rest of the year? How does the plans look like for the end of the year in the U.K. in France and in Poland, the 3 main markets?
Yes, I can take this one. Relative to the U.K., I think our ambition, clearly, we articulated the last time was, we were slowing down the number of locations, but we were increasing the size of the machine. So actually, the number of compartments that we are targeting is still the same. And the main focus is really the transition that we have pulled forward in our plan to accelerate our logistics offering and take control of our logistics. And that really was also a factor of the demand that we were starting to see from the market, mainly the merchants at the end of Q4 going into the beginning of Q1, that really give us the confidence to pull forward that plan. And really that transition is well underway. As Adam articulated, we expect that to be completed by now -- by the end of Q2. So our forecast really in the U.K., as per the last call remains similar, with the total number of compartments actually really in line with what we previously guided upon.
In France, we continue to target between 2,000 to 3,000 as our ambition for this year and still remain confident in that rollout plan. And really, we continue to accelerate, really to capture the market opportunity and the automation of the out-of-home offering in France.
And maybe, Adam, you want to comment on Poland?
Yes, I think we did mention we would be slowing down in volume this year for obvious reasons, given the scale and density that's always been the plan. At the same time, I'll again refer to my comment I made around the free cash flows for the quarter, where I mentioned our CapEx was quite front-loaded for this year for tactical reasons, but also if we think about how it's linked to the pace of deployment in Poland, pace of deployment in Poland also is front-loaded to first half of the year. So Q1 not necessarily being representative as a run rate for the rest of the year, we would actually expect to have complete a vast majority of our deployments for Poland in the first half of the year.
Can I perhaps squeeze in a second question, and that's specifically regarding Mondial Relay. I realize that you can't perform miracles overnight. You can only do so much at a time. In the past, you've said the focus initially is very much on France. What can you do to benefit from the developments in the shift towards out-of-home in the other countries where you are active, in the Benelux and in Spain, will the focus remain on adding PUDOs initially and the APMs at a later stage?
Henk, I think 2 points to that. One, the focus will remain on PUDOs as we keep an asset-light strategy in those markets predominantly, and we'll continue to service and operate. The second element is really working with our pan-European merchants as we really build out that offering, with France being the core focus market, but clearly, the cross-border opportunity, mainly on C2C and point-to-point with those partners, really gives us the opportunity to accelerate and bring volume to those markets, whilst building out the network with an asset-light strategy.
Clearly, from a landlord point of view, as opportunities arise in those markets, we will be opportunistic potentially for APMs. But again, similar to all the markets that we've entered in a very concentrated urban way, as we look at deployment and that capacity. But again, really -- the focus is really asset light and really working with pan-European partners to develop those markets, and France being the center of that focus.
We will now take a final question from David Kerstens from Jefferies.
I have 2 remaining. First of all, on the APM deployment by the competition, do you see that momentum changing in the current inflationary environment? And great to see the new step that you provided that APMs with competition nearby are doing better. And were you saying that, that is mainly because they are in better locations, or what's driving that -- do you see the competitive activity picking up in the current environment?
And the second question is regarding market growth. We've seen quite a bit of pressure on markets, partial markets in Western Europe. What's driving the continued strong growth in Poland in the first quarter, relative to the other parcel markets that we're seeing? And I saw -- you said you translated the mobile app in Ukrainian, has that had a material impact in the first quarter on parcel volumes in Poland?
Thank you, David. Maybe I'll answer the first question and the last one. So in terms of the of the locations. I mean, it's pretty obvious, that if the newcomers want to get some traction, they should deploy machines closed by our [ best ] machines. Our best machines also are pretty visible, I mean, the largest machines that we deploy. And yes, and we will -- I think we'll provide more and more color on a quarterly basis or during our reporting, showing the traction of those locations. And we were a little bit surprised literally, because seems that those machines are not only -- I mean our machines in those locations are not only like under pressure, it's completely opposite seems that they are performing better and better. Hard to explain. I think it's just 2 quarters. But I must say that after Q1, we remain at the same place where we've been a month ago. So we don't see any material traction. And the competitors machines that are nearby, also visibly, nothing has changed here. So hard to say how it evolves in the future.
But as we always said, we are fully focused on deploying best-in-class service for the end users, and it has nothing to do with physical machines, it's much more complex, and we want to build more value-added services even this year to create even more sticky product offering for the end users, literally keeping them so close to our chest, that no one else or not -- may not win them, but the winning of every single client will cost tons of money. That's the strategy here. And it has nothing to do with just the physical presence of the machines.
And the question about the downloads, we started measuring that. The effect is not yet visible in Q1 as we launched our Ukrainian version end of March. So probably for Q2, we will see already how those new clients are behaving in comparison to our soft, hard and super hard users, how to position them among those clients. But I strongly believe that a big part of Ukrainian population that we are hosting right now, will stay becoming pure consumers of the e-commerce as well.
And what is -- in your view is then, the reason for the strong performance in Poland relative to the pressure on partial markets in Western Europe? Is that the level of e-commerce penetration still being relatively lower?
Yes. I think this is one element. Second, very important also, that some of the big verticals in Poland, let's take an example of LPP. So their markets, their Eastern markets were shut down, and they put a lot of emphasis on the online channel to compensate that drop of volume. We have the newcomers on the markets. So Amazon, Shopee, but also international players really trying to win as much as possible on Polish market, given that saturation that is not yet comparable to French, German or U.K. one. So I think that the Polish market will not go into the decrease -- overall decrease on a quarterly basis. It might go down to single-digit growth rates, but we remain positive, as a market, Polish market will perform stronger than the other more mature markets that we observe.
I will now turn the call back to your host for closing remarks.
Thank you, operator. Actually, we have one question from the floor I'd like to pass on for Adam. Of the PLN 1.43 billion of goodwill, the question is, is that all from the Mondial acquisition?
Yes, the short answer is yes, the entirety of that amount is driven by Mondial Relay acquisition.
Thank you. Operator, with that, I would like to close, I'd like to thank everyone for being on the call, and thank you for your interest. And if you do have any follow-up, please do not hesitate to get in touch with us.
Many thanks and good day.