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Q4 & Full Year 2009 ResultsPress Presentation
Peter Bakker, CEO
Henk van Dalen, CFO
22 February 2010
2
2009 highlights: weathering the stormGroup• Challenging economic circumstances, with signs of improvement in the second half• Tight control of costs and cash
• Cash flow strong, over € 1 billion • Full-year cost-savings of € 527 million
• Underlying operating income € 896 million• Dividend pay-out over 2009 ~40% of normalised net income• Vision 2015 announced
Express• Q4 underlying operating margin above 2008 levels for the first time in 2009• Emerging Platforms showing good growth• Cost savings aggressively and effectively pursued: € 428 million for the full year
Mail• Volume decline addressed mail in line with trend• Master plan savings at € 84 million• In-principle CLA reached, union members consultation outcome mid-March• EMN impairments € 146 million
3
Full year ‘underlying’ results
ChangeFY 2008FY 2009
10.1%9231,016Net cash from operating activities
1,141
1,496
11,152
Underlying
FY 2008*
-21.5%
-17.0%
-5.3%
Change
1,241EBITDA
896Operating income (EBIT)
10,566Revenues
Underlying
FY 2009*€ millions
* The underlying figures over 2009 are at constant currency and both 2008 and 2009 exclude the impact of various one-off charges
4
Cost savings 2009
Express
Head Office
Total savings 2009 € 527 million
2009 savings:
€ 428 million
2009 savings:
€ 84 million
2009 savings:
€ 15 million
2,545 employees
4,377 employees
5
TNT has responded well to the economic crisis
296324
209
312
174206 194
322
Net cash from operating activities
35297410157
Q4Q1 Q3Q2
Underlying EBIT development 2009In € million
-41% -36% -7% +3%
20082009
6
Cost savings ahead of volume decline
Core volumes started to rebound in Q3 2009
Further strengthening Emerging Platforms
Improved underlying results Q4 year-on-year
Express summary
6
7
Challenging economic environment, further signs of improvement in Q4Strong pricing pressureOperating focus on high service levels while reducing costs by € 428 million (excl. fuel)
3,1762,894
2,814
3,330 3,323
3,142
HY1 2008 HY1 2009 HY2 2008 HY2 2009
Revenues € millions EBIT € millions
Express
Operational summary full year
Reported Underlying
183
99187
49
259
144117
HY1 2008 HY1 2009 HY2 2008 HY2 2009
Aggressively pursued cost savings
* The underlying figures over 2009 are at constant currency and both 2008 and 2009 exclude the impact of various one-off charges
8
Volume development 2009 versus 2008Core kilos, year-on-year change, in %
Express volumes versus 2008
Core volumes exclude Special Services, Hoau, Mercúrio, Araçatuba and LIT Cargo
-35%-30%-25%-20%-15%-10%-5%0%5%
10%15%15%
10%5%0%
-5%-10%-15%-20%-45%-50%-55%
Weeks 1–2 Weeks 3–26 Weeks 27–39 Weeks 40–53
AirRoad
9
Mail summary
9
In-principle collective labour agreement, union members to vote in March
Start realisation value opportunities EMN
German Federal Administrative Court:
minimum wage Germany not binding
Good growth Emerging Mail & Parcels
10
Addressed mail volume decline in line with trend (-4.7%)Revenues in line with previous yearStrong Master plan savings€ 146 million impairments in EMN
Operational summary full year
2,1902,076
2,046
2,077
2,170
2,168
HY1 2008 HY1 2009 HY2 2008 HY2 2009
Revenues € millions EBIT € millions
348 344374
299288367
173
266
HY1 2008 HY1 2009 HY2 2008 HY2 2009
Reported Underlying* The underlying figures over 2009 are at constant currency and both 2008 and 2009 exclude the impact of various one-off charges
11
Group summary
11
Corporate responsibility performance integrated in annual report
Group recognitions
Management remuneration lowered
CO2 target communicated
12
2009: Pakistan, Indonesia and the Philippines2010: Haiti
WFP hands-on support
Super sector leader for the third consecutive time
Dow Jones Sustainability Index
Fatalities 2009: 34 (2008: 58)
Health & Safety
2020 objective set
CO2 emission
Corporate responsibility
13
2007 2020
Objective: improve CO2 efficiency by 45% in 2020
Renewableenergy
Electric vehiclesBio-fuels
City logistics
Bio-fuels
Innovation
Continuous improvement in CO2 efficiency
Best practicesCO2 index
-45%
13
14
New proposed remuneration policy 2010 for Board of Management
Basis: transparency and consistency
Levels of base salary frozen at 2009 actual levels for 2010 – 2012
Proposed variable compensation scheme- Rolling plan, both short and long term components- Maximum of 100% of base salary- Multi stakeholder approach- 50% deferred payments
Implies total remuneration reduction in maximum of total income compared to current policy:
- 33% CEO- 24.5% Board of Management
15
Group recognitions
Overall leader in the Dow Jones Sustainability Index
Clinton Global Initiative Corporate Citizenship award
13th in Fortune’s Global Ranking of Top Companies for Leaders
Dutch award for best annual report Henri Sijthoff prize
One of only 43 companies worldwide with a maximum score on corporate governance as measured by GovernanceMetrics International
Institutional Investor award 2009 and IR Magazine Award 2009
2010 Outlook & Agenda
17
-10%
0%10%
20%
30%
40%50%
60%
Express 2010 volumes
Core volumes exclude Special Services, Hoau, Mercúrio, Araçatuba and LIT Cargo
Volume development weeks 1 – 6Core kilos, year-on-year change, in %
• Volumes develop well in weeks 3 – 6, however:
• Pricing environment
• Cost inflation
AirRoad
2010 versus 2007
Weeks 1, 2 Weeks 3-6
2010 versus 2009
Weeks 1, 2 Weeks 3-6
140%
130%
120%
30%
20%
-10%
0%
10%
18
Main CLA 1 April 2009 – 31 December 2011
Social plan to 31 December 2012
In-principle agreement on CLA and social plan
Union members consultation outcome mid-March
1 January 2010 pay increase of 0.7%1 January 2011 pay increase of 1.0%1 October 2011 pay increase of 0.2%
Stimulating voluntary redundancyAdditional financial incentives for employees over 50 years for voluntary leaveSpecial arrangements employees over 55 years old
Separate CLAs to be negotiated to take effect on 1 April 2010
TNT Post
TNT Express – TNT Post Parcel Service
Joint working group of TNT Post and trade unions to explore a future-proof pension scheme for TNT Post
19
2010 Agenda
Volume growth and price / yield focusContinue cost savingsContinue growth Emerging Platforms
Realisation CLAMaster plan efficiency plans in the NetherlandsValue realisation EMN
Implementation five focus areas Vision 2015Group wide focus on cash
19
Express
Group
20
Implementation Vision 2015 started
1 2 3 4 5Emerging PlatformsEmerging Platforms SDSSDSParcels Freight Mail NL EMN
Cost leadership & customer focus
21
EMN value realisation
SoldAddressed Mail AustriaUnaddressed GermanyTelemarketing Czech Republic
PartnershipsMail alliance with German publishersMinimum wage abolished in Germany
Further partnerships / disposals are being prepared
21
22
Strong internal launch of Vision 2015
Senior project directors on dedicated project groups
Focus on profitable growth
+Thorough and full speed implementation started
Preparation Mail (NL) for partnerships
Acquisition TopPak
Implementation five focus areas Vision 2015
22
23
General
TNT sees early signs of a somewhat improving trend in the economy, but remains cautious on the continuation of the economic recovery
More specific
Express volumes, revenues and results are expected to be above 2009 levels with continued pressure on price
Mail volumes and results are expected to be below 2009 levels
Structural cost savings € 200 million in 2010 targeted
Continuous focus on cost and cash remains essential
Outlook 2010
Henk van Dalen, CFO
22 February 2010
Q4 & Full Year 2009 Results
25
Statement of income
1,141
1,496
11,152
Underlying*
FY 2008
312
408
2,933
Underlying*
Q4 2008
1,3811,2411,137EBITDA293410361
896
10,566
Underlying*FY 2009
322
2,954
Underlying* Q4 2009
152.976.7EPS16.86.5
30.2%38.2%Effective tax rate36.5%70.5%
(242)(179)Income taxes(35)(55)
(147)(161)Net financial (expense) / income
(33)(43)
23
128
2,947
ActualQ4 2009
61
160
2,933
Actual Q4 2008
560289Profit for the period
982648Operating income (EBIT)
11,15210,402Revenues
Actual FY 2008
Actual FY 2009
€ millions
* The underlying figures over 2009 are at constant currency, both 2008 and 2009 underlying figures exclude the impact of restructuring and impairment charges, related costs and value adjustments.
26
2008 - 2009 impact of one-off charges and fx
22906
1461859
10644
17
81
Q4 2009
6321
(15)146
28472
28226
42237
193
FY 2009
7Impairments and other value adjustmentsOPTA penalties, Sale of Aspac and other
Other3737Impairments and other value adjustments
8282Restructuring related costs
Fx
Mail633150Reported EBIT
722232Underlying EBIT
44688Underlying EBITFx
3333Restructuring related costs376
FY 2008
Express18Reported EBIT
Q4 2008€ millions
2727
Express Q4 underlying
Further recovery in volumes
Year-on-year underlying operating margin above last year’s for the first
time in 2009
20.5%
8.2%
0.5%
Total%
4.8%3.4%147159EBITDA
5.3%6.3%Operating margin
2.3%18.2%88106Operating income (EBIT)
2.0%-1.5%1,6671,675Revenues
Acq
%Organic
%Q4 2008*Q4 2009*€ millions
* The underlying figures over 2009 are at constant currency and both 2008 and 2009 exclude the impact of various one-off charges
28
020406080
100120140160
200 200
Oil price volatilityCrude oil spot prices (USD per barrel)
Source: Bloomberg Professional
Q4 2008 positive fuel and working day impactQ4 2009 positive working day impact
Working days
64Q4 2007
68Q4 2009
66Q4 2008
Working days
Distortion of year-on-year comparison
201020092008
Q2 Q4Q3Q2Q1Q4Q3Q1
29
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Express volumes
Volume developmentCore kilos, year-on-year change, in %
Weeks 3-6Weeks 1-2Q4Q1 Q3Q22009 versus 2007 2010 versus 2007
Air, 2009 corrected for working daysRoad, 2009 corrected for working days
Core volumes exclude Special Services, Hoau, Mercúrio, Araçatuba and LIT Cargo
30
-8%
-4%
0%
4%
Express revenue quality yield still negative
Core revenue quality yield development year-on-year, excl. fuelIn %
Core volumes exclude Special Services, Hoau, Mercúrio, Araçatuba and LIT Cargo
200920082007
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4Q1 Q3Q2
Indicative movement 2009 vs 2007
31
Express focus on costs
-15%
-10%
-5%
0%
5%
10%
15%
Q1 Q2 Q3 Q4-160-120-80-4004080120160
Core consignments
Volume and cost development 2009Year-on-year change, in % and € million
Cost savings
04080120160
Core volumes exclude Special Services, Hoau, Mercúrio, Araçatuba and LIT Cargo
Total € 428 millioncost savings
3232
Mail Q4 underlying
Overall revenues and operating income in line with last year
Volume deterioration continues: -5.9% in Q4
Strong Master plan savings € 33 million
-0.4%
-0.4%
0.3%
Acquisition %
-1.3%
-2.6%
1.5%
Total%
-2.2%267260EBITDA
19.3%18.7%Operating margin
-0.9%232229Operating income (EBIT)
1.2%1,2041,222Revenues
Organic%Q4 2008*Q4 2009*€ millions
* The underlying figures over 2009 are at constant currency and both 2008 and 2009 exclude the impact of various one-off charges
33
Addressed mail volumes, corrected for working days and one-off mailing in Q4 08, declined by 6.6%
Bulk mail decline higher than single item mail
Mail in the Netherlands; addressed mail volumes
33
-6%
-4%
-2%
0%
2%
Total
Actual 2008Actual 2009Actual 2009 corrected for one-off mailings
Q4Q3Q2Q1Q4Q3Q2Q1
34
Update cost management Mail NLMaster plan savings & phasing
€ 470 million annual cost savings since 2000
595200
395
Combined target
895200
325
370
Target
425198
227
Still to go
300
300
Realised 2001 - 2006
1702
168
Realised 2007 – 2009
20172017
2015
2010
Planned end implementation€ millions
MPIII
MPII
MPI
Total
Planning of remaining € 425 million cost savings up to 20172010 – 2013 2014 – 2017
215 210
2010€ 75m
• Cash out restructuring towards € 50 million average per yearin years to come
35
Pension developments
Coverage ratio main defined benefit pension fund:
• Central Bureau of Statistics research shows increasing longevity, which might result in a drop of around 4% in the coverage ratio as at the end of December 2009
• Total cash payment to defined benefit obligations pensions and transitional pension plans (eg. early retirement) are expected to be € 287 million in 2010 (2009: € 286 million) of which € 20 million in the P&L (2009: € 60 million) (mainly Mail Netherlands)
113%End of 2009
93%End of 2008
141%End of 2007
36
Normalised net income for dividend
Revaluation investment Logispring (after tax) and other
Restructuring, impairments, revaluations, Opta claim, Sale of Spring Aspac (after tax)
Restructuring, impairments, write-downs, revaluations and other (after tax)
153Mail:
493Normalised net income
20Group:
49Express:
281Profit attributable to the shareholders
Actual FY 2009€ millions
37
Dividend 2009 proposal € 0.53
Interim dividend € 0.18
Final dividend € 0.35
In cash
In ordinary sharesPremium targeted at, but not lower than 2% above
cash dividend
• Ex dividend date is 12 April 2010
• Record date is 14 April 2010
• Ratio of value of stock dividend to value of cash dividend determined on 26 April 2010
• Dividend payment date is 29 April 2010
Over 2009 pay-out ratio 40% of normalised net income
or
+
38
Vision 2015 key performance indicators 2009 – 2015;Actuals 2009 regrouped (not current segmentation nor organisational structure)
Cash EBITDA*
~16%
Vision 2015 EBITDA
objective
Underlying EBITDA as % of
revenue2009
10 - 14%~12%14 - 18%~ 690SDSInnight, Fashion, Delivery+, Storapart, VAS UK and E-commerce
Realisation value opportunities~1,095EMNRest of Europe activities of EMN and Spring
Cash EBITDA*
~16%(4) – (6)%~2,780
Mail NLMail NL, Data and Document Mgt and Dutch / Belgian activities of EMN
7 - 10%~3%10 - 15%~1,710Emerging PlatformsAustralia, Asia, South America and MEA (incl. International flows)
13 - 16%~10%7 - 9%~4,350Parcels & Freight
Objective annualaverage revenue growth 2010-
2015
Revenues 2009
€ millions
* Note: All figures are rounded and regrouped for indication purposes only; Cash EBITDA is based on reported EBITDA adjusted for provision charges for restructuring and including cash payments on restructuring and pensions.
39
Reporting and managing CO2
• Calculate CO2 emission performance for each category and compare to 2007 base year
• Actual CO2 objectives translated into measurable actions throughout the organisation
• CO2 performance will become part of bonus objectives
Air
CO2per tonne-km
Road
CO2per km
Buildings
CO2per m2
Group and Divisions
Reporting and managing CO2CO2 KPIs
CO2 Index 5594100
202020092007
40
Outlook 2010
Overall
Express volumes, revenues and results are expected to be above 2009 levels
Mail volumes and results are expected to be below 2009 levels
Structural cost savings € 200 million in 2010 targeted
Continuous focus on cost and cash remains essential
Express
Single-digit volume growth with some limited recovery of weight per consignment, supported by lower costs per kilo and consignment
Most growth is expected from international, especially Economy Express
Pressure expected because of price/mix, wage increases and cost inflation
Volume decline in the Netherlands of 7-9%, due to the first full year effect of liberalisation combined with normal substitution
Master plan implementation
41
Outlook 2010
Other
Structural cost savings: around € 200 million
Capex: around € 400 million
Pensions: cash contributions defined benefit obligations approximately € 287 million of which € 260 million for the main Dutch plans and the transitional plans
Net financial expense: around € 160 million
Taxes paid: around € 300 million, including delayed payments
42
Summary
2009
Weathering the storm effectively
Financially and operationally stronger company
2010
Cautious optimism
Focus on cost and cash
Vision 2015 implementation
42
44
Warning about forward looking statementsSome statements in this presentation are "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.