Investor presentation - Bpost/media/Files/B/Bpost... · 2 Investor presentation third quarter 2016...
Transcript of Investor presentation - Bpost/media/Files/B/Bpost... · 2 Investor presentation third quarter 2016...
November - December 2016
Investor presentation
Third quarter 2016
2
Investor presentation third quarter 2016
Disclaimer
This presentation is based on information published by bpost in its Third Quarter 2016 Interim Financial Report, made available on November, 9th 2016 at 5.45pm CET on corporate.bpost.be/investors. This information forms regulated information as defined in the Royal Decree of 14 November 2007. The information in this document may include forward-looking statements1, which are based on current expectations and projections of management about future events. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This material is not intended as and does not constitute an offer to sell any securities or a solicitation of any offer to purchase any securities.
More on corporate.bpost.be/investors
05.12.2016 (17:45 CET) Interim dividend 2016 announcement
08.12.2016 Ex-dividend date (interim dividend)
12.12.2016 Dividend payment date
08.03.2017 (17:45 CET) Annual results FY2016
03.05.2017 (17:45 CET) Quarterly results 1Q17
Financial Calendar
1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995
bpost at a glance
Highlights 3Q16 – 4 Outlook 2016 – 5 Overall guidance 2016-2020 – 6 Overview – 7 Products – 8 Strategy – 9 Domestic Mail: volume & revenue – 10 Domestic Mail: regulation – 11 Domestic Parcels – 12 International Parcels – 13 & 14 M&A strategy – 15 Domestic Parcels acquisition – 16 International parcels acquisitions – 17 Additional sources of revenues – 18 Transformation – 19 Productivity – 20 Vision 2020 – 21 Alpha – 22 Hybrid network – 23 CSR – 24 Dividend policy – 25 Summary of key financials FY15 – 26
More detail on 3Q16
EBITDA bridge – 31 Key financials – 32 Revenues – 33 Domestic Mail – 34 Parcels – 35 Additional sources of revenues – 36 Costs – 37 Cash flow – 38
Contents
Additional Info
EBITDA bridge YTD16 – 40 Key financials YTD16 – 41 Revenues YTD16 – 42 Cash flow YTD16 – 43 European mail market – 44 Key contacts – 45
bpost at a glance
Balance sheet – 27 Relationship with State – 28 Management – 29
bpost at a glance
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bpost at a glance
Highlights of 3Q16
Underlying Domestic Mail volume decline • Continued strong performance in advertising offset by transactional &
press
Cost savings on track • Normalized costs down, fully absorbing salary indexation and new CLA • Underlying average FTE reduction of 6041 for the quarter
Continued growth in both domestic and international parcels • Domestic: volume growth driven by e-commerce and C2C; improved
price/mix effect of -1.8% • International: positive contribution from acquisitions, continued volume loss
to China
-5.9%
+12.7%
+ € 4.1m
- € 8.5m
Revenues down 2.3% • Solid growth in Parcels revenues offset by the anticipated lower SGEI
compensation and Domestic Mail
€ 538.1m
1 i.e. excluding 948 additional FTEs and interims for higher parcels & solutions volumes, Deltamedia integration and new subsidiaries leading to a reported average increase of FTEs and interims of 344.
Normalized BGAAP result of bpost SA/NV down only € 0.8m
Outlook reconfirmed: on track and confident to deliver our FY guidance
€ 110.1m
€ 50.5m
Excluding SGEI, normalized EBITDA up € 2.9m demonstrating that our operating model continues to work
5
bpost at a glance
Outlook for 20161
Top line
• Underlying Domestic Mail volume decline around 5%2
• Compensation for SGEI: € 26.8m lower than in 2015 excluding inflation and volume impact
• Domestic Parcels: double digit volume growth
• International Parcels: continued growth supported by acquisitions
Costs
• Productivity improvements: low end of 800 to 1,200 FTE/year range excluding impact of Deltamedia integration.
• Strong focus on all cost items and factor cost levers (e.g. abolishment of Saturday compensation, tax shift).
Recurring EBITDA and dividend payment at least at the same level as 2015
FCF
• Gross capex: c. € 80.0m
• Cash generation from operating activities will be negatively impacted by lower compensation and changed payment terms for SGEI (€ -36.8m), the Alpha pay-outs and a settlement on terminal dues with another postal operator.
1 Outlook 2016 excludes the impact of the acquisition of the Belgian activities of Lagardère Travel Retail 2 4Q16 will count 1 day less vs. same quarter of 2015.
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2020 EBITDA of at least € 620m (organic including announced acquisitions, e.g. Lagardère)
bpost at a glance
Overall guidance 2016-2020
Revenue Overall slight increase driven by: • Growth in domestic parcels: volume +75%,
-2 to -3% price/mix effect • Growth in international parcels: revenue x2 • Decrease in domestic mail: volume up to
-6%
Operating expenses Slight increase, driven by: • Growth in transport cost (reflecting growth in
International) • Up to 4% FTE & interim productivity
increase p.a. at current scope • Optimized FTE mix • Integration of acquired businesses • Inflation
Capex • Further Vision 2020 investments in 2017-18: ~€ 90m p.a. • Maintenance capex level in 2019-20: ~€ 60m p.a.
M&A on top of overall 2020 EBITDA guidance Accretive contribution supported by strong balance sheet. Any decision must be evaluated on 5 criteria (cfr. p. 15)
Maintenance of dividend policy At least 85% pay-out of BGAAP net profit
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Belgium’s leading postal operator
bpost at a glance
2015 figures (normalized)
Leading market position in the resilient Belgian mail market with a balanced regulatory framework Focused mail and parcels business with a proven strategy for profitable growth Scope for continued cost improvements Strong financial performance supporting a high level of cash flow generation and dividends Proven performance track record
Built on strong foundations and with ambitious targets
€ 2.4bn revenues
€ 583.6m 24.2% EBITDA
€ 494.4m 20.5% EBIT
€ 328.1m net profit
9.1m letters handled every day
126,000 parcels handled every day
664 678 post franchised offices post points
5 sorting centres
24,703 average # FTE & interims
8
A modern and diversified mail operator
bpost at a glance
Domestic Mail € 1,464m 61%
Transactional mail
1 Including a.o. SGEI compensation for the retail network, philately, retailer products, “unallocated” operating income
€ 918m 38%
Parcels € 341m 14%
Additional sources of revenues € 589m 25%
€ 2,408m normalized revenues 2015
Advertising mail € 251m 11%
Press € 296m 12%
Domestic € 161m 7%
International € 170m 7%
Special Logistics € 10m 0%
International mail € 176m 7%
Value added services € 96m 4%
Banking and finance € 205m 9%
Other1 € 112m 5%
One integrated domestic distribution network for mail and parcels
International player hubs in London LHR and Brussels
strategically located facilities in US, Canada, Poland, China, HK, Singapore, the Netherlands, Australia and New Zealand
Revenues % of total
9
Focused strategy to create value and reward shareholders
bpost at a glance
We are mail
We grow
We are lean, agile & flexible
We are @core
10
We continue to focus on core mail business Volume & revenue drivers
bpost at a glance
1 Source: bpost commissioned market research, 2016 (1,015 face to face interviews) 2 Services of General Economic Interest
Transactional mail
Advertising mail
Press
• e-substitution mainly in administrative mail; however, 79% satisfaction level for the paper channel (vs. 54% on average for digital channels)1
• General cost cutting on all categories
• Mix effect: shift towards cheaper products or reduced weight of mail items
• Strongly linked to GDP growth (+1.4% in 2015, forecast 2016: +1.4%)
• Marketing mix in Direct Mail is more balanced between different channels • Focus on 6 key segments with growth potential: retail & distribution (food +
non-food), automotive, FMCG (food), retail fashion, travel & leisure, SMEs
• Distribution of newspapers and periodicals are both part of the SGEIs2
• Revenues consist of:
• Compensation from the Belgian State: agreed in the newspapers and periodicals contracts (cfr. p. 28)
• Invoices sent directly to the editors
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bpost at a glance
Designated provider of the Universal Service Obligation until end of 2018
Fully liberalized market with clear licensing conditions
Mail pricing regulation
• Collection, sorting, transport and distribution of postal items up to 2kg and postal packages up to 10kg
• Collect and deliver 5x per week • Cover full territory of Belgium
• Apply uniform tariffs and an identical service across the territory
• Cover 80% of the territory of the 3 regions within 5 years • Deliver 2x per week within 2 years
• Uniform pricing over entire territory
• Employ contractual workers
• Price-cap formula for single piece mail & USO parcels falling within “small user basket” (inflation + quality bonus1 + unused credit)
• Volume and operational discounts allowed for other USO products (bulk)
• Price increases done in practice on a yearly basis (1 January): +1.5% on average in 2016
We continue to focus on core mail business Regulatory aspects
1 Quality bonus = [Average quality – 90%]^2 / 1,000; unused credit = cumulated price increases allowed under cap but not applied for last 3 years.
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We innovate/grow within core competencies We have an established position in domestic parcels
bpost at a glance
B2B1: ~€ 750-800m
Unique selling proposition
Offer best last mile and broadest delivery options, supported by acquisitions:
• Home delivery 7 d/week & evening delivery
• >1,900 pick-up & drop-off points (incl. 735 Kariboo! points) • 150 bpost parcel lockers, 51 De Buren lockers (NL: 50, B: 1 → ambition: NL: 1000, B: 500)
• Click & Collect
B2C/C2X1: ~€ 170-230m
1 Source market shares: bpost data, Datamonitor, “European Express Benchmarking 2011”
Others
~50% ~5%
Others
Ambition: We want to capture e-commerce growth and realize profitable volume growth of at least +75% by 2020 (vs. 2015)
13
bpost at a glance
We innovate/grow within core competencies We have a strong footprint in international parcels through Landmark Global
Asset-light business model
Strategic locations in 11
countries
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bpost at a glance
We innovate/grow within core competencies We enable global e-commerce through Landmark Global
Unique selling proposition Ambition
We want to at least double international parcels revenues by 2020 (vs. 2015) through a continued focus on cross border parcel shipments:
• North America and Australia: we will continue profitable growth
• Europe: we aim to become a stronger leader in parcels
• Asia: we want to gain a substantial footprint
Support mid-sized e-tailers to expand their business beyond their national borders Provide additional services enabling customers to reach new markets at a reasonable cost without disruption
• Fulfillment services as an absolute differentiator • Full range of e-commerce and end-to-end
solutions Offer services to more complex developing markets (e.g. Mexico and Brazil)
Enablers to realize our strategy
Further leverage our state of the art technology system Mercury
• Proprietary technology • Web-based, carrier-neutral platform • Easy integration with clients, vendors and new
acquisitions
Acquisitions and partnerships are key
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We innovate/grow within core competencies We also support growth through selective and targeted M&A
bpost at a glance
Rationale
Respond to and anticipate market trends • Fast growing e-commerce
• Growing demand for convenience and proximity
• Leverage combination of mail and digital solutions
Leverage our strong balance sheet
Create an even stronger operator in a globalizing market
M&A strategy
Small bolt-on acquisitions to be the strategic partner of choice for our customers Diversify in growing and profitable markets linked to our core competencies Leverage and monetize our know-how in successful transformation of a postal company Cross-border postal consolidation to create a stronger domestic and international operator
Illustrations
1 Not realized
1
1
Close to our core business Improve our proximity and convenience product offering
Earnings accretive Maintain sustainable dividend policy Maintain financial solidity
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bpost at a glance
Retail (220 shops)
Con
ven
ien
ce &
P
roxi
mit
y R
etai
l
• Pre-paid services (Alvadis) • Impulse products (Burnonville)
Convenience distribution
Pre
ss
Log
isti
cs
Newspaper Magazines International press
Press distribution to 5,345 POS
Non
-P
ress
Lo
gis
tics
Parcels & Logistic Services (735 pick-up drop-off points)
Lagardère Travel retail in Belgium
Sales 2014: € 440.0m • Retail: 41% (€ 180.0m) • Convenience distribution: 18% (€ 80.0m) • Press distribution: 41% (€ 180.0m)
EBITDA 2014: € 15.6m (3.5% margin)
Rationale for bpost
Diversify into the growing proximity & convenience distribution • Grow at least in line with convenience & proximity
retail market (4-6% annually 2015-20) • Footprint expansion (30 to 45 new stores in the
next 3 to 5 years) and remodeling • Accelerate product diversification in order to
enhance profitability
Further enable domestic parcels growth strategy • Improve delivery options and increase coverage
(network of > 1,900 points across Belgium)
• Fully cash financed (consideration not disclosed) • Fully accretive as of 2017 • Preliminary synergy estimate of €4-5m annually
after full integration • Anti-competition clearance obtained, closing by end
2016, full consolidation after closing • Total capex planned < € 10m/year
Transaction details
We innovate/grow within core competencies Acquisition agreement for the Belgian activities of Lagardère Travel Retail
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bpost at a glance
SPE (Poland)
Rationale for bpost
Support our international e-commerce cross-border parcels strategy • Offer complete service range to international e-commerce customers (including fulfillment)
• Further build out the US market through a complete service offering
Economize on last mile distribution • In-house last mile distribution vs. use of incumbent postal operators or alternative distributors
FDM (Australia)
We innovate/grow within core competencies Bolt-on acquisitions in international parcels
• Logistics, distribution and fulfillment across Europe for US e-tailers
• 100% acquisition in Nov. 2015, full consolidation as of Dec. 2015
• Third Party Logistics (3PL), warehousing, transport & distribution for US e-tailers
• 100% acquisition in March 2016, full consolidation as of April 2016
Apple Express (Canada & US)
• Last mile delivery, transportation and fulfillment for clients in Canada & US
• 100% acquisition in June 2016, full consolidation as of July 2016
Purchase price: Sales 2015: EBITDA 2015:
Key figures
€ 14.4m + earn-outs
c. € 24.0m
c. € 2.4m
Purchase price: Sales 08/14-07/15: EBITDA:
Key figures
€ 12.5m + earn-outs
c. € 24.5m
c. € 1.4m
Purchase price: Sales 2014: EBITDA 2014:
Key figures
€ 3.5m + earn-outs
US$ 3.4m
NA
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We innovate/grow within core competencies bpost has other sources of revenues besides mail and parcels
bpost at a glance
Mail originating from foreign countries and delivered to other countries
International mail What?
Asset-light business model and fully variable costs Dedicated sorting centre and hub in Brussels Active in the US, Europe and Asia
Business model
Customer specific solutions which leverage our key assets: last mile, retail network and financial backbone
Value added services Collect and handling services for mail Services at the front door (gaz, water, electricity) Solutions tailored to specific needs
Associate 50/50 with BNP Paribas Fortis (bpost is sole retail agent) Agent of bpost bank ~50% of revenue (commissions)
Payment services, cash at the counter, public finance solutions Direct offering ~50% of revenue
Banking & finance
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Continuous improvement is in our DNA. We have a 10-year proven transformation track record…
bpost at a glance
2004 • Building of new
sorting centres • Transformation of
the network
2003 Start of continuous optimization of delivery rounds
2009 Implemen-tation of new distribution structure with reduced number of buildings
2011-2017 New strategic ‘Vision 2020’ program in mail service operations to further increase efficiency
2003 New management
& start of the transformation
period
2006 CVC and Danish Post enter into the capital
for 50%-1 share (split 50/50), government holds 50%+1 share
2008 Danish Post
sells its stake to CVC
2013 IPO in June at € 14.5/share
CVC sells 30% in IPO and remaining 20% in December
Tran
sfor
mat
ion
jou
rney
K
ey e
ven
ts
Normalized1 EBIT
1 Normalized figures are neither audited nor have been subject to a limited review
2007 Automated round sorting and mail sequencing
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… and we have plans for further productivity gains
bpost at a glance
Historic FTE evolution Average FTEs, ‘000
-4.0% p.a.
bpost has a systematic, well-rounded approach to identify and capture cost improvements across the entire organization
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
24
39
bpost has plans for further productivity gains supported by natural attrition and Vision 2020
2014 to 15: -711
38% of bpost’s employees are above 50
years old*
Age pyramid Headcount per age, 31.12.2015
40-49
7,920
0-39
8,024 9,604
50+
Statutories
Non pay-scale contractuals Pay-scale contractuals
2014 2015
* Natural attrition of c. 1,400 FTE p.a. of which slightly more than 50% is replaced as auxiliary postmen which cost c. 30% less than bpost average payroll cost/FTE
21
Vision 2020 will drive substantial productivity improvements by 2017 in the field
bpost at a glance
Improved operational platform
4 industrial mail sorting facilities
Automated sorting of all formats on MSMs (16 installed end Oct ‘16)
Central mailbag preparation
Further FTE reduction by eliminating manual mailbag preparation and transport time to/from start of postmen’s round
1 new sorting facility for mail and parcels (Brussels) with increased capacity merging the two existing facilities (Antwerp and Charleroi)
Further reduction of mail centres from current c. 250 to 60
Enabling
Declining mail
volumes
Increasing parcels volumes
Increasingly complex
product mix
1
22
Alpha targets a decrease in support functions at the headquarters
bpost at a glance
End of August 2014, bpost embarked upon the “Alpha program”, a headcount reduction program targeting the support functions at the corporate headquarters.
2
2610 FTE
Scope of Alpha
analysis
-24%
Productivity improvements
identified
77
625
142
282
Realized 4Q14
48
Identified reduction
Still to do Realized 1H16
Realized FY15
Realized 3Q16
76
• At 30 September 2016, 548 FTE were saved in the Alpha scope since the start of the analysis. • Savings
• Estimated average unit cost/FTE: € 68k • FY impact as of 2018: € 42.5m annual savings
• Full restructuring provision booked in 3Q15: € 54.5m; total Alpha pay-outs since start of the program: € 33.7m
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bpost at a glance
High performance hybrid network We will play an architect role defining which network is best suited to handle each type of parcel
We will capitalize on high density and synergy of our integrated network We will start using an ecosystem of networks in complementary ways
Parcify
bringr
Citydepot
External partners
Euro-Sprinter
• Sunday delivery • Evening delivery (6-9pm) • Urgent items • Volume peaks • 2-man delivery,…
• Highly specific • Urgent items • No packaging or label
• Urgent items • Non-standard format • Technical intervention
• City centers • Mobility • Green
• B/C2Me
Specific
Our integrated mail distribution and retail networks
Home delivery • Large volume • weekdays • Saturday • standard format
Standard
PUDO • 1,250 bpost points • 150 bpost parcel lockers • open networks
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75
88
85
91
We want to keep stakeholders on board…
bpost at a glance
Distribution quality Percentage letters1 in D+1
+6
2003 2015
Customer satisfaction2
Percent
+13
2003 2015
Environment
1st on the IPC
Environmental Ranking
Carbon disclosure project: B (C is average score)
Committed employer
Commitment & well-being
2015 2014
-12%
Recognize experience
# work accidents
231 people graduated
1 D+1 delivery of domestic single piece items up to 2 kg, stamped at “Prior tariff” 2 “Satisfied customers” (score of 5 or above on a scale from 1 to 7 on the question: “Overall, how satisfied are you about bpost?”) based on bpost commissioned
survey by Ipsos-Synovate
Note: more information regarding bpost’s Corporate Social Responsibility is available on the website: http://corporate.bpost.be/sustainability
CO2 reduction objective: -45% by 2020 (vs. 2007)
25
We create value for shareholders
bpost at a glance
Dividend Policy
Annual dividend of minimum 85% of BGAAP net profit (unconsolidated)
Interim in December of financial year based on 10-month results
Final in May of year following financial year
Constrained by the net results of a given year + distributable reserves
Distributable reserves built gradually as from 2013, primarily to safeguard the dividend level in case of exceptional costs (€ 97m end 2015)
0.93 1.04 1.05
0.200.22
+2% +12%
2015
1.29 0.24
2014
1.26
2013
1.13
Interim gross DPS (€) Final gross DPS (€)
26
Summary of key financials FY15
bpost at a glance
Note: an Excel download of detailed financials per quarter is available on the website: http://corporate.bpost.be/investors/results-reports-and-presentations/quarterly-results/2016
€ million
1 Normalized figures are neither audited nor have been subject to a limited review
FY14 FY15 FY14 FY15 % ΔTotal operating income (revenues) 2,464.7 2,433.7 2,464.7 2,407.6 -2.3%Operating expenses 1,892.6 1,878.5 1,892.6 1,824.0 -3.6%EBITDA 572.0 555.2 572.0 583.6 2.0%Margin (%) 23.2% 22.8% 23.2% 24.2%EBIT 480.2 466.1 480.2 494.4 3.0%Margin (%) 19.5% 19.2% 19.5% 20.5%Profit before tax 454.1 470.6 454.1 499.0 9.9%Income tax expense 158.6 161.4 158.6 170.9 Net profit 295.5 309.3 295.5 328.1 11.0%FCF 373.3 315.9 373.5 315.9 -15.4%bpost S.A./N.V. net profit (BGAAP) 296.9 287.7 296.9 303.6 2.3%Net Debt/ (Net cash), at 31 Dec. (486.2) (549.5) (486.2) (549.5) 13.0%
Reported Normalized1
Alpha social plan provision of
€ 54.5m
Gain from sale of sizeable building
€ 26.1m
27
Supported by a strong balance sheet
bpost at a glance
Assets
1 bpost has no pension deficit: as is customary in Belgium all pensions are paid as part of national social security
Equity and liabilities
PPE & intangible assets
Inventories
Trade & other receivables
Investments in associates
Other assets
Cash & cash equivalents
Sep 30, 2016
2,167.9
647.3
11.6
328.7
398.2
57.7
724.4
Dec 31, 2015
2,112.0
638.1
11.1
413.5
375.0
58.5
615.7
Total equity
Employee benefits
Trade & other payables
Provisions
Interest-bearing loans & borrowings
Sep 30, 2016
2,167.9
898.2
360.8
796.1
46.6 66.3
Dec 31, 2015
2,112.0
694.8
346.2
940.9
64.2 65.8
€ million
297.1 49.1
148.1
108.9
77.7
11.6
Long term benefits • Pension savings days • Quota days • Part-time work
Other long term benefits (disability annuities)
Deferred tax asset
• Mostly unfunded (no investment risk)
• Volatility mainly through the discount rate
• No pension liabilities1
Employee benefit liabilities
Termination (early retirement)
Post retirement
(family allowance, transport, bank, …)
28
bpost’s long term relationship with the Belgian State
bpost at a glance
State as a long term shareholder Belgian State has >50% shares bpost’s board is composed of 6 board members and CEO appointed by the Belgian State and 5 independent directors
Belgian State supports a regular dividend policy
bpost provides SGEIs1 on behalf of the State bpost provides a range of public services. 2015 Fifth Management Contract (covering 2013-15)
Compensation of ~ € 288m in 2015 based on Net Avoided Cost
2016-2020 2 press distribution contracts (newspapers & periodicals)
Sixth management contract for other SGEIs
Contractual amounts (excl. inflation2, volume impact & sharing of efficiency gains) of € 261.0m in 2016, € 260.8m in 2017, € 257.6m in 2018, € 252.6m in 2019 and € 245.6m in 2020
State as important customer State is a key commercial client to bpost
Several other agreements in place with the State, such as European license plates (won by bpost through tender)
1 SGEI stands for Services of General Economic Interest 2 All amounts need to be adjusted for inflation on a cumulated yearly basis
Shareholder
Belgian State Free float
# shares
102,075,649
97,925,295
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bpost’s management team and organization
bpost at a glance
Kurt Pierloot Director International & Parcels
Mark Michiels CHRO
Koen Van Gerven CEO
Marc Huybrechts
Director Mail & Retail Solutions
Philippe Dubois Director Mail Services Operations
Koen Beeckmans CFO
Current Trading 3Q16
31
3Q16
Parcels growth and cost savings offset by anticipated reduced SGEI compensation and domestic mail
+8.5
+2.8
+7.5
EBITDA 3Q16
+110.1
Costs Corporate Additional sources of revenues
-2.8
Parcels Domestic Mail
-13.1
SGEI Compensation
-6.8
EBITDA 3Q15
+114.0
€ +2.9m / +2.7%
Total operating income (revenues)
Normalized1, € million
1 Normalized figures are not audited
32
3Q16
Summary of key financials 3Q16 € million
3Q15 3Q16 3Q15 3Q16 % ΔTotal operating income (revenues) 550.5 538.1 550.5 538.1 -2.3%Operating expenses 491.0 428.0 436.5 428.0 -2.0%EBITDA 59.5 110.1 114.0 110.1 -3.4%Margin (%) 10.8% 20.5% 20.7% 20.5% - EBIT 37.1 87.8 91.6 87.8 -4.2%Margin (%) 6.7% 16.3% 16.6% 16.3% - Profit before tax 37.6 89.0 92.1 89.0 -3.4%Income tax expense 11.6 28.2 30.0 28.2 - Net profit 26.0 60.8 62.1 60.8 -2.1%FCF (29.5) (71.9) (29.5) (71.9) - bpost S.A./N.V. net profit (BGAAP) 15.2 50.5 51.3 50.5 -1.6%Net Debt/ (Net cash), at 30 Sept. (690.6) (657.7) (690.6) (657.7) -4.8%
Normalized1Reported
Alpha social plan provision of
€ 54.5m
1 Normalized figures are not audited
33
3Q16
Total operating income (revenues)
1 Defined as domestic and Belgian in- and outbound
€ million
3Q15 SGEI ∆ 3Q16 % ∆
Transactional mail 202.8 - -12.2 190.6 -6.0%Advertising mail 56.1 - -0.4 55.7 -0.8%Press 71.0 -1.7 -0.4 68.9 -0.6%
Domestic parcels1 37.8 - 3.8 41.6 10.0%International parcels 38.1 - 4.1 42.3 10.9%Special logistics 2.4 - -0.5 1.9 -19.1%
International mail 40.0 - -2.8 37.2 -7.0%Value added services 23.3 - 1.0 24.3 4.2%Banking and financial 50.6 -2.9 -1.7 46.1 -3.3%Other 26.7 -2.3 0.7 25.1 2.4%
Corporate 1.6 - 2.8 4.4 167.8%
550.5 -6.8 -5.6 538.1 -1.0%
Domestic mail
Parcels
Additional sourcesof revenues
TOTAL
34
3Q16
FY15 1Q16 2Q16 3Q16 YTD16 FY15 1Q16 2Q16 3Q16 YTD16Transactional mail -5.1% -5.6% -3.5% -7.8% -5.5% -5.3% -5.3% -4.8% -7.4% -5.8%Advertising mail -6.9% 0.1% -2.2% -1.2% -1.1% -4.9% 0.1% -2.2% -1.2% -1.1%Press -2.8% -2.6% -0.3% -4.2% -2.3% -2.8% -2.6% -0.3% -4.2% -2.3%Domestic Mail -5.3% -4.2% -3.0% -6.1% -4.4% -5.0% -4.0% -3.8% -5.9% -4.5%
Reported Underlying 1, 2
1 3Q16 had 1 working day less vs. 3Q15 except for stamps which had the same number of business working days as 3Q15 2 FY15 corrected for requalification of advertising mail to administrative mail
328.3
SGEI -1.7
3Q
15
330.0
315.2
-13.1
3Q
16
Price/Mix 4.6
Volume -16.9
Working Day Impact -0.9
• Transactional Mail: - impacted by weaker sales over the summer months especially
for franking machines, while 2Q16 benefitted from positive volume impact of social elections and 3Q15 from a specific mailing from the utility sector due to changed VAT rate on electricity.
- continued e-substitution, shift towards cheaper products (less registered).
• Advertising Mail: continued strong performance driven by focus on growth segments.
• Press: low renewal rate on newspaper subscriptions contracted in 3Q15 and periodicals impacted by reduced number of issues and less acquisitions campaigns vs. 3Q15.
Domestic mail underlying volume trend at -4.5% YTD in line with our full year guidance Total operating income (revenues), € million
1,033.2
-26.2
YTD
16
14.6
-42.4
1.5
1,059.4
-5.9
YTD
15
1,065.3
35
3Q16
Continued growth in both domestic and international parcels Total operating income (revenues), € million
Special Logistics -0.5
International Parcels 4.1
3.8
3Q
15
78.3
85.7
+7.5
3Q
16
1 Defined as domestic and Belgian in- and outbound
Domestic Parcels1
• Continued double-digit reported volume growth of +12.7% driven by e-commerce and continued growth in C2C parcels sales (online product offering).
• Excluding calendar effects, equal volume trend over the 3 quarters of 2016 at +14.5%.
• Improved price/mix of -1.8% fully mix-related (product & client mix).
• Growth driven by positive contribution from acquisitions, continued volume loss to China, flows from US continue to suffer from strong USD which decreases price competitiveness of US e-tailers.
• Mainly due to lower revenues from Sprint activities.
261.0
+18.3
YTD
16
-1.3
6.4
13.2
YTD
15
242.7
36
3Q16
Total operating income (revenues), € million
• Continued decline of wholesale business due to price increases to safeguard reasonable profit margins.
• Positive contribution of solutions mainly driven by European licence plates (€ +0.4m) and Citydepot (€ +0.2m).
• Mainly higher revenues in philately (€ +0.4m)
Additional sources of revenues driven by Value Added Services
135.5
SGEI -5.1
3Q
15
140.6
132.7
-2.8
3Q
16
Others
International Mail
1.0 VAS
-1.7 Banking & Financial
0.7
-2.8
• Mainly impacted by financials transactions managed on behalf of the Belgian State and lower revenue from bpost bank savings accounts due to low interest rate environment.
410.9
-9.6
YTD
16
-2.4
-2.9
6.5
-10.8
420.5
-16.2
YTD
15
436.7
37
3Q16
Cost savings on track
428.0
-8.5
3Q
16
Other costs -7.8
Other SG&A -1.6
Payroll & Interim -1.2
Transport 2.1
3Q
15
436.5
• Average reported FTE increase of 344 FTE leading to € +3.2m higher costs, underlying FTE reduction is 604 for the quarter.
• Favourable FTE mix of € -5.4m thanks to the recruitment of auxiliary postmen (€ -1.5m) and the reduction of management level FTE (€ -4.2m).
• Negative price effect of € +3.0m explained by salary indexation and new CLA partly offset by tax shift and lower lay-off costs.
• Favourable evolution of holiday arrears (€ -2.5m) partly offset by increase in employee benefit costs (€ +0.8m).
• Decrease of transport costs linked to the evolution of international activities, fully offset by the settlement on terminal dues with other postal operator.
• Nearly all costs decreased except rent & rental due to absence of last year’s positive impact from fleet contracts prolongation.
• Explained by the evolution of other operating charges and positive evolution of provisions, mainly settlement on terminal dues (corresponding costs booked within transport costs) and bad debt.
1,289.2
-29.1
YTD
16
-18.3
1.5
-10.0
-2.3
YTD
15
1,318.2
Operating expenses excl. depreciation and amortization, normalized1, € million
1 Normalized figures are not audited
38
3Q16
• Higher proceeds sale of buildings: € +2.1m • Lower capex: € +13.6m
• Alpha pay-outs: € +2.5m • Terminal dues payment, mainly phasing as costs were booked in previous years in
transport cost: € -16.8m • Higher tax prepayment in 3Q16 (phasing): € -10.0m • Excluding Alpha pay-outs/provision2, the terminal dues payment and the higher tax
prepayment: • Results of operating activities: € -4.3m, in line with evolution of normalized EBITDA • Working capital evolution: € -29.6m, mainly due to phasing elements: Social
Security payments (€ -8.0m), payment of commissions on banking products (€ -7.5m) and evolution in outstanding balances with suppliers
1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities 2 3Q15 Alpha provision amounted to € 54.5m of which € 7.6m was incorporated in ‘employee benefits’ provisions and € 46.9m in working capital (social debts)
€ million 3Q15 3Q16 Delta
Cash flow from operating activities -6.0 -64.2 -58.2
Cash flow from investing activities -23.5 -7.8 +15.7
Operating free cash flow1 -29.5 -71.9 -42.5Financing activities -0.2 -0.1 +0.2
Net cash movement -29.7 -72.0 -42.3Capex -24.9 -11.3 +13.6
FCF impacted by terminal dues payment, tax prepayments and negative working capital evolution mainly due to phasing elements
Additional info
40
Strong parcels growth and cost savings nearly fully compensate the lower SGEI compensation and domestic mail revenue decline
YTD16
Normalized1, € million
+29.1
+9.4+18.3
EBITDA YTD16
+445.4
Costs Corporate Additional sources of revenues
-9.6
Parcels Domestic Mail
-26.2
SGEI Compensation
-22.1
EBITDA YTD15
+446.4
€ +21.1m / +5.0%
Total operating income (revenues)
1 Normalized figures are not audited
41
YTD16
YTD15 YTD16 YTD15 YTD16 % ΔTotal operating income (revenues) 1,764.7 1,734.5 1,764.7 1,734.5 -1.7%Operating expenses 1,372.7 1,289.2 1,318.2 1,289.2 -2.2%EBITDA 391.9 445.4 446.4 445.4 -0.2%Margin (%) 22.2% 25.7% 25.3% 25.7% - EBIT 327.0 378.5 381.5 378.5 -0.8%Margin (%) 18.5% 21.8% 21.6% 21.8% - Profit before tax 325.8 368.4 380.3 368.4 -3.1%Income tax expense 112.1 123.9 130.5 123.9 - Net profit 213.7 244.5 249.8 244.5 -2.1%FCF 247.4 159.4 247.4 159.4 -35.6%bpost S.A./N.V. net profit (BGAAP) 186.4 221.8 222.4 221.8 -0.3%Net Debt/ (Net cash), at 30 Sept. (690.6) (657.7) (690.6) (657.7) -4.8%
Reported Normalized1
Summary of key financials € million
Alpha social plan provision of
€ 54.5m
1 Normalized figures are not audited
42
YTD16
Total operating income (revenues)
1 Defined as domestic and Belgian in- and outbound
€ million
YTD15 SGEI ∆ YTD16 % ∆
Transactional mail 664.2 - -26.0 638.3 -3.9%Advertising mail 182.3 - -0.7 181.6 -0.4%Press 218.7 -5.9 0.5 213.3 0.2%
Domestic parcels1 116.7 - 13.2 129.8 11.3%International parcels 118.7 - 6.4 125.1 5.4%Special logistics 7.4 - -1.3 6.1 -17.7%
International mail 127.3 - -10.8 116.5 -8.5%Value added services 71.1 - 6.5 77.6 9.2%Banking and financial 154.1 -8.7 -2.9 142.5 -1.9%Other 84.3 -7.5 -2.4 74.4 -2.9%
Corporate 20.0 - 9.4 29.4 46.9%
1,764.7 -22.1 -8.1 1,734.5 -0.5%
Domestic mail
Parcels
Additional sources of revenues
TOTAL
43
Net cash generation for the first nine months of 2016
YTD16
• Proceeds sale of buildings: € +8.3m • Lower capex: € +5.6m • Acquisitions & earn-outs: € -44.7m (final payment for SPE € -0.2m, FDM Australia € -12.1m,
purchase 24.5% additional shares in LGI € -20.7m, City Depot € -0.2m, Apple Express Canada € -11.4m (subject to changes))
• Partially compensated by 2015 outflows for Gout (€ +4.0m) and LGI (€ +7.0m)
• Lower compensation and changed payment terms for SGEI: € -36.8m • Lower income tax paid in 2016 vs. 2015 relating to previous years: € +21.1m • Higher tax prepayment in 3Q16 (phasing): € -10.0m • Alpha net impact: € -15.7m • Terminal dues payment, mainly phasing as costs were booked in previous years in transport
cost: € -16.8m • Excluding the above:
• Results of operating activities: € +12.7m • Working capital evolution: € -22.7m, mainly phasing elements (Social Security payments
€ -13.4m and evolution in outstanding balances with suppliers)
1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities
• Dividend to minority interests: € -2.0m and higher dividend: € -4.0m
€ million YTD15 YTD16 Delta
Cash flow from operating activities +297.3 +229.1 -68.1
Cash flow from investing activities -49.9 -69.7 -19.8
Operating free cash flow +247.4 +159.4 -88.0Financing activities -44.7 -49.6 -4.9
Net cash movement +202.7 +109.8 -92.9Capex -48.6 -43.0 +5.6
44
A relatively resilient mail market vs. other European operators
European mail market
2008-15 CAGR for addressed mail volumes as reported by major incumbent European postal operators, percent
46
82
142
146
182
193
215
216
223
259
DK
IT
NL
SW
BE
FR
UK
AU
DE
CH
Addressed mail volume per capita 2015 operator level*
1
11
3
8
6
7
10
5
2
4
SOURCE: Company information; Annual reports; Investor presentations; IPC; Eurostat
Note: definition of addressed mail may differ by operator 1 Includes addressed mail 2 Includes addressed mail 3 Includes addressed mail 4 Includes addressed mail 5 Includes mail communication and dialogue marketing 6 Includes addressed mail
7 Includes addressed mail (publishers services excl.) 8 Includes addressed mail excluding press 9 Includes all domestic mail 10 Includes inland addressed mail 11 Includes letter mail and addressed direct mail / media post * Excludes domestic competitors
-2.0
-3.0
-3.0
-3.9
-4.7
-5.0
-9.1
-9.2
-3.4
IT
DK
NL
FR
UK
SW
BE
CH
AU
DE
-11.5
3
9
4
5
6
7
11
10
1
2
(*)
(*)
(*) 2014 data
(*)
(*)
(*) 2008-2014
45
Key contacts
Baudouin de Hepcée
Director External Communication, Investor Relations & Public Affairs
• Email: [email protected] • Direct: +32 (0) 2 276 22 28 • Mobile: +32 (0) 476 49 69 58 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Saskia Dheedene
Manager Investor Relations
• Email: [email protected] • Direct: +32 (0) 2 276 76 43 • Mobile: +32 (0) 477 92 23 43 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium