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November - December 2018
Investor presentationThird quarter 2018
2
Investor presentation third quarter 2018
Financial Calendarbpost at a glance
Highlights 3Q18 – 4Outlook 2018 – 5Outlook 2019-22 – 6 & 7Dividend policy – 8Capex 2019-22 – 9FCF 2018-22 – 10Investment rationale – 11Overview – 12Transformation – 13Vision & strategy – 14 & 15Business segments – 16Mail & Retail – 17-27Parcels & Logistics Eur & Asia – 28-36Parcels & Logistics N. America – 37-44Summary of key financials FY17 – 45Balance sheet – 46Relationship with State – 47Management – 48Sustainability – 49
More detail on 3Q18
EBITDA bridge – 51Radial 3Q18 – 52Key financials – 53Revenues – 54Domestic Mail – 55Parcels – 56Additional sources of revenues – 57Costs – 58Cash flow – 59
Contents
Additional Info
EBITDA bridge YTD18 – 61Key financials YTD18 – 62Revenues YTD18 – 63Cash flow YTD18 – 64USO & SGEI – 65Pro forma 2017 financials – 66European mail market – 67Key contacts – 68
1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995
DisclaimerThis presentation is based on information published by bpost in its Third Quarter 2018 Interim Financial Report, made available on November, 7th 2018 at 5.45pm CET, in its 2017Annual Report and in its Capital Markets Day presentation of June, 21st available on corporate.bpost.be/investors. This information forms regulated information as defined in the RoyalDecree of 14 November 2007. The information in this document may include forward-looking statements1, which are based on current expectations and projections of managementabout future events. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and otherfactors 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-lookingstatements 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 statementscontained 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 sellany securities or a solicitation of any offer to purchase any securities.
More on corporate.bpost.be/investors
03.12.2018(17:45 CET)Interim dividend 2018 announcement
06.12.2018Ex-dividend date (interim dividend)
10.12.2018Dividend payment date
19.03.2019 (17:45 CET)Annual results FY18
bpost at a glance
4bpost at a glance
Highlights of 3Q18
Underlying Domestic Mail volume evolution• Impacted by continued e-substitution, rationalization and competitive advertising
market; increased monthly volatility
Continued strong parcels growth and Radial in line with expectations• Domestic: continued double-digit organic volume growth driven by strong
e-commerce development; price/mix effect of -5.5% fully mix related• Logistic Solutions: mainly driven by Radial acquisition (€ +184.2m) in line with
expectations. Preliminary PPA of Radial is included in the financial statements
-6.4%
+25.5%
+ € 257.5m
Total operating income up 34.9%• Driven by acquisitions, excellent domestic parcels growth and stable domestic mail
revenues€ 873.7m
Lower EBITDA as expected impacted by higher organic costs
BGAAP net profit of bpost SA/NV
2018 outlook, dividend and back-loaded trajectory confirmed
€ 78.9m
€ 29.3m
+ € 188.8mOrganic costs impacted by growth and cost inflation• Opex from acquisitions (€ +212.2m)
• Excluding one-offs (€ +17.2m), organic cost base impacted by growth of domestic parcels (€ +8.5m), transport cost (€ +11.2) linked to evolution of international activities and cost inflation (€ +8.3m) in core business
5bpost at a glance
Outlook for 20181 as issued on May 2, 2018 – maintained
Normalized EBITDA at the low end of the € 560-600m range2
Dividend payment at least at the same level as 2017
RevenuesIncrease driven by:• Growth in domestic parcels: volume double
digit, price/mix effect between -3% and -6%• Continued growth in international parcels• Partly offset by volume decline in domestic
mail3 up to -7%, average domestic mail price/mix effect of +4%
• Continued decline in Banking & Financialrevenue
• Radial revenues impacted by client churn
Operating expensesIncrease driven by:• Increase in transport cost (reflecting growth in
International Parcels & Mail) • Consolidation of acquired businesses• Salary indexation effective as of October 2018• Partly compensated by continued productivity
improvements and optimized FTE mix and • Continued cost optimization• Radial EBITDA impacted by phase out
webstore business and higher than expected opex (medical benefits & inflation) not fully compensated by productivity improvements
Capex• Recurring and business development investments for new subsidiaries (Radial, Ubiway and Dynagroup)
for an estimated total amount of ~ € 140m
1 Outlook for 2018 includes the acquisitions of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc. and Active Ants2 EBIT range of € 400m to € 440m as communicated at CMD of June 21st
3 4Q18 will count 2 working days more on franking machines vs. the same quarter of 2017.
6
Guidance over 2019-22
bpost at a glance
Actuals 2018 guidance
CMD Guidance2019-2022
436480 494 497 502
EBITDA
15 181716
537
EBIT
20222013 14 19 20 21
572 584 587 598
Low end of € 560-
600mguidance2
Equivalent to EBITDA3 guidance € 540-600m; 2019 expected to
be the low end of the range
Normalized1 EBIT and EBITDA€m
EBIT guidance € 390m - € 440m;2019 expected to be the low end of
the range
Equivalent toEBIT of
€ 400-440m
1 Normalized EBIT(DA) definition unchanged and excludes non-recurring items of €20m or more, all profits or losses on disposal of activities whatever the amount, non-cash Purchase Price Allocation (PPA) accounting impacts related to acquisitions, reversals of provisions whose addition had been normalized from income (regardless of the amount they represent)
2 As per 1Q18 guidance on 2 May 2018 3 Excluding impact of IFRS16 as of January 2019
7
Key parameters underlying this plan
bpost at a glance
• Double digit yearly volume increase for BeNe last-mile
• Price/mix ranging from -3 to -6% p.a.• ~10% organic revenue growth in
e-commerce logistics in line with sector
• Parcels allocated operational FTEs in Belgium to increase in line with revenue evolution
• Inflation of 1.6% p.a. on average; similar fuel price evolution• Exchange rate of ~1.2 USD/EUR• Statutory Belgian corporate tax rate progressively decreasing from 33.99% in 2017 to 29.58% in 2018-19, and to 25% as
of 2020
Macro-economics indicators
• Organic planM&A
Parcels & Logistics Europe and AsiaMail & Retail• Mail volume decline from up to 7% in
2018 to up to 9% by 2022• Price/mix offsetting ~50% of mail
volume decline over 2018-2022• Revenue from proximity and
convenience retail network increasing by 1-2% p.a.
• Renewal of key contracts with the State, including reset of efficiency gains
• Mail allocated operational FTEs to decrease by ~5% p.a.
• Alternative operating model with flexible, differentiated offering ( D+1 and D+2/3)
Parcels & Logistics North America• 7-9% revenue growth in
e-commerce logistics from 2017-2022 (from 2019 for Radial)
• Radial EBITDA expected to evolve from ~$ 20m in 2018 to $100-$120m by 2022
• Wage increase of ~2% (mainly driven by automatic indexation) for 1/3rd compensated by favorable employee mix effect in Belgium
• Other FTEs bpost SA/NV to decrease by ~3-4% p.a. partly offset by SG&A increase due to outsourcing plans
Operating expenses
8
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 (€ 173m end 2017)
0.93 1.04 1.05 1.06 1.06
0.200.22 0.25 0.25
1.31
2016
+16%
2017
1.31
2018 2019-222014
1.13
2013
0.241.29
2015
1.26
Final gross DPS (€)Interim gross DPS (€)
Dividend at least at the same
as in 2017
Management to deliver
earnings to be in a
position to sustain
dividends
91%Pay-out ratio 85% 90% 85% 90% >85%
9
Perspective on CAPEX evolution 2019-22
bpost at a glance
€m
79 91 81 85
121
-27 -22 -27 -24
52
20212013 2019 2020 20222018
69
20172016
-491
20152014
Gross CAPEX
58
Proceeds fromsale of PPE
97
32
Total of €30-40m for 2020-2022
3.2% 3.7% 3.4% 3.5% 4.0%Gross Capex/ revenues
Gain on sales of property, m€ 17.8 15.5 33.42 17.0 15.9
2019-2022 gross CAPEX expected between €130-170m
Increase driven by parcels volume capacity increase and new subsidiaries, e.g., Radial, ~€8m yearly CAPEX for Ubiway
Total of €100m for 2018-2019
Net CAPEX
In line with standard years
3% to 4%
1 Reported figure, normalized figure = € -12m2 Reported figure, normalized figure = € 7.3m
10
Cash flow guidance as issued at CMD on 21 June 2018 -Excess cash expected from 2020
bpost at a glance
2022 outlook vs. 2017 Comments2016A 2017A2014A 2015A
Cash flow from operating activities
of which change in working capital
In line with EBIT guidance353 266451 361
Cash flow from investing activities excluding acquisitions
Increase of the investments mainly driven by parcels volume growth and Radial
-70 -85-69 -32
Free cash flow (before financing) 194 -486373 316
Acquisitions -89 -667 2022 plan based on organic growth-9 -14
Net cash movement -76 -69114 52
Financing activities Interest rate on gross debt, debt repayment subject to refinancing schedule-10 679-11 -10
Dividends -260 -262-248 -254 “at least 85% of BGAAP net income”
Expected to generate excess liquidity as of 2020
-41 -12547 35Working capital stabilizing as of 2020 after expected ~$100m negative impact from Radial spread over 2018-19
11
bpost offers a strong investment rationale
bpost at a glance
We develop sustainable activities in the high growth e-commerce logistics & parcelsbusiness in our Be-Ne home market and key geographies Be-Ne and North America
We continue to transform the mail and proximity business in the home market to sustainsolid cashflows
Multiple levers for transformation of the legacy business: natural attrition, alternative delivery model, stable and predictable regulation, network optimization,…
Experienced management team with embedded financial discipline and a strong business transformation track record
High growth in e-commerce logistics & parcels: aspired 60% of revenues by 2022
A solid balance sheet with single 'A' credit rating
bpost aims at being a responsible company, delivering a sustainable dividend to its shareholders
What?
How?
12
A diversified mail operator with a footprint in e-commerce logistics
bpost at a glance
Domestic Mail€ 1,353m45%
Transactional mail
2017 figures (normalized)1 45% Domestic Mail, 27% Additional sources of revenues, 26% Parcels and 1% Corporate revenue
€ 808m 27%
Parcels€ 796m26%
Additional sources of revenues€ 832m27%
Advertising mail € 253m 8%
Press € 293m 10%
Domestic € 224m 7%
International € 223m 7%
Logistic Solutions € 349m 12%
International mail € 160m 5%
Value added services € 102m 3%
Banking and finance € 183m 6%
Distribution € 98m 3%
Revenues % of total
Retail & Other € 289m 10%
Mai
l & R
etai
l ~67
%P
arce
ls &
Lo
gis
tics
~32
%
€ 3,024m1
revenues
€ 598.0m19.8%EBITDA
€ 501.6m16.6%EBIT
€ 329.3mnet profit
26,906average # FTE & interims
13
Continuous improvement is in our DNA. We have a proven transformation track record
bpost at a glance
2004• Building of new
sorting centres• Transformation of
the network
2003Start of continuous optimization of delivery rounds
2009Implemen-tation of new distribution structure with reduced number of buildings
2011-2020Strategic ‘Vision 2020’ program in mail service operations to further increase efficiency
2003New management
& start of the transformation
period
2006CVC and Danish Post enter into the capital
for 50%-1 share (split 50/50),
government holds 50%+1 share
2008Danish Post
sells its stake to CVC
2013IPO in June at € 14.5/share
CVC sells 30% in IPO and remaining 20% in December
Tran
sfor
mat
ion
jou
rney
Key
eve
nts
Normalized1
EBIT
1 Normalized figures are not audited
2007Automated roundsorting and mail sequencing
2017LaunchNew Brussels X sortingfacility
14
Vision for 2022
bpost at a glance
Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium”
Efficient provider
of mail universal, retail & public services
EBIT
Progressive profit generation
Share of revenues generated in
parcels & logistics
~60%
15
bpost will deliver on 3 strategic aspirations…
bpost at a glance
Mail services to citizens and State remain core and will continue to generate profit with a more adapted distribution model
1 Drive profitable growth in parcels in BeNe and e-commerce logistics in Europe
2
CASH GENERATION& DIVIDENDS
3 Optimize Radial to deliver on the investment thesis in the promising North American e-commercemarket
16bpost at a glance
Segment Sub-segments 2017 pro forma revenue1
Mail &Retail
Parcels & Logistics EU and Asia
Parcels & Logistics NorthAmerica
• Parcels BeNe (last-mile)• E-commerce logistics• Cross-border (incl. mail & parcels)
• E-commerce logistics • International mail (US)
• Transactional• Advertising• Press• Proximity and convenience retail network• Value added services
~€ 2bn(53% of total)
~€ 0.6bn(17% of total)
~€ 1.1bn(30% of total)
1 2017 revenue pro forma for the full year effect of the acquisitions (Radial, IMEX, Mail incl. and Leen Menken) – cfr. p.66
…supported by alignment of responsibilities down to the bottom-line
17
Mail & Retail at a glance
496
356
808
96
2,008
253
Transactional mail
Advertising mail
Press1
Proximity and convenience retail network2
Value added services3
Total
Sub-segments
~8.1m letters handled daily
Servicing 5.6m letter boxes
~10k distribution rounds per day
5 industrial sorting centers
Key facts & figuresRevenuePro forma 2017, €m
~2.5k points of presence in Belgium
~18.6k operational FTEs
1 Includes Ubiway press distribution revenue (AMP) 2 Includes Banking & Financial, Retail & Other MRS and Ubiway convenience distribution 3 VAS MRS
bpost at a glance –Mail & Retail
18
Key value drivers for the Mail & Retail business
bpost at a glance –Mail & Retail
To From Key value drivers
>50% over 2018-2022~20% in 20172Share of mail volume decline compensated
through price increase
Successful extension / renewal
Three contracts until end 2020; compensation contractually set
Renegotiation/retendering of future 6th
Management contract and press concessions
Flexible, differentiated offering (prior vs. eco)
Fixed D+1 based model (everywhere, everyday)
Evolution of operating model (mail collect and distribution)
-3.5% p.a. over 2013-17 -5-6% p.a. over 2017-2022
Operational workforce reductionexcluding retail network and acquisitions (i.e., collect, transport, sorting, distribution)
Up to ~-9%1
by 2022-5.8% in 2017Speed of domestic mail volume decline
1 At comparable scope with regards to 2017, i.e., excluding Ubiway press revenue from AMP that will be integrated within Press sub-segment as of 1Q19 in line with the new segment reporting
2 Proposed price increase rejected by regulator for small user basket only, not for commercial products
19
Domestic mail volume decline expected to progressively accelerate from -5.8% in 2017 up to ~9% in 2022
bpost at a glance –Mail & Retail
-4.2%-5.8%
-4.4% -5.7%-5.0%-5.0%
Key drivers
• E-substitutionat large corporates and Belgian State
• Intensifying competition in advertising media
• Shift to digital for newspapers & magazines
• Renewal of press concessions
• Service level elasticity
-5.9%-5.3%-3.7% -5.0%
-8.1%-5.3%
2013 2014 2015 2016 2017 YTD18
-7.5%-9.1%
-3.0%-4.9%
-3.0%
1.5%
-2.8%-3.0% -2.8% -2.8% -3.7% -4.1%
2019-22
Underlying change in domestic mail volume
Transactional mail
Advertising mail
Press
Progressively up to -9% with the alternative operating model
20bpost at a glance –
Mail & Retail
Designated provider of the Universal Service Obligation until end 2023
3 key contracts with the Belgian State until 2020
Postal law of 10 February 2018 provides stable & predictable mail pricing framework
• Collection, sorting, transport and distribution of postal items up to 2kg and single piece postal packages up to 10kg
• Collect and deliver 5x per week• Cover full territory of Belgium for collection and delivery of items belonging to universal service
• Apply uniform tariffs and an identical service across the territory
• 6th Management Contract: for the provision of certain SGEIs, i.e. maintenance of retail network, cash at counter, cash payment of pensions at home
• 2 press concessions: (1) for distribution of periodicals and (2) for distribution of newspapers
• Single piece mail & USO parcels falling within “small user basket” are subject to a price cap• Price cap1 = inflation - (volume evolution + cost reduction factor x efficiency gains sharing factor)
• Volume and operational discounts allowed for other USO products (bulk)
• Price increases done in practice on a yearly basis: +4.7% on average in 2018 on all domestic mail items
Regulatory aspects
1 Exact formula: Price cap = health index April n-1/ health index April n-2 * (1 – [expected volume decline/(expected volume decline +1)] – 2.8%*33% ) – 1
21
New Postal Law provides stable and predictable regulatory framework to increase prices in context of accelerating mail volume decline
bpost at a glance –Mail & Retail
Illustrative example assuming 2% inflation and -6% average volume decline:
[V/(V+1)] with V as the expected negative volume trend on the Small User
Basket
Fixed by the law at 0.9% (i.e., 1/3 of 2.8%
efficiency gains target)
Ratio of the health index as measured in April of the n-1 and n-2 years
Calculation logic
Correlation to price cap
Larger mail volume decline results in larger allowed price increase
Constant and fixed by lawHigher inflation results in larger allowed price
increase
DescriptionCompensation for mail
volume declineMechanism to share 1/3 of the efficiency gains target
with consumers
Compensation for inflation
Drivers of the price cap formula
Inflation Volume decline Efficiency gains
102%Price cap1: 7.6% 106.4% 0.9%
1 Detailed formula: Price cap = (1 + inflation) * ( 1 - [V/(V+1)] – 0.9% ) – 1 ,giving for the above example the following calculation (1+2%) * (1 – [-6%/(-6%+1)] – 0.9%) - 1 = 7.6%
x
Effective as of February 10, 2018
22
Price increase and mix effects expected to compensate >50% of mail volume decline over 2018-22
bpost at a glance –Mail & Retail
716867
6057
13
212027
42
17 2018-2214 162013 15
Domestic mail price/mixDomestic mail volume
Volume and price/mix impact on revenue€m
72% 45% 18%30% 31% >50%
Building on the New Postal Law for price regulated products
Price increase on small user basket rejected by regulator
x% Share of volume effect compensated by price/mix
Key drivers
• Acceleratingdomestic mail volume decline up to -9%1 by 2022
• New price cap mechanism of Postal Law defining max price increase for small user basket, and guiding price increase for non-price capped products
• Price increase partly offset by shift to less expensive mail products
1 At comparable scope with regard to 2017 segment reporting, i.e., excluding Ubiway press distribution revenue (AMP) that will be integrated within Press sub-segment as of 1Q19 in line with the new segment
23
Management has developed an extended set of cost control options
bpost at a glance –Mail & Retail
Examples of cost control options
FTE Unit cost
Distribution
Collect & Transport
Industrial Mail Centers
Operating model
• Revise Collective Labor Agreement evolution
• Optimize further FTE mix
• Introduce new generation of Georoute and time potential management
• Simplify process for selected transactions
• Enhance customer experience and productivity through digital (e.g., consumer preferences)
• Align number of red boxes to mail volume decline
• Stop collect on Saturday and increase flexibility of pick-up, delivery and dispatch timing constraints
• Optimize mail sorting centers footprint• Pursue continuous improvement
• Evolve towards a differentiated offering and alternative operating model• Take measures to address absenteeism
24
bpost will evolve towards a differentiated offering to accommodate changing customer needs
bpost at a glance –Mail & Retail
Acceptance for D+3-41 Within D+3
Optimizing drop density Differentiated offeringOperating model evolution
D+1Mail
Newspapers
• Same day delivery
• Adjusted “day certain” distribution frequency: in a given street, mail will be distributed on selective days of the week
• D+1 delivery will remain available as a separate product (“Prior”)
Parcels
• D+1 offering No change
2004 2018 2022 2022
~70~55
<50
~70
Current model: everywhere, everyday
Alternative:D+3 combined
with D+1
Share of houses receiving mail on any given day, %
Available to consumers who need D+1 delivery
Service level agreement (SLA) “within 3 days”
Professionals ~92%
Individuals 94%1
1 Based on a bpost study with 1,000 households & 500 businesses (<200FTE) interviewed in February 2015
25
bpost’s retail network in Belgium is evolving towards an integrated proximity network
bpost at a glance –Mail & Retail
662(28%)
828(35%)
Post offices (mail, parcels, bank)
674(28%)
220(9%)
Postal points (mail, parcels)
Proximity retail
“Kariboo”pick-uppoints
100% = 2,384
+ ~4,000 stamp shops
Composition of retail network in Belgium# point of presence, % Geographical footprint of retail network
Franchised
26
Ubiway progressing towards acquisition rationale
bpost at a glance –Mail & Retail
2Invest in the future of Belgian press by offering PoS press delivery to increase the flexibility & synergies in delivery options for both publishers and newspapers readers
1Diversify into the growing proximity and convenience distribution by building on Ubiway’s network of stores, portfolio of concepts (e.g., Press Shop, Relay) and expertise
Acquisition rationale Progress on objectives
• New store concept identified and tested; roll-out ongoing with 10 stores implemented
• Building capabilities (marketing, supply chain) to re-activate network
• Won SNCB / NMBS tender (end of 2017) for 30 Relay and 18 Hubiz for 8-14 years
• ~€ 3-4m press synergies already identified and execution ongoing (~€ 2m to be realized in 2019)
• Agreement with editors on price increase for newspaper distribution
Transversal initiatives
• New governancemodel with more centralization, stricter processes with an increased focus on performance management
• New CEO and changes at N-1 level
• Integration of subsidiaries in distribution to realize synergies on support functions
645# FTE
282 Sales €m
# Integrated Retail stores 220
5,622Distribution to # PoS
Key figures for 2017
18435
63
Press distribution (AMP)Distribution (excl. press)Integrated retail
Sales split by activity (2017)€m
27
Operational FTE evolution1
Average FTEs and interims, ‘000
Labor cost will benefit from decrease of mail related FTEs and optimized employee mix
Operational FTE mix evolution1
Evolution of operational FTEs allocated to mail1
Age pyramid1
Operational headcount per age, 31/12/17
1 bpost SA/NV scope, excluding retail network2 Auxiliary postman is c. 30% cheaper than civil servant. FTE mix evolution expected to mitigate up to 1/3 of wage drift.
20222015 17 2114 18 19162013
Shape of ramp-down depending on timing & speed
of implementation of alternative operating model
162013 15
19.0 18.618.519.8
14
Allocated toparcels
Allocated tomail
18.6
15-20%
80-85%
2017
-3.5% p.a.~-5% p.a.
bpost at a glance –Mail & Retail
51% 47% 43% 39% 30%
25% 28% 32% 37% 46%
19% 19% 18% 18% 16%
2022
Civil servant
Contractual
Auxiliarypostman2
Other 6% 7% 7%7%
15 162014
5%
17
5,593
7,294
0-39 40-49
6,842
50+ Civil servantsPay-scale contractualsNon pay-scale contractuals
Natural attrition
Average natural attrition is expected to range from 1,200 to 1,300 FTEs/yearover 2019-22
28
Parcels & Logistics Europe and Asia at a glance
Sub-segments Key facts & figuresRevenuePro forma 2017, €m
bpost at a glance –P&L Eur. & Asia
Parcels BeNe (last-mile)1
E-commerce logistics2
Cross-border (incl. int’l mail & parcels)
Total
4 Parcel hubs with dedicated parcel rounds in BE
~1,500 dedicated parcel rounds
+370k parcels per peak day in BeNe
1 sorting location (New Brussels X) + Dyna hubs
• Last-mile activities in Belgium and the Netherlands
• Total of ~50m parcels in 2017
• Fulfilment & transport activities in Europe (incl. Radial EU)
• Majority of cross-border volume is inbound mail and parcels for Europe and Asia
641
222
133
286
1 Includes a.o. domestic parcels at the exception of inbound flow, DynaLogic, DynaSure, Citydepot, Eurosprinters, De Buren and Parcify2 Includes a.o. Radial Europe (pro forma FY17), Dynafix, NL & PL fulfilment, Leen Menken (pro forma FY17) and Bubble post
29
Key value drivers for Parcels & Logistics Europe and Asia
bpost at a glance –P&L Eur. & Asia
Parcels BeNe (last-mile)
Sub-segments To From Key value drivers
Cross-border
Natural business evolution
Developing international parcel flows driven by e-commerce activity
• Develop international cross-border parcels, also across continents
• Ability to maintain international mail volume
E-commerce logistics
E-commerce logistics in PL, NL & BE and “DynaFix”
Higher scale & skills, ability to leverage Radial capabilities
• Ability to organically capture market growth of ~10% p.a. (vs. insourcing, pan-European players)
Focus on Belgium (sales force, contracts, DHL partnership)
BeNe-wide approach• BeNe-wide offering addressing customer requirements
Volume growth rate of 20-30% with price/ mix effect up to -6% over 2016-2017
Double-digit growth rate with price/mix effect of ~-3% to -6%
4 parcel hubs in 2017 in BE
>15 parcel hubs in 2022
• Optimized last-mile operations based on parcels characteristics (e.g., size) and in line with delivery requirements
• Ability to capture profitable growth in a competitive environment
30
Four strategic initiatives for parcels BeNe
bpost at a glance –P&L Eur. & Asia
Convenience& Cost
leadership
Differentiate pricing policy
IntegratedBeNe offering
Attract key foreign
e-commerce players
4strategicinitiatives
• Convenience expressedthrough Net Promoter Score KPI
• Dedicated parcel hubs
• Sorting capacity• Fulfilment
infrastructure • Transport
optimization• Digital excellence
• Tactical pricing initiatives
• Partnerships with e-commerce players
• E2E service offering (“gateway to Europe”)
• Dedicated, specialized sales force • Integrated commercial offers• Partnership with DHL Parcels
31
We have an established position in the Belgian B2C/C2C parcels market
bpost at a glance –P&L Eur. & Asia
Unique selling proposition
Offer best last mile and broadest delivery options, supported by acquisitions and partnerships:
• Home delivery 7/7 & evening delivery, including high-end deliveries (2-man)
• >2,400 pick-up & drop-off points (incl. >800 open access Kariboo! points)
• 177 parcel lockers in B (>450 Cubee lockers by end 2018), 61 de Buren lockers in NL
• Click & Collect
• Non-exclusive partnerships with DPDHL for B2C parcel delivery into Belgium (from Germany/France & Benelux)
CAGR 2017-20, %
0-4%
~5%
B2C
C2C
~15%
B2B
B2C
C2CB2B
2017 parcel market1
100% = € 1,285m
1 Source: Effigy
2017 bpost domestic parcels revenue€ 224m
32
New partnership with DHL Parcels NL will allow to cover the full BeNe region and to capture important cross-border flows
bpost at a glance –P&L Eur. & Asia
Competitive offering
• Very competitive & dynamic region with many large players such as PostNL, DHL, DPD, FedEx
Large NL-based e-commerce players
• Looking for a BeNe wide offering with regards to last mile
• Benchmarking prices on a BeNe level
Purchasing behavior
• NL is the most important import country to BE (~25% of import flows)
• BE consumers mainly buy from NL players such as Bol.com (7%) and Coolblue (6% of BE online sales)
Launched in June 2018
33
The parcels operating model will be continuously optimized
bpost at a glance –P&L Eur. & Asia
Increase sorting capacity
Optimize distribution cost using drop density of mail rounds
Build dedicated parcel infrastructure to match customer requirements
• Increase sorting capacity to cope with increasing volume (optimizing sorting footprint mail & parcels)
• Use technology (e.g. address recognition)
• Maximize letterbox-sized and non-letterbox-sized parcels in mail rounds (~40% of the parcels)
• Cost advantage due to higher drop density leading to lower unit costs
• Nationwide network of Parcel hubs to accommodate distribution of ~60% of parcels (that are not in mail rounds)
• 15-20 hubs by 2022, with ramp up in line with parcels growth
• Benefit for customer proximity and special services e.g. Late-in services, “large scale” evening distribution or same day distribution
34
Additional parcels sorting capacity will be gradually built
bpost at a glance –P&L Eur. & Asia
2017 2022
Base Capacity, K Parcels / day
Description
Parcel sorting capability footprint1
• Centralized sorting capacity in NBX with AX & CX to cover demand in peak periods
• Additional parcel sorting machines in existing centers (LX, GX, AX, CX) to increase capacity
• Build on DHL capacities
The selected scenario to gradually add capacity to all sorting centers offers several advantages such as
• Use freed space from letters
• Minimize transportation costs
Ax
Cx
NBx Gx
Lx
+
Ax
Cx
NBx
1 Parcel sorting capabilities of Parcify, Eurosprinters, Citydepot, De Buren & Kariboo not shown on the map
~400
~600 + DHL
35
Supported by acquisitions, bpost has initial assets in Europe along the entire value chain of e-commerce logistics
bpost at a glance –P&L Eur. & Asia
Realtime technology
3
2
1
Fulfilment
4
Customer care
Order
Delivery
• Phone, email, social media & chat support
• Advanced analytics
• Ordermanagement
• Paymentservices, tax services and fraud prevention
• Order reception in warehouses in the proximity of clients
• Preparation for shipment
• Hybrid transport network for high-end and urgent delivery
• Last mile delivery
Poland
Germany
UK
TheNetherlands
Belgium
Cold chain facility Fulfilment sites Personalized logistics
~€ 130m pro forma1
2017 revenue9 fulfilment centers / facilities2
>600 employees5 countries
1 Assumes FY17 revenue from new acquisitions (Radial, Leen Menken); excludes Active Ants as only acquired in 1Q182 Including Leen Menken and Active Ants, excluding bpost sorting centers
E-commerce logistics operations in Europe E-commerce logistics offering
36bpost at a glance –
P&L Eur. & Asia
Sales 2015: € 88.5mNormalized EBITDA 2015: € 6.8m (7.7% margin)Initial purchase price: € 51.0mSales 2017: € 132.2m
Rationale: support growth strategy of parcels
• We want to broaden the value chain in e-commerce
• We will further build out our hybrid network by adding capabilities to offer high-end deliveries
• We want to extend our footprint in The Netherlands with a strong player with an excellent track record. DynaGroup is market leader on the 2XL market segment.
Acquisition of on 6 January 2017
• EPS & DPS accretive• ~10% revenue growth for coming years• Total capex planned € 2-3m/year
Financial ambitions
Repair of e.g. smartphones, coffee machines, etc.
E-commerce related high-end deliveries requiring non-standard, non-bulk transport with added value activities• Anytime: same-day, next day, weekend• Any size: S to 2XL (2man delivery with installation)• Safe & secure: ID verification & authentication• Anywhere: active through 7 locations throughout Benelux
Supply chain services for banks and insurance companies: e.g. sensitive document handling, ID verification
37
Parcels & Logistics North America at a glance
bpost at a glance –P&L North America
Total
E-commerce logistics
Interna-tional Mail
Growth engine for bpost, to be a leading e-commerce logisticsplayer in US with ~$ 100m-$ 120m EBITDA potential
Grow with cross-border commerce
One of the last international mail providers to deliver profit through infrastructure optimization
US e-commerce logisticsprovider fulfilling 72m parcels p.a. with provenclient base, IT infrastructure and capabilities along theE2E value chain
Capabilities to support mid-sized e-tailers to expand cross-border andlast mile distribution in Canada and Australia
International mail solutions and catalogue fulfilment through US companies
Sub-segments ObjectiveRevenuePro forma 2017, $m
1,265
Cross-borderparcels 1512
1003US mail
1,0141
1 Revenues in North America, excluding revenues from webstore ($ 28m) and revenues in Europe ($ 40m) 2 Including Landmark Global, Apple Express and FDM, previously under International Parcels3 Including MSI, Imex, Mail Inc.
38bpost at a glance –P&L North America
bpost has a global footprint through Landmark Global and a nation-wide coverage in the US through Radial
Strategic locations in
13countries
39bpost at a glance –P&L North America
Key data• Sales 2017: $ 1,082m
(of which North America: $ 1,014m)• Normalized EBITDA 2017: $ 57m (5.3% margin)
(of which North America: $ 64m, 6.3% margin)• 6,200 FTEs• 24 fulfillment centers (of which 2 in Europe)
• 100% acquisition of the shares• Enterprise Value: $ 820m• Financed through a € 650m 8-year bond issue
carrying a coupon of 1.25% (issued 4 July 2018)
Acquisition of US-based on 16 November 2017
• Sales 2018e: $ 976m• Sales CAGR 2019-2022: +7 to 9% p.a.• EBITDA 2018e: $ 23m (2.4% margin)• EBITDA 2022e: $ 100-120m (high single digit margin)• Capex: maintenance capex of $ 25-30m + growth
capex for capacity expansion & automation
Financial indicators for Radial North America
Acquisition rationaleOur growth
• Integrated e-commerce logistics provides access to a larger and more attractive profit pool
• Radial as growth engine and key profit contributor
Presence in the US and Europe
• Strengthen US position building on presence with Landmark Global
• Scale bpost’s e-commerce logistics capabilities in the Benelux and Europe
Strong growth of e-commerce
• e-commerce is growing rapidly with US being an attractive and advanced space (+16% p.a. growth of online retail over 2004-2022e)
• Transatlantic e-commerce is growing at >25% p.a. with 20% of European parcels coming from the US
Knowledge and experience
• Knowledge and experience of the e-commerce logistics chain increase exponentially with the acquisition of an experienced player
40
Radial North America offers multiple services across the entire e-commerce logistics value chain
bpost at a glance –P&L North America
~10%
Tech
no
log
yO
per
atio
ns
Radial North America assets
Processing global payments, maximizing successful authorization and reconciling tax districts and global duties 99.1% approval rate vs. 97.1% industry average 2.1% manual review rate vs. 25% industry average
Payment, Tax, and Fraud Prevention
Omnichannel Technology2
22,000Stores with fulfilment26,000
Dropship suppliers
Optimizing efficiency of order management, ship-from-store and in-store pick up Ability to handle complex orders < 10 weeks to deployment vs. competition 1-2
years Scalability of technology
Warehousing & Fulfilment
22Fulfilment sites in
North America
Adapting warehouse management and parcels preparation to e-commerce with pragmatic automation 80%+ orders shipped day 0 ~100% US coverage Experience of scaling up to ~20k peak capacity
3,400+Seats across 5 sites
Customer Care
Having a single view of customer’s history and profile combined with leading self-service tech #1 Email & Chat and #2 Phone
(StellaService ranks) Advanced data analytics
Description and key strengths
Transportation Management
100%asset light
Managing a large network of carriers for a seamless customer experience Rates 5-15% cheaper than in-sourcing for mid-
sized players Clients reached in 2.4 days on avg
1
3
5
4
Pro forma rev.$m and %, 2017
-
-
107
717
Fraud Zero software
1,014Total
~70%
190
~20%
41bpost at a glance –P&L North America
Radial North America market dynamics and competitive landscape
Independent e-commerce logistics providers
Online revenue e-tailers, US Addressable e-commerce logistics sector
$ 20m
$ 2,000m
$ 460bn1 expected US online retail revenue in 2017
Radial’s target audience ($ 20m – 2bn revenues)• Mid-market
segment ($ 20-200m online revenue)
• Enterprise segment ($ 200-600m)
• Some selected key accounts ($ 600m-$ 2bn)
$ 27-37bnaddressable e-commerce logistics
Radial’s target audience e-commerce revenue $ 150-155bn
~$ 460bn total US online Retaile-commerce
1 Source: Forrester Data, Online Retail Forecast, 2017
86
120
74
164
194
309
Jagged Peak
Trade Global
Genco
OHL 1,350
1,385
1,524
DHL e-commerce
1,014
Ingram Micro
Digital River
Speed commerce
Newgistics
Radial N. America
2015
2017
2015
2015
2017
2015
2015
2016
Revenue per e-commerce logistics provider$m, 2016-17
Year of acquisitionOwner
42bpost at a glance –P&L North America
Radial diagnostic & action plan
Diagnostic
• Radial has a strong value proposition in a growing industry and the required operations to deliver that proposition.
• Phase-out of webstore business, decided in 2014, will impact revenue and EBITDA in 2018 & 2019 as expected for an amount of $ 23m and $ 5m respectively.
• Commercial function requires an improvement to address a number of critical points:
• Customer churn is higher than expected due to: insourcing, bankruptcies, poor fit with clients needs and insufficient focus on customer satisfaction
• Total Contract Value (“TCV”) of new contracts signed in:
• 2017 was below target
• YTD18 still lags budget
• Lead time in fulfillment and transport between customer decision to start or terminate business with Radial and top line impact could be around ~9 to 18 months
43bpost at a glance –P&L North America
Radial diagnostic & action plan
50
Supportingfunctions
and IT
+80-100
20-30
10-20
Grow & Retain
2018e 23
Productivity
2022 Guidance 100-120
Action plan will result in $ 80-100m potential EBITDA improvement by 2022
1
2
3
• Fuel top-line growth via new leads, increased conversion rate and optimized pricing
• Increase satisfaction and retain clients by installing true client philosophy (e.g. pursue renewals, improve client qualification, …)
• Continue to implement productivity improvement programs, e.g.‒ Lean warehousing metrics ‒ Improved allocation of clients to distribution centers based on client
specifics
• Implement identified improvement levers in support functions(e.g. IT, medical costs, …)
44bpost at a glance –P&L North America
Purchase Price Allocation of Radial has been reviewed
• Preliminary Purchase Price Allocation results in reviewed Radial opening balance sheet for fair value adjustments by external independent accounting firm as per IFRS 3 practice.
• Initial goodwill has been reduced by $ 155.7m (€ 132.3m) to amount to $ 516.0m (€ 438.4m) following:
– the fair value adjustment (prolongation of useful life) of fixed assets for $ 43.8m (€ 37.2m)
o Radial reported D&A decreased by € 9.5m for 9M18 (1Q18 and 2Q18 restated for respectively € 2.5m and € 3.5m, € 3.5m in 3Q18) following the fair value adjustment (prolongation of useful life) of fixed assets
– the recognition of intangible assets for $ 132.3m (€ 112.4m) consisting of customer relationships, in-house developed technology and tradename
o Radial reported D&A increased by € 10.2m for 9M18 (1Q18 and 2Q18 restated for respectively € 4.3m and € 3.0m, € 2.9m in 3Q18) following the recognition of intangible assets.
o This D&A impact is normalized.
– partially offset by the fair value adjustments of other assets and liabilities for $ 20.4m (€ 17.3m).
o Radial reported EBITDA impacted positively by € +7.8m for 9M18 (1Q18 and 2Q18 restated for respectively € +3.0m and € +2.2m, € +2.7m in 3Q18)
• Audit to confirm the full year impact.
45
Summary of key financials FY17
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
€ million
1 Normalized figures are not audited
FY16 FY17 FY16 FY17 % ΔTotal operating income (revenues) 2,425.2 3,023.8 2,425.2 3,023.8 24.7%Operating expenses 1,838.4 2,425.9 1,838.4 2,425.9 32.0%EBITDA 586.9 598.0 586.9 598.0 1.9%Margin (%) 24.2% 19.8% 24.2% 19.8%EBIT 496.5 492.9 496.5 501.6 1.0%Margin (%) 20.5% 16.3% 20.5% 16.6%Profit before tax 489.5 488.7 489.5 497.5 1.6%Income tax expense 143.2 165.8 165.4 168.2Net profit 346.2 322.9 324.1 329.3 1.6%FCF 193.9 (485.8) 193.9 (485.8)bpost S.A./N.V. net profit (BGAAP) 308.7 291.0 286.5 291.0 1.6%Net Debt/ (Net cash), at 31 December (492.7) 292.4 (492.7) 292.4
Reported Normalized1
Positive tax impact of Deltamedia
liquidation € 22.2m
€ 8.7m linked to amortization on intangible assets (purchase price allocation “PPA”
Ubiway, Dynagroup& de Buren)
Tax impact of PPA on amortization of
€ 2.5m
46
bpost is to retain a robust 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
1,643.1 1,617.7
724.3595.6
329.2
255.2
466.0544.3
71.0
Cash, cashequivalents
& investmentsecurities 39.3
39.1
September 30, 2018
Dec 31, 2017
restated
3,241.0
Other assets
40.5
Investments inassociates
Trade & otherreceivables
Inventories
PPE & intangibleassets
3,124.3
777.8 810.3
326.9 331.1
1,314.51,042.2
755.3889.0
Employee benefits1
66.5
51.7
Dec 31, 2017
restated
3,241.0
September 30, 2018
Interest-bearingloans & borrowings,
bank overdrafts
Provisions
Trade & otherpayables and
derivativeinstruments
Total equity
3,124.3
€ million
Rating and capital allocation
• S&P assigned credit rating of ‘A’ to bpost on June 20th, 2018 based on a stand-alone credit profile of BBB
• bpost successfully issued a € 650m 8-year bond on July 4th, 2018 with a coupon of 1.25%
• bpost seeks to maintain credit metrics compatible with a solid intrinsic investment grade
• Dividends remain the primary use of capital allocation as the plan assumes no further acquisitions
47
bpost’s long term relationship with the Belgian State
bpost at a glance
State as a long term shareholderBelgian State has 51% sharesbpost’s board is composed of 5 board members1 and CEO appointed by the Belgian State and 6 independent directors
Belgian State supports a regular dividend policy
bpost provides SGEIs2 on behalf of the State2016-20202 press distribution contracts (newspapers & periodicals)
Sixth management contract for other SGEIs
Contractual amounts (excl. inflation3, volume impact & sharing of efficiency gains) of € 261.0m in 2016 (actual amount: € 264.9m), € 260.8m in 2017 (actual amount: € 270.0m), € 257.6m in 2018, € 252.6m in 2019 and € 245.6m in 2020
State as important customerState 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 Since the Ordinary General Meeting of Shareholders of May 9, 2018 there are only 3 State appointed board members (incl. CEO). The Belgian State requested bpost to postpone the appointment of three directors to be nominated by the Belgian State to a later date.
2 SGEI stands for Services of General Economic Interest3 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 RetailFinancial services
Press
48
bpost’s management team and organization
bpost at a glance
Mark MichielsCHRO
Koen Van GervenGroup CEO
Nico CoolsCIO
Dirk TirezCLO
Henri de RomréeCFO
Kurt PierlootCEO Mail & Retail
Pierre WinandCEO Parcels & Logistics North America
Luc CloetCEO Parcels & Logistics Europe & Asia
49
Sustainability is at the heart of our activities
bpost at a glance
Selected awards and recognition
First Sustainable Loan in Belgium
3-pillar CSR strategy linked to United Nations
Peoplewe care
about our employees and engage
them
Proximitywe are close
to the society
Planetwe strive to reduce our impact on
the environment
Shared Value
Creation
• Employee health & safety• Employee training and
talent development• Ethics & diversity• Social dialogue
• Green fleet• Green buildings• Waste management
• To our community• To our suppliers• To our customers
through our services
• Continuity of our business
• Employee satisfaction and engagement
• Customer satisfaction
€ 300m revolving credit facility with pricing mechanism linked to the sustainability score of bpost• Financing needs aligned with bpost’s sustainability
and CSR ambitions• bpost being recognized by its stakeholders as a
highly responsible company
• IPC EMMS Scorecard 2017 (sector index): #1 (Sixth Year)
• EcoVadis (clients index): Gold rating• Ethibel Indexes: reconfirmed as a constituent of the
Ethibel Sustainability Index (ESI) Excellence Europe since 19/03/2018
• Sustainalytics: score 78% (TOP 2/117)• MSCI: Score A• ISS: Quality Score: 2 = Low Risk
IPC Environmental Ranking
1st
Current Trading3Q18
513Q18
110.3
88.178.9
0.320.2
23.5
-17.2
-5.0
ReportedEBITDA
3Q17
EBITDA 3Q17excl.
one-offs
One-offs3Q17(opex)
-11.2-8.5
Opexfrom
acquisitions (excl.
Radial)
Transport costs for
international growth
Opex Domestic Parcels
-8.3
Costinflation
Corporate
-27.0
2.9
-1.0
Parcels ReportedEBITDA
3Q18
Additional sources of revenues
Domestic Mail
One-offs3Q17
(operatingincome)
EBITDARadial
EBITDA impacted by growth activities and core business cost inflation
Total operating income
€ million
€ -9.1m / -10.3%
Mainly provision reversals
523Q18
Radial’s performance in line with expectations
• 3Q18 revenues below last year driven by:
– Growth from new and existing customers does not compensate clients terminating with Radial
– Webstore phase-out and expected client churn in Fulfilment & Transport
• 3Q18 EBITDA in line with expectations but below last year driven by:
– Growth from existing clients, better productivity and tighter control on SG&A spend
– Offset by phase-out of (high margin) webstore business and impact of customer churn in Fulfilment & Transport
Reported€ m 3Q18Total operating income 184.2Operating expenses 185.2
Transport 57.6Payroll and interim 80.1Other SG&A 39.1Other costs 8.4
EBITDA (1.0)Margin (%) -0.6%
53
3Q17 3Q18 3Q17 3Q18 % ΔTotal operating income 647.6 873.7 647.6 873.7 34.9%Operating expenses 537.3 794.8 537.3 794.8 47.9%EBITDA 110.3 78.9 110.3 78.9 -28.4%Margin (%) 17.0% 9.0% 17.0% 9.0%EBIT 87.2 40.6 87.2 46.7 -46.4%Margin (%) 13.5% 4.7% 13.5% 5.3%Profit before tax 91.4 39.9 91.4 46.0 -49.7%Income tax expense 31.4 12.7 31.4 13.4Net profit 60.0 27.2 60.0 32.6 -45.7%FCF (76.3) (53.3) (76.3) (45.7)bpost S.A./N.V. net profit (BGAAP) 52.0 29.3 52.0 29.3 -43.6%Net Debt/ (Net cash), at 30 September (518.6) 354.1 (518.6) 354.1
NormalizedReported
Summary of key financials 3Q181
3Q18
€ million
1 3Q18 figures are not audited
Tax impact of PPA on amortization of
€ 0.8m
€ 6.1m linked to amortization on intangible assets (purchase price allocation “PPA” Radial, Ubiway, Dynagroup & de
Buren)
Normalized FCF excludes the cash Radial receives on
behalf of its customers for
performing billing services. Radial
routinely remits this cash back to its customers with
some delay
54
Total operating income
3Q18
€ million
1 Defined as domestic and Belgian in- and outbound2 Including scope changes: Radial, Leen Menken, BubblePost, Active Ants3 Including scope changes: Imex, M.A.I.L. Inc.4 Including one-off 3Q17 operating income
3Q17 ∆ 3Q18 % ∆
Transactional mail 177.4 1.6 178.9 0.9%Advertising mail 55.6 -0.5 55.1 -0.8%Press 67.8 -0.8 67.0 -1.2%
Domestic parcels1 52.5 9.7 62.2 18.5%International parcels 51.8 6.0 57.8 11.5%Logistic solutions2 38.7 188.8 227.5 -
International mail3 35.3 22.5 57.7 63.7%Value added services 25.2 1.9 27.1 7.5%Banking and financial 44.8 -3.6 41.2 -8.0%Distribution 21.9 1.8 23.7 8.3%Retail & Other 69.9 1.0 70.9 1.4%
Corporate4 6.7 -2.1 4.6 -31.2%
647.6 226.2 873.7 34.9%
Domestic mail
Parcels
Additional sourcesof revenues
TOTAL
55
Domestic mail underlying volume trend at -6.4% in line with full year guidance of up to -7.0%
3Q18
Total operating income, € million
12.5
Volume
Elections²
3Q
17
-12.9
-1.4Working day impact
2.1
Price/mix
3Q
18
300.7
301.0
+0.3
FY17 1Q18 2Q18 3Q18 YTD18 FY17 1Q18 2Q18 3Q18 YTD18Transactional mail -8.3% -7.0% -3.5% -5.3% -5.2% -8.1% -6.7% -3.2% -6.1% -5.3%Advertising mail 1.5% -7.6% -7.8% -3.4% -6.5% 1.5% -7.6% -7.8% -6.9% -7.5%Press -3.7% -3.3% -2.5% -7.1% -4.1% -3.7% -3.3% -2.5% -7.1% -4.1%Domestic Mail -5.9% -6.8% -4.3% -5.1% -5.4% -5.8% -6.6% -4.1% -6.4% -5.7%
Reported Underlying (excl. elections)1
1 3Q18 had 1 working day more on franking machines and 2 more on stamps vs. 3Q17.2 Advertising addressed and unaddressed volumes related to elections are neutralized in the calculation of the underlying volume trend.
35.0
YTD
17
-2.6
2.1
-46.6
YTD
18
993.6
981.4
-12.2
• Elections: local elections took place on October 14th, 2018 impacting advertising mail for € 2.1m (+3.5% volume impact). 4Q18 will also be positively impacted by election mail.
• Transactional Mail: continued e-substitution and rationalization.
• Advertising Mail: excluding elections, unfavorable media mix evolution in Direct Mail and higher competition in Unaddressed.
• Press: newspapers trend in line vs. LY excluding impact of 1 distribution day less; periodicals hit by increased digitization and further rationalization.
56
Continued strong organic parcels growth
3Q18
Total operating income, € million
1 Defined as domestic and Belgian in- and outbound
Radial
327.3
LogisticSolutions
3Q
17
reb
ased
4.6
3Q
17
184.2
9.7DomesticParcels1
InternationalParcels
3Q
18
143.1
6.0
347.5
+20.2
• Driven by consolidation of Leen Menken and Active Ants.
• Consolidation of Radial as of 16 November 2017 (revenues are reported under Logistic Solutions), revenues impacted by webstore phase-out and customer churn.
574.0
1,060.2
428.2
11.8
YTD
17
30.2
1H
18
1,002.2
16.0
+58.0
• Reported organic volume growth of +25.5% driven by strong e-commerce growth.
• Price/mix of -5.5%: price increase more than offset by product & client mix effect.
• Growth driven by US and Europe.
57
Additional sources of revenues driven by acquisitions
3Q18
22.5
Banking &Financial
3Q
17
InternationalMail
1.9VAS
-3.6
1.8Distribution
1.0Retail &Other
3Q
18
220.6
197.1
+23.5
• Driven by consolidation of Imex & M.A.I.L., Inc. as of January 2018 and higher volumes from Asia (mainly registered).
• Excluding accounting restatement in 3Q17, decline of Alvadis due to legislative change on pre-paid mobile phone cards.
• Lower revenues from bpost bank savings accounts due to low interest rate environment.
• Driven by higher sales Ubiway Retail.
• Mainly Speos (document management services) and e-ID services.
Total operating income, € million
57.8
YTD
18
YTD
17
5.9
-2.8
-13.3
-1.5
616.9
662.9
+46.0
58
Organic costs impacted by growth and cost inflation in corebusiness
3Q18
Operating expenses excl. depreciation and amortization, € million
SG&A
2.9
Domestic parcelscost increase
Other costs
3Q
18
537.3
11.2
766.8
One-offs
3Q
17
794.8
17.2
212.2
3Q17rebased
Consolidationeffect (opex
acquisitions)1
3.6
8.5
Transport
1.8Payroll & Interim
+28.0
1 Opex of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc., Active Ants (see appendix for more detail)
• Mainly 3Q17 provision reversals related to an old litigation and to payroll
• Increase driven by evolution of the international activities (mail & parcels).
• Negative price effect (mainly indexation of provisions, CLA and merit) and absenteeism partly compensated by better productivity, favourable FTE mix and tax shift
• Mainly increase in rent & rental (new mail centre, sales & lease back), energy delivery costs resulting from higher fuel price and insurance costs.
• Mainly driven by increase in other operating expenses (ATM attacks, taxes NBX, provision fleet end of contract)
• Additional FTEs, transport (subs), fleet, fuel and insurance costs for parcels volumes.
4.5
24.5
23.7
-9.8
YTD
18
21.7
2,285.1
2,353.9
25.8
YTD
17
641.3
1,622.1
+68.8
8.3
59
€ million 3Q17 3Q18 Delta
Cash flow from operating activities -38.9 -30.2 +8.8Cash flow from investing activities -37.3 -23.1 +14.2Operating free cash flow1 -76.3 -53.3 +23.0Financing activities -0.1 +106.4 +106.4Net cash movement -76.3 +53.1 +129.4
Capex -35.1 -26.9 +8.2
Cash inflow in line with refinancing activities
3Q18
1 Reported operating free cash flow = cash flow from operating activities + cash flow from investing activities
• Tax prepayments: € +10.0m
• Proceeds from sale of buildings: € +3.3m• Lower capex: € +8.2m• Apple Express Earn-out paid in 3Q17: € +2.7m
• Bond issuance (€ +650.0m) and commercial papers (€ +20.0m) offset the reimbursement of the bridge loan for Radial acquisition and related costs
Additional info
61
EBITDA impacted by growth activities and core business cost inflation
YTD18
€ million
446.5 409.0
353.8
58.0
46.0
+7.9 +10.8
CostsReportedEBITDA YTD17
One-offsYTD18 (opex)
-75.3
Corporate EBITDARadial
-10.9
EBITDA YTD18excl.
one-offs
-68.8
Parcels Additional sources of revenues
364.7
ReportedEBITDA YTD18
Domestic Mail
One-offsYTD17
(operatingincome)
-12.1
EBITDA YTD17excl.
one-offs
-32.5-5.0
One-offsYTD17(opex)
Total operating income
€ -55.2m / -13.5%
Opex from acquisitions(excl. Radial)
• Reversal of provision (€ +14.9) • Support on specific projects and
ATM attacks for a combined amount of € -4.1m
Of which € -24.5m related to growth of
domestic parcels
Mainly provision reversals (of which € 15.3m IAS19 non-cash gain related to termination of
transport benefit)
62
YTD17 YTD18 YTD17 YTD18 % ΔTotal operating income 2,068.7 2,718.6 2,068.7 2,718.6 31.4%Operating expenses 1,622.1 2,353.9 1,622.1 2,353.9 45.1%EBITDA 446.5 364.7 446.5 364.7 -18.3%Margin (%) 21.6% 13.4% 21.6% 13.4%EBIT 377.4 249.6 377.4 267.3 -29.2%Margin (%) 18.2% 9.2% 18.2% 9.8%Profit before tax 381.8 240.5 381.8 258.3 -32.4%Income tax expense 126.0 81.5 126.0 83.2Net profit 255.8 159.1 255.8 175.1 -31.6%FCF 90.8 19.4 90.8 45.6bpost S.A./N.V. net profit (BGAAP) 222.8 184.2 222.8 184.2 -17.3%Net Debt/ (Net cash), at 30 September (518.6) 354.1 (518.6) 354.1
Reported Normalized
Summary of key financials YTD181
YTD18
€ million
1 Normalized figures are not audited
€ 17.7m linked to amortization on intangible assets (purchase price allocation “PPA” Radial, Ubiway, Dynagroup & de
Buren)
Tax impact of PPA on amortization of
€ 1.7m
Normalized FCF excludes the cash Radial receives on
behalf of its customers for
performing billing services. Radial
routinely remits this cash back to its customers with
some delay
63
Total operating income
YTD18
€ million
1 Defined as domestic and Belgian in- and outbound2 Including scope changes: Radial, Leen Menken, BubblePost, Active Ants3 Including scope changes: Imex, M.A.I.L. Inc.4 Including one-off 3Q17 operating income
YTD17 ∆ YTD18 % ∆
Transactional mail 593.1 -1.4 591.8 -0.2%Advertising mail 185.5 -6.9 178.6 -3.7%Press 214.9 -3.9 211.1 -1.8%
Domestic parcels1 159.5 30.2 189.7 18.9%International parcels 159.7 11.8 171.5 7.4%Logistic solutions2 109.0 590.0 699.0 -
International mail3 117.4 57.8 175.2 49.2%Value added services 76.1 5.9 82.0 7.7%Banking and financial 139.1 -13.3 125.8 -9.6%Distribution 72.2 -1.5 70.7 -2.1%Retail & Other 212.0 -2.8 209.1 -1.3%
Corporate4 30.0 -15.9 14.1 -52.9%
2,068.7 649.9 2,718.6 31.4%
Domestic mail
Parcels
Additional sourcesof revenues
TOTAL
64
€ million YTD17 YTD18 Delta
Cash flow from operating activities +219.5 +138.1 -81.4Cash flow from investing activities -128.7 -118.7 +10.0Operating free cash flow1 +90.8 +19.4 -71.4Financing activities -49.8 +49.6 +99.4Net cash movement +41.0 +69.0 +28.0
Capex -66.9 -66.4 +0.5
YTD18
Lower operating FCF1 supported by optimized financing activities
• Phasing in tax prepayments (positive impact in 4Q18): € -50.0m• bpost bank dividend in 2017: € -5.8m• Excluding these elements:
• Decreased operating results: € -36.6m
• Proceeds from sale of buildings: € -2.1m• Investment securities in 2Q17: € -12.0m• Cash outflows related to acquisitions: € +23.6m
• Bond issuance (€ +650.0m) and commercial papers (€ +20.0m) offset the reimbursement of the bridge loan for Radial acquisition and costs relating to borrowings and leasing liabilities
1 Reported operating free cash flow = cash flow from operating activities + cash flow from investing activities
65
Management contracts and press concessions will be (re)negotiated in the timing of the plan
USO & SGEI
Scope
€270m1 state compensation in 2017
Universal Service Obligation (USO)
State compensation possible in case of USO being financial burden
• Collect, sort, transport, & distribute letter mail up to 2kg, parcels up to 10kg, and parcels up to 20kg from other EU member states
• 1 access point per municipality
• Collect and deliver 5x/week• Full territory of Belgium• USO pricing constraints• Provide adequate
information on USO products and services
• Quality control obligation (95% of prior mail/parcels D+1, 97% D+2)
6th Management Contract
Services not typically associated with mail operators (SGEI), e.g.,• Retail network• Cash at Counter• Election mail (distribution)• Cash payment of pensions
at home
• Also part of SGEIs• Newspaper early delivery
6x/week • Periodical delivery
5x/week• Quality control obligation
of max 7 complaints per 10k deliveries
• ~3,000 FTEs
Timing • End of 2023, renewable by consecutive terms of 5 years
• Complementary management contract granted by the State
• End of 2020• Notified and validated by
European Commission under State Aid rules
• End of 2020• Notified and validated by
European Commission under State Aid rules
Press concessions
1 Amount including inflation, volume variance and sharing of efficiency gains
66
Pro forma 2017 for bpost group including full year impact of new acquisitions
Pro forma 2017 financials
1Of which:
• ~€1,100m for bpost SA/NV consisting of:
Operational FTEs ~18,600 FTEs3
Other FTEs2
~5,200 FTEs3
• ~€500m (pro-forma for acquisitions) for subsidiaries consisting of ~10,800 FTEs3
1
1 Includes acquisitions (Radial, Leen Menken, IMEX and Mail Inc.)2 Includes retail network and headquarter-related FTEs3 Year average FTEs
67European mail
market
A relatively resilient mail market vs. other European operators
2008-18 CAGR for addressed mail volumesas reported by major incumbent European postal operators, percent
53
54
119
133
154
164
171
193
197
207
248
DE
DK
EU
SW
IT
NL
BE
FR
CH
AU
UK
Addressed mail volume per capita 2018 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 operator1 Includes addressed mail2 Includes addressed mail3 Includes addressed mail4 Includes addressed mail
5 Includes mail communication and dialogue marketing6 Includes addressed mail7 Includes addressed mail (publishers services excl.)8 Includes addressed mail excluding press9 Includes all domestic mail
-3.2
-3.5
-4.7
-9.4
-4.5
-5.1
-9.1
-2.0
-5.8
-3.8
UK
BE
DE
AU
CH
EU
-13.1 DK
NL
IT
FR
SW3
8
4
5
6
7
11
10
1
2
10 Includes inland addressed mail11 Includes letter mail and addressed direct mail / media post
* Excludes domestic competitors
68
Key contacts
Baudouin de Hepcée
Director Corporate Finance
• 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
Stéphanie Voisin
Manager Investor Relations
• Email: [email protected]• Direct: +32 (0) 2 276 21 97 • Mobile: +32 (0) 478 48 58 71• Address: bpost, Centre Monnaie, 1000 Brussels, Belgium