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Investor presentation Third quarter 2014
November - December 2014
2
Investor presentation third quarter 2014
Disclaimer This presentation is based on information published by bpost in its Third Quarter 2014 Interim Financial Report, made available on November, 3rd at 5.45pm CET on www.bpost.be/ir . 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 www.bpost.be/ir
08.12.2014 Ex-dividend date (interim dividend)
10.12.2014 Dividend payment date
16.03.2015 (17:45 CET) Annual results FY2014
06.05.2015 (17:45 CET) 1Q15 results
Financial Calendar
1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995
bpost at a glance Overview – 4 Transformation – 5 Products – 6 Strategy – 7 Domestic Mail – 8 Parcels – 9 Additional sources of revenues – 10 Productivity – 11 Vision 2020 – 12 CSR – 13 Dividend policy – 14 Summary of key financials FY13 – 15 Balance sheet – 16 Relationship with State – 17 Management – 18
Current trading: 3Q14 Highlights – 20 EBITDA bridge – 21 Key financials – 22 Revenues – 23 Domestic Mail – 24 Parcels – 25 Additional sources of revenues – 26 Costs – 27 Cash flow – 28 Dividend 2014 – 29 Outlook 2014 – 30
Contents
Additional Info EBITDA bridge YTD14 – 32 Scope effects – 33 Key financials YTD14 – 34 Revenues YTD14 – 35 Cash flow YTD14 – 36 Key contacts – 37
bpost at a glance
4
Belgium’s leading postal operator
bpost at a glance
K
669 674 post offices franchised post points
13,200 post boxes
9,200 mail rounds/day
5 sorting centres
Company description • One integrated network for domestic mail and parcels • International mail and parcels through hubs in
London LHR and Brussels and strategically located facilities in US, Canada, China, HK, Singapore, the Netherlands and Australia
• Financial and insurance products as well as value-added solutions
2013 revenues split
64% 10% 26%
DOMESTIC MAIL PARCELS OTHERS
Why bpost ? Proven performance track record Leading market position in the 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
Financials Revenues (€ millions)
Normalized1 EBIT
(€ millions)
2013 results
Key figures 4.7m households served 5x/week
10m letters handled every day
105,000 parcels handled every day
25,683 FTE
2,318 2010 2011 2012 2013
2,365 2,416
2,429
319 2010 2011 2012 2013
359 404
436
1 Normalized figures are neither audited nor have been subject to a limited review
€ 2.4bn € 536.9m
€ 436.1m 22.1%
18.0%
€ 287.9m € 249.0m
€ 1.43
Revenues
Normalized1
EBITDA
Normalized1
EBIT
Net profit
FCF
EPS
5
Transformation journey: continuous profitability improvement from loss making in 2003
bpost at a glance
2004 • Building of new
sorting centers • 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
6
bpost product and service offering
bpost at a glance
Domestic Mail € 1,551m 64%
Transactional mail
Product line
1 Only reported results have been audited; the presentation of normalized results is not in conformity with IFRS and is not audited 2 Including a.o. SGEI compensation for the retail network, philately, retailer products, intercompany elimination, “unallocated” operating income
€ 961m
Revenues
40%
% of total
License obtained in 2013
Main direct competitors
Parcels € 250m 10%
Additional sources of revenues € 628m 26%
N/A
€ 2,429m Total revenues 2013
Advertising mail € 276m 11% For unaddressed mail only
Press € 314m 13%
Domestic € 142m 6%
International € 92m 4%
Special Logistics € 16m 1%
International mail € 199m 8%
Value added services € 90m 4%
Banking and finance € 209m 9%
Other2 € 130m 5%
100%
Normalized1, 2013
7
Focused strategy as an answer to observed trends
bpost at a glance
E-substitution
Services at home
E-commerce
Leading to value
creation & rewarding
of shareholders
Continue to focus on core mail business
Innovate /grow within core
competencies
Generate continued
productivity gains
Keep stakeholders on board
8
Continue to focus on core mail business
bpost at a glance
• While being impacted by e-substitution mail remains important…
90% of customers check their mail box every working day 73% with internet connection prefer paper
… and we run marketing programs to defend the value of mail • bpost has the ability to partly compensate the volume decline through price increases
Volume 2 specific programs to support mail resilience
Pricing • General pricing principles of uniformity, non-
discrimination, transparency, affordability, cost-orientation apply to all USO1 products
• Price-cap formula for single piece mail & USO parcels falling within “small user basket” (inflation + quality bonus + unused credit2)
• Volume and operational discounts allowed for other USO products (bulk)
• Price increases done in practice on a yearly basis
Offer solutions to address the customers’ preference for paper
Proves effectiveness of Direct Mail
1 Universal Service Obligation 2 Quality bonus = [Average quality – 90%]^2 / 1,000; unused credit = cumulated price increases allowed under cap but not applied for last 3 years. Price increases need to be
approved by the regulator
Telco Cie
Telco Cie à votre service:(voir au dos de votre facture)
Telco CieTelco Cie
Telco Cie à votre service:(voir au dos de votre facture)
Transactional Mail
Advertising
9
Innovate/grow within core competencies (1/2) bpost has an established position in parcels…
bpost at a glance
B2B segment • Segment size: ~€ 750-800m • 2010-12 growth of 3% p.a. • Double market share by 2017
Unique selling proposition Offer the best last mile and broadest delivery options through: • Flexible at home delivery 6
days/week (incl. Saturday delivery)
• Densest network of pick-up and drop-off points in Belgium (1,250)
• ~125 parcel lockers: all-time accessible pick-up locations
B2C/C2X segment • Segment size: ~€ 150-200m • 2010-12 growth of 5% p.a. • Capture share of e-commerce
growth
Dom
esti
c
par
cels
Others
~50%
The rationale… Originated to protect the Belgian home market by: • Offering US and Chinese
e-tailers solutions to ship products into Europe and other parts of the world
• Ensuring last mile delivery into Belgium and via injection into other postal operator’s delivery network for other countries
Inte
rnat
ion
al
par
cels
How we do it • We offer direct access to international postal networks and rates • Asset-light business model: outsourcing of air and road transport as well
as last mile delivery outside of Belgium • Dedicated international sorting center • Strategic presence in North America (Landmark) and Asia (Beijing, Hong
Kong, Singapore) driving flows towards EU • Integrated service range: customs clearance, warehousing, pick & pack
and last mile delivery
~5%
Others
10
Innovate/grow within core competencies (2/2) … and several other sources of revenues besides mail and parcels
bpost at a glance
• Mail originating from foreign countries and delivered to other countries
Inte
rnat
ion
al
mai
l
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 V
alu
e ad
ded
se
rvic
es
• 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) • Basic retail, investment and insurance products • Established footprint in Belgium through the bpost retail network
Agent of bpost bank ~50% of revenue (commissions)
• Payment services, cash at the counter, public finance solutions • Continuous development of innovative products and services
Direct offering ~50% of revenue
Ban
kin
g &
fi
nan
ce
11
bpost has a proven track record and plans for further productivity gains
bpost at a glance
Non Baremic Contractuals Baremic Contractuals
Statutories
Historic FTE evolution End of year FTEs, ‘000
-4.7% 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
25
40
bpost has plans for further productivity gains supported by natural attrition and Vision 2020
2012 to 13:
-1,090
37% of bpost’s employees are above 50
years old
Age pyramid Headcount per age, 31.12.2013
8,469 8,911 10,407
0-39 40-49 50+
12
Vision 2020 will drive substantial productivity improvements by 2017
bpost at a glance
Improved operational platform
Five specialized industrial mail centers for letters automatically sorting all formats (large & small) and centrally preparing mailbags
Further reduction of FTEs (from 800 to 1,200 yearly through 2017) through eliminating manual mailbag preparation and transport time to/from start of postmen’s round as a result of which they can serve more addresses
New central parcels sorting facility (Brussels) with increased capacity merging the two existing facilities (Antwerp and Charleroi)
Further centralization of distribution activities from current 270 to 60 mail centers as backbone of the logistic network
Enabling
Declining mail
volumes
Increasing parcels volumes
Increasingly complex
product mix
13
We want to keep stakeholders on board…
bpost at a glance
75
86
Distribution quality Percentage letters1 in D+1
85
962
+ 11
2003
2012 to 13: +2
2013
Customer satisfaction3
Percent
+ 11
2003
2012 to 13: +3
2013
Environment
1st on the IPC
Environmental Ranking
Carbon disclosure project
81/100
Engaged employer
• Engagement • Well-being
2013 2012
-15%
• Recognize experience
• # work accidents
108 people graduated
1 D+1 delivery of domestic single piece items up to 2 kg, stamped at “Prior tariff” 2 Quality scores for 2013 subject to approval by the IBPT/BIPT 3 “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: www.bpost.be/en/greenpost
2013 #1 2012 #2 2011 #8 2009 #14
14
Reward shareholders: total dividend of € 1.13/share gross based on 2013 results
bpost at a glance
Div
iden
d
Pol
icy
Div
iden
d
20
13
Oth
er
shar
ehol
der
s re
turn
s
• Dividend policy: pay-out of minimum 85% of BGAAP reported net profit (unconsolidated) • Annual dividend payment • Interim in December of financial year based on 10-month results • Final in May of year following financial year
• The dividend payment is constrained by the net results of a given year + distributable reserves • Distributable reserves are being built gradually as from 2013
• Exceptional dividends and share buy-backs are constrained by the level of distributable reserves under BGAAP (€ 36.7m end 2013 of which € 14.5m untaxed). Distributable reserves are currently being built primarily to safeguard the dividend level if bpost were to incur exceptional costs.
• Capital reduction/repayment is constrained by the level of capital of bpost SA/NV (€ 363.9m end of 2013). • There is no mechanism under Belgian corporate law to create additional distributable reserves or capital in
the specific circumstances of bpost. • Given bpost’s net cash position and significant borrowing capacity, cash is not a constraint to shareholders’
returns even taking into account capex and potential acquisitions.
• Final payment based on 2013 results:
Interim dividend paid in December 2013(€, gross per share) € 0.93
Final dividend payment (€, gross per share based on € 47.5m bpost S.A./N.N. net profit after tax under BGAAP and 85% payout ratio) € 0.20
Total dividend for 2013 € 1.13
• Dividend based on 2014 results should be higher (cfr. page 30)
15
2012 2013 2012 2013 % ∆Total operating income (revenues) 2,415.7 2,443.2 2,415.7 2,428.6 0.5%Operating expenses 1,994.8 1,891.7 1,913.7 1,891.7 1.1%EBITDA 421.0 551.4 502.0 536.9 7.0%Margin (%) 17.4% 22.6% 20.8% 22.1%EBIT 323.0 450.7 404.0 436.1 7.9%Margin (%) 13.4% 18.4% 16.7% 18.0%Profit before tax 272.7 456.8 353.7 442.2 25.0%Income tax expense 98.5 168.9 126.0 168.9 Net profit 174.2 287.9 227.7 273.3 20.0%
FCF2 (16.8) 125.9 284.0 249.0 -12.4%bpost S.A./N.V. net profit (BGAAP) 171.9 248.2 239.4 248.2 3.7%Net Debt/ (Net cash) (618.6) (360.7) (618.6) (360.7) -41.7%
Reported Normalized1
Summary of key financials FY13
bpost at a glance
2012: net loss of € 81.1m due to: 1) Gain on partial
curtailment of employee benefit plan € 21.1m
2) Gain on pending litigation provision € 22.7m
3) Loss on provision relating to European Commission Decision € 124.9m
Note: an Excel download of detailed financials per quarter is available on the website: www.bpost.be/site/en/postgroup/invest/results/key_figures.html
€ million
2013: gain of € 14.6m from sale of Certipost divisions
1 Normalized figures are neither audited nor have been subject to a limited review 2 Operating FCF = cash flow from operating activities + cash flow from investing activities; normalization excludes the impact of the 2012 and 2013
repayment of prior compensation, following the 2012 EU ruling
16
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, 2014
2,194.0
655.4
11.5
315.0
416.9
63.6
731.6
Dec 31, 2013
1,929.2
659.2
9.2
402.4
341.3
68.7
448.2
Total equity
Employee benefits
Trade & other payables
Provisions
Interest-bearing loans & borrowings
Sep 30, 2014
2,194.0
849.0
343.6
861.0
55.2 85.2
Dec 31, 2013
1,929.2
576.9
345.1
857.7
62.6 86.9
€ million
290,8 54,3
135.4
116.1
78.2
15.4
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, …)
17
bpost’s long term relationship with the 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 primarily under a Management Contract (Fifth, covering 2013-15)
• ~ € 300m operating income per year: compensation based on Net Avoided Cost with bpost sharing efficiency improvements if quality targets are met
• Tender process for newspapers and periodicals launched (for entire territory and on non-discriminatory basis).
• Indicative Invoice to the State by SGEI for 2013:
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)
Newspapers
Periodicals
Retail Network
Others
1 SGEI stands for Services of General Economic Interest
Shareholder
Belgian State bpost staff Free float
# shares
102,075,649
916,479
97,004,754
18
bpost’s management team and organization
bpost at a glance
Kurt Pierloot Mail Services Operations & International
Mark Michiels Human Resources & Organization
Koen Van Gerven CEO & Parcels
Marc Huybrechts
Mail & Retail Solutions
Pierre Winand CFO, Service Operations & ICT
Current Trading 3Q14
20 3Q14
Highlights of 3Q14
• Operating income (revenues) at € 569.2m, stable organically versus last year but negatively impacted by building sales being € 7.7m lower than the same quarter last year during which a sizeable property was sold.
• Improved underlying Domestic Mail volume decline at -4.3% (-4.9% in 1H14) helped in part by one-off mailings by some customers but still impacted by trends already observed in e-substitution and advertising mail sales, resulting in -4.7% year-to-date. Reported decline for the quarter stood at -4.6% (the underlying figure eliminates the impact of one less working day in the quarter).
• Domestic parcels volume up 10.3% (+5.2% in 1H14) helped by strong performance of e-commerce customers, first signs of recovery in C2C and some one-off actions. International parcels grew solidly by € 10.6m, bringing total organic parcels growth to € 13m.
• Slight organic growth in Additional sources of revenues of € 1.4m.
• Costs (excluding transport) down € 7.2m organically compared to 3Q13. Underlying FTE reduction of 840, in line with expectations.
• EBITDA margin stable versus 3Q13 at € 104.4m or 18.3%, in line with expectations, impacted by non-operational items such as lower building sales and restructuring charges.
• Net profit of bpost S.A./N.V. under BGAAP for the first 9 months at € 218.1m.
21 3Q14
3Q14 EBITDA in line with outlook. Lower gains on building sales compared to 3Q13 when one sizeable property was sold
+1.4
+13.0+2.5
EBITDA 3Q14
+104.4
Costs
-7.9
Additional sources of revenues
+0.3
Corporate Parcels Domestic Mail
-6.5
Scope
-2.3
EBITDA 3Q13
+103.9
100% acquisition of Gout, BEurope, Ecom and Starbase by Landmark Global Inc.
Of which building sales € -7.7m (last year included one sizeable property for € 11.4m in 3Q13)
Total operating income (revenues)
€ +0.2m
1 Normalized figures are neither audited nor have been subject to a limited review
€ +0.4m / +0.4%
Normalized1, € million
22 3Q14
Summary of key financials 3Q14
1 Normalized figures are neither audited nor have been subject to a limited review
€ million
3Q13 3Q14 3Q13 3Q14 % ∆Total operating income (revenues) 566.6 569.2 566.6 569.2 0.5%Operating expenses 462.7 464.7 462.7 464.7 -0.4%EBITDA 103.9 104.4 103.9 104.4 0.6%Margin (%) 18.3% 18.3% 18.3% 18.3%EBIT 81.5 82.9 81.5 82.9 1.8%Margin (%) 14.4% 14.6% 14.4% 14.6%Profit before tax 80.6 79.8 80.6 79.8 -1.0%Income tax expense 26.9 27.0 26.9 27.0 Net profit 53.8 52.7 53.8 52.7 -1.9%FCF (2.5) (38.5) (2.5) (38.5) -bpost S.A./N.V. net profit (BGAAP) 44.9 46.6 44.9 46.6 3.9%Net Debt/ (Net cash), at 30 September (535.4) (645.9) (535.4) (645.9) 20.6%
Reported Normalized1
23 3Q14
Total operating income (revenues) of € 569.2m in 3Q14, stable on an organic basis. 3Q13 revenues included disposal proceeds of € 11.4m for one large property.
1 Normalized figures are neither audited nor have been subject to a limited review ² Scope changes related to acquisitions of Gout International BV, Beurope, Ecom and Starbase ³ Defined as domestic and Belgian in- and outbound
Normalized1, € million
3Q13 Scope² Organic 3Q14 % ∆ Org
Transactional mail 212.5 - -3.1 209.3 -1.5%Advertising mail 60.5 - -2.2 58.3 -3.6%Press 75.4 - -1.1 74.3 -1.5%
Domestic parcels³ 31.9 - 3.4 35.2 10.5%International parcels 22.2 1.9 10.6 34.8 47.7%Special logistics 3.9 - -1.0 2.9 -25.6%
International mail 45.5 0.0 3.0 48.5 6.6%Valued added services 23.5 -1.2 0.6 22.9 -2.6%Banking and financial 51.8 - -1.3 50.6 -2.3%Others 25.5 1.8 -0.9 26.4 -3.7%
Corporate 13.8 - -7.9 6.0 -56.5%
566.6 2.5 0.1 569.2 0.0%
Additional sources of revenues
TOTAL
Domestic mail
Parcels
24
1Q14 2Q14 3Q14 YTD14 1Q14 2Q14 3Q14 YTD14Transactional mail -5.3% -5.2% -5.1% -5.2% -5.3% -5.9% -4.7% -5.3%Advertising mail -2.7% 2.0% -3.7% -1.3% -2.7% -3.6% -3.7% -3.3%Press -3.2% -2.9% -2.5% -2.9% -3.2% -2.9% -2.5% -2.9%Domestic Mail -4.6% -3.6% -4.6% -4.2% -4.6% -5.1% -4.3% -4.7%
Reported Underlying²
3Q14
Better Domestic Mail underlying volume decline at -4.3% helped by some one-off actions from customers and no new aggressive e-substitution measures.
341.9
-6.5
3Q
14
Price/Mix 7.3
Volume -12.9
Working day impact -0.9
3Q
13
348.4
• 1 business working day less (affecting transactional mail) • Underlying volume decline at -4.3%. • Transactional mail remained affected by e-substitution
(although we did not see additional customers implementing aggressive measures) and cost reduction measures by customers. Some one-off mailings impacted positively the volume evolution.
• Advertising mail remained weak.
• Price increase in line with policy.
Normalized1 total operating income (revenues), € million
1 Normalized figures are neither audited nor have been subject to a limited review 2 2Q14 was impacted by elections. In 3Q14 we have 1 business working day less and in 4Q14 we will have 1 business working day more compared to 2013.
1,113.8
-23.2
YTD
14
19.9
-46.8
-0.9
Elections 2014 4.6
YTD
13
1,137.0 Comments on 3Q14
25 3Q14
Continued growth of international parcels. Strong volume performance in domestic parcels. Normalized1 total operating income (revenues), € million
1 Normalized figures are neither audited nor have been subject to a limited review 2 Defined as domestic and Belgian in- and outbound
58.0
72.9
Special Logistics
10.6
3Q
13
3
Q1
4
-1.0
59.9
Scope 1.9
+13.0
Domestic Parcels 2 3.4
Before organic evolution
International Parcels
• Turnaround of activities implemented: revenues decreased as a result of discontinuing the activities in distribution & warehousing.
• Continued growth on lanes from US (€ +5.7m) with higher growth than 2Q14; from China (€ +2.2m) in line with 2Q14 growth and shipments to China still growing slightly (€ +1.4m).
• Volume increase in 3Q14 of +10.3%, showing improvement vs. 1H14.
• Volume growth as the result of strong performance of e-commerce, first signs of recovery in the C2C parcels and a one-off action of a customer (0.6% of the 10.3% growth).
• Slightly positive price/mix effect.
YTD
14
-2,5
32,9
+37,9
217,1
173,6
YTD
13
5,6
7,5
179,3
Comments on 3Q14
26 3Q14
International mail & VAS performing well, partly offset by Banking & Financial. Normalized1 total operating income (revenues), € million
1 Normalized figures are neither audited nor have been subject to a limited review
0.6
-1.3
VAS
0.6
146.9
Scope
3.0
Before organic evolution
146.3
3Q
13
International Mail
148.4
+1.4
3Q
14
Others -0.9
Banking & Financial
• Good international mail performance
• Contribution of solutions thanks to European license plates, Car Registration Cards and digital printing of magazines.
• Mainly driven by phasing (€ -0.6m) and lower volumes (€ -0.3m) of financial transactions managed on behalf of the Belgian State.
• Lower sales of physical products sold in post offices.
445.7
454.4
+7.3
YTD
14
-0.5
-1.5
5.1
4.2
447.2
1.4
YTD
13
Comments on 3Q14
27 3Q14
Cost savings in other OPEX offset by increase in transport costs. Personnel costs impacted by one off elements and delays in holiday taking. Operating expenses excl. depreciation and amortization, Normalized1, € million
1 Normalized figures are neither audited nor have been subject to a limited review
3Q
14
Other costs -4.8
Other SG&A -3.2
Transport costs 6.9
Payroll & Interim 0.8
3Q13 before organic evolution 465.0
Scope 2.3
464.7
462.7
-0.3
3Q
13
• Reported FTE reduction of 1,092 FTE (€ -13.3m) • However, delays in holiday taking impacted costs (€ +2.9m
provisioned). The underlying reduction of FTE is therefore estimated at 840 FTE.
• Mix impact of € +0.2m due to lesser use of students and higher use of interims.
• Price effect negative at € +3.3m, mainly due to merit increases, other premiums and CLA impact (€ +2.0m as announced).
• Other effects relating to restructuring charges (€ +3.1m) and employee benefits (€ +1.8m).
• Increase in transport costs mainly volume driven (increase in international activities), including one-offs for € +1.5m.
• Decrease in rental costs (fleet), other goods, energy delivery and publicity costs, partly compensated by the increase in maintenance & repairs (fleet and facilities).
• Mainly decrease in other operating charges (impacted by one-off costs in September 2013 related to real estate and local taxes), favourable impact of movements on provisions and decrease in material costs.
€ million 1Q14 2Q14 3Q14Volume (#FTE, underlying) -1,037 -1,061 -840 Volume -13.6 -12.7 -10.4 Mix effect -0.9 0.2 0.2 Price effect 2.6 5.0 3.3 Other 3.6 3.0 4.6 Restructuring 3.1 Total -8.3 -4.5 0.8
1,372.4
1,368.3
-10.7
YTD
14
-0.8
-18.2
20.3
-12.0
YTD
13
6.6
1,379.0
Comments on 3Q14
28 3Q14
Operating free cash flow of € -38.5m in 3Q14
• Higher capital expenditure in 3Q14 (€ -13.7m) related to Vision 2020 and in particular the extensions of the sorting centres and the installation of new sorting machines for mixed/large format mail
• Lower proceeds sale of buildings (€ -14.5m) mainly due to LY sale of a large property
• Improved results of operating activities (€ +14.2m) • Negative evolution of the working capital vs. 3Q13 (€ -24.2m) mainly due to the announced
reversal of the positive phasing effect recorded in 1Q14 relating to terminal dues
1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities, excludes the impact of the 2013 repayment of prior compensation, following the 2012 EU ruling and deposits received from 3rd parties.
€ million
3Q13 3Q14 Delta
Cash flow from operating activities -6.7 -16.7 -10.1Cash flow from investing activities +4.1 -21.7 -25.9Operating free cash flow1 -2.5 -38.5 -36.0Financing activities -0.1 -0.5 -0.4Net cash movement -2.6 -38.9 -36.4
Capex +13.2 +26.9 +13.7
29 3Q14
Based on bpost SA/NV 9-month results, shareholder remuneration should be higher than last year
• First nine months results of bpost SA/NV (BGAAP) are already at the level reached after 10 months in 2013 (corrected for the exceptional tax charge).
• As a result, the Board of Directors expects to declare a higher dividend based on 2014 results.
€ million 2013 2014
bpost SA/NV - results first 9 months (BGAAP) 175.5 218.1Exceptional tax charge 17.6 NATotal 193.1 218.1bpost SA/NV - results October (BGAAP) 25.2Results of first 10 months corrected for exceptional tax charge 218.3
30 3Q14
Outlook for 2014
• We reiterate our confidence to be able to report operating results (EBITDA and EBIT) in line with last year for the 4Q14 and consequently to keep the advance booked in the first nine months.
• As a result, the level of the dividend should be higher than last year.
• Revenues should be stable or slightly above last year. • Unchanged underlying volume trends in Domestic Mail partly helped by a better 3Q14 make us
return to our initial volume decline outlook of around -5% for the full year. • In domestic parcels, we remain confident that full year growth should be above the one
achieved in the first half. • International parcels growth is expected to be in line with the first half of the year for
routes into Europe. Traffic to China related to milk powder is expected to decline.
• Taking the phasing of the productivity improvement initiatives into account, the FTE reduction for 2014 is still expected to be at the low end of the reference range of 800 to 1,200 FTE/year.
• We do not anticipate any material exceptional cash outflows for the remainder of the year which means that cash generation should follow the normal seasonality. Net capex is expected to be below € 90m.
Additional info
32 Additional info
EBITDA bridge YTD14 (9 months) Normalized1, € million
+10.7+7.3
+37.9
+7.1
Corporate
+441.0
EBITDA YTD 14
Costs
-7.3
Domestic Mail Parcels Other sources of revenues
-23.2
Scope²
-6.6
EBITDA YTD 13
+415.3
€ +25.3m / +6.1%
€ +0.4m
Total operating income (revenues) Of which building sales € -6.1m (last year included one sizeable building)
100% acquisition of Gout, Beurope, Ecom and Starbase by Landmark Global Inc.
1 Normalized figures are neither audited nor have been subject to a limited review ² Scope changes related to acquisitions of Gout International BV, Beurope, Ecom and Starbase
33 Additional info
Scope elements affecting results: small bolt-on acquisitions relating to international parcels activities
Acquisition of Gout
InternationalBV and
BEurope
Acquisition of Ecom
Acquisition of Starbase
Topic Description High-level impact
Ch
ang
es in
sco
pe
• Additional operating income of € 1.7m and additional operating expenses of € 1.5m in 3Q14, bringing YTD contributions to € 5.0m and € 4.2m respectively
• Additional operating income of € 0.5m and additional operating expenses of € 0.5m in 3Q14, bringing YTD contributions to € 1.3m and € 1.7m respectively
• Additional operating income of € 0.3m and additional operating expenses of € 0.3m in 3Q14, bringing YTD contributions to € 0.8m and € 0.8m respectively
• In Jan. 2014, Landmark Global Inc. acquired 100% of the shares of Gout and BEurope both based in the Netherlands
• Both companies offer import services for customers looking to sell their products in Europe. This includes customs clearance services, warehousing, pick & pack and last mile delivery
• Landmark Global Inc. acquired 100% of the shares of Ecom Ltd in February 2014
• Import services for goods in UK
• Landmark Global Inc. acquired 100% of the shares of Starbase in February 2014 (based in US)
• Import services for goods in the US
34 Additional info
Summary of key financials YTD14 (9 months)
1 Normalized figures are neither audited nor have been subject to a limited review
€ million
YTD13 YTD14 YTD13 YTD14 % ∆Total operating income (revenues) 1,802.2 1,809.4 1,787.7 1,809.4 1.2%Operating expenses 1,372.4 1,368.3 1,372.4 1,368.3 0.3%EBITDA 429.9 441.0 415.3 441.0 6.2%Margin (%) 23.9% 24.4% 23.2% 24.4%EBIT 363.9 377.3 349.3 377.3 8.0%Margin (%) 20.2% 20.9% 19.5% 20.9%Profit before tax 371.4 368.8 356.8 368.8 3.4%Income tax expense 136.1 124.0 136.1 124.0 Net profit 235.2 244.8 220.6 244.8 11.0%FCF 113.3 324.9 236.5 325.2 37.5%bpost S.A./N.V. net profit (BGAAP) 175.5 218.1 175.5 218.1 24.3%Net Debt/ (Net cash), at 30 September (535.4) (645.9) (535.4) (645.9) 20.6%
Reported Normalized1
35 Additional info
Total operating income (revenues) YTD14 (9 months) Normalized1, € million
1 Normalized figures are neither audited nor have been subject to a limited review ² Scope changes related to acquisitions of Gout International BV, Beurope, Ecom and Starbase ³ Defined as domestic and Belgian in- and outbound
YTD13 Scope² Organic YTD14 % ∆ Org
Transactional mail 701.7 - -17.6 684.1 -2.5%Advertising mail 202.0 - -2.1 199.9 -1.0%Press 233.4 - -3.5 229.9 -1.5%
Domestic parcels³ 102.9 - 7.5 110.4 7.3%International parcels 58.5 5.6 32.9 97.0 56.2%Special logistics 12.2 - -2.5 9.7 -20.5%
International mail 144.1 0.0 4.2 148.4 3.0%Valued added services 66.5 - 5.1 71.6 7.7%Banking and financial 156.4 - -1.5 154.9 -1.0%Others 78.7 1.4 -0.6 79.5 -0.8%
Corporate 31.3 - -7.3 24.0 -23.3%
1,787.7 7.1 14.6 1,809.4 0.8%
Additional sources of revenues
TOTAL
Domestic mail
Parcels
36 Additional info
Operating free cash flow of € 325.2m YTD14 (9 months)
• LY capital increase of bpost bank (€ +37.5m) • LY sale of Certipost (€ -15.1m) • LY purchase remaining 20% MSI (€ +6.8m) • Newly acquired subsidiaries in 2014 (€ -9.1m) • Higher capital expenditure in 2014 (€ -15.0m) • Lower proceeds sale of buildings (€ -12.8m)
• Improved results of operating activities (€ +44.5m) • Positive evolution of the working capital vs. LY (€ +52.2m). Apart from LY’s payment related to
the competition claim fine (€ +37.4m), most other categories in working capital showed a positive evolution (clients, social debts, suppliers,…)
1 Normalized figures are neither audited nor have been subject to a limited review 2 Operating free cash flow = cash flow from operating activities + cash flow from investing activities, excludes the impact of the 2013 repayment of prior compensation, following
the 2012 EU ruling and deposits received from 3rd parties.
€ million, normalized1
YTD13 YTD14 Delta
Cash flow from operating activities +283.8 +379.9 +96.6Cash flow from investing activities -46.8 -54.8 -8.0Operating free cash flow2 +236.5 +325.2 +88.7Financing activities -318.5 -41.9 +276.6Net cash movement -82.0 +283.3 +365.3
Capex +42.0 +57.0 +15.0
• LY repayment of SGEI overcompensation (€ +123.1m) and decapitalization & exceptional dividends (€ +198.0m)
• This year mainly dividends paid (€ -40.0m)
37
Key contacts
Pierre Winand
CFO, Service Operations and ICT
• Email: [email protected] • Direct: + 32 (0)2 276 22 35 • Mobile: +32 (0) 494 566 348 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Paul Vanwambeke
Director Investor Relations
• Email: [email protected] • Direct: + 32 (0)2 276 28 22 • Mobile: +32 (0) 497 591 335 • 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) 477 922 343 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
