first quarter 2020/media/files/b/bpost...2020/05/04 · this presentation is based on information...
TRANSCRIPT
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Investor presentationFirst quarter 2020
May – June 2020
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Financial Calendar13.05.2020Ordinary General Meeting of Shareholders
04.08.2020 (17.45 CET)Quarterly results 2Q20
03.11.2020 (17:45 CET)Quarterly results 3Q20
More on corporate.bpost.be/investors
ContentsHighlights & guidance1Q20 Highlights – 4Outlook 2020 – 5
bpost Group at a glanceInvestment rationale – 7Dividend policy – 8Overview – 9LT vision & strategic aspirations – 10Management – 11Sustainability – 12Mail & Retail – 13-21
Parcels & Logistics Eurasia – 22-29Parcels & Logistics N. America – 30-35
1Q20 resultsEBIT bridge – 37Key financials – 38Results by segment – 39Mail & Retail – 40 & 41Parcels & Logistics Eurasia – 42 & 43Parcels & Logistics N. America – 44 & 45Corporate – 46Cash flow – 47Balance sheet – 48Financing Structure & Liquidity – 49
Additional InfoKey financials FY19 – 51Results by segment FY19 – 52Relationship with State – 53USO & SGEI – 54European mail market – 55Key contacts – 56
Investor presentationFirst quarter 2020
1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995
1Q20 Roadshow presentation2
DisclaimerThis presentation is based on information published by bpost Group in its First Quarter 2020 Interim Financial Report made available on May, 4th 2020 at 5.45pm CET and in its 2019 Annual Report available on corporate.bpost.be/investors. This informationforms 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 ornot 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 statements contained herein to reflect actual results, changes in assumptions or changesin 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.
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Highlights 1Q20Guidance 2020
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4 1Q20 Roadshow presentation
Highlights of 1Q20
Mail & Retail
€ 65.2m13.0% EBIT margin
• Total operating income at € 500.0m (-5.2%) driven by COVID-19 impact on Advertising Mail & on retail and by deconsolidation of Alvadis
• Underlying mail volume decline at -9.9% driven by cancelled advertising campaigns (COVID-19)
• Adjusted EBIT decline (-29.6%) from COVID-19 mail evolution and additional opex. M&R COVID-19 impact: € -14.4m
Parcels & Logistics Eurasia€ 16.9m7.9% EBIT margin
• Total operating income at € 213.5m (+8.5%), mainly driven by Parcels BeNe(+19.8%). Significant negative impact in Cross-border of COVID-19.
• Parcels BeNe organic volumes +20.5%
• Adjusted EBIT, excl. 1Q19 VAT recovery, YoY negative evolution of terminal dues settlements & COVID-19, up € +4.5m (+31%) operationally. PaLo EA COVID-19 impact: € -1.8m
Parcels & Logistics N. Am.€ -7.4m -2.8% EBIT margin
• Total operating income at € 261.3m (+14.3%) fully driven by E-commerce logistics, in particular growth at Radial from existing customers and new business signed in 2019
• Adjusted EBIT increase (€ +0.4m) driven by positive evolution of E-commerce logistics (mainly Radial), to a large extent offset by continued margin pressure in International mail. PaLoNA COVID-19 impact: € -0.3m
Group operating income€ 934.6m
Group adjusted EBIT€ 75.6m 8.1% EBIT margin
1Q20 COVID-19 impact1 on Group EBIT estimated at € -16.7m
2020 outlook overruled by COVID-19
1Q20
1 All COVID-19 impacts mentioned in this presentation are best effort estimates based on actuals
1Q20 above expectations excluding COVID-19
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5 1Q20 Roadshow presentation
Outlook for 2020 overruled by COVID-19 Outlook FY20
Mail & Retail
Total operating income up to -5%
- -9% to -11% underlying Domestic Mail volume decline
- Approved mail pricing impact of +5.1%
8-10% adjusted EBIT margin
Parcels & Logistics EurasiaLow teens % growth in total operating income6-8% adjusted EBIT margin
Parcels & Logistics N. Am.Mid-single-digit % growth in total operating incomeAdjusted EBIT margin positive up to 2%
Group
Low single-digit % growth in total operating incomeAdjusted EBIT between € 240-270mGross capex up to € 200m
Dividend
Current dividend policy of 85% of BGAAP net result is suspended.
A new dividend policy will be decided by the Board when the longer term impact of the COVID-19 crisis becomes clear.
Mail volume impact:- Advertising > -60%- Transactional: impacted to
lesser extentAdditional costs (safety & premium): ~€ 5.0m on a monthly basisbpost Belgium absenteeism doubled at the start of the crisis in March
Parcels BeNe YoY volume growth >20% and strongly trending upwardsCross-border significantly impacted by reduced air freight capacity and closure of international bordersAdditional costs (safety, premium, absenteeism & transport): ~€ 1.5m on a monthly basis
So far, client volumes met expectations; limited operational disruptionsAdditional costs for health & safety currently less than ~€ 1m on a monthly basis, might go up
We strive to reduce gross capex by at least € 50m to € 150m maximum
Out
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1Q20
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wnUpdated full-year guidance will be issued as soon as the full quantitative impact of COVID-19 can be accurately and reliably estimated. bpost Group is not in position to do so to date.
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bpost Group at a glance
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bpost Group offers a strong investment rationalebpost Group aims at being a responsible company, delivering a sustainable dividend to its shareholders
What?
at a glance – Group
We continue to transform the mail and proximity business in the home market to sustain solid cashflows
We develop sustainable activities in the high growth e-commerce logistics & parcels business in our Belgium/Netherlands home market and key geographies in Europe and North America
How?
Multiple levers for transformation of the legacy business: natural attrition, alternating distribution model, stable and predictable regulation, network optimization,…
Experienced management team with embedded financial discipline and a strong business transformation track record
Growth in e-commerce logistics & parcels: aspired sizeable share of revenues
A solid balance sheet with single 'A' credit rating
7 1Q20 Roadshow presentation
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We create value for shareholders
Dividend Policy• IPO dividend policy until 2019: Minimum 85% of BGAAP net profit of the
mother company bpost SA/NV (unconsolidated). This policy is now suspended
• Dividend on FY19 results limited to interim dividend due to COVID-19 crisis• Updated dividend policy: A new dividend policy will be decided by the Board
when the longer term impact of the COVID-19 crisis becomes clear
Dividend is constrained by net results of a given year (in BGAAP) + distributable reserves
Distributable reserves (€ 199m end 2019)
built gradually as from 2013, primarily to neutralize the non-recurring impact of exceptional costs
Interim gross DPS (€)Final gross DPS (€)
Pay-out ratio91% 85% 90% 85% 90% 100%
1Q20 Roadshow presentation8
0.93 1.04 1.05 1.06 1.06 1.06
0.62
0.200.22 0.24 0.25 0.25 0.25
20192013 20162014 2015
1.13
2017 2018
1.26 1.29 1.31 1.31 1.31
72%
Capital allocation and dividend policy are under review
at a glance – Group
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35,377average # FTE & interims
A diversified mail operator with a footprint in e-commerce logistics
Revenues % of total
Transactional mail € 748m 19%
Advertising mail € 236m 6%
Press € 344m 9%
Proximity and convenience retail network € 465m 12%
Value added services € 104m 3%
Parcels Be-Ne € 381m 10%
E-commerce logistics € 133m 3%
Cross-border € 300m 8%
E-commerce logistics € 1,018m 26%
International mail € 87m 2%
Mail & Retail€ 1,897m49%
Parcels & LogisticsEurope & Asia€ 813m21%
Parcels & Logistics North America€ 1,098m29%
€ 3,837.2m1revenues
€ 537.0m14.0%EBITDA
€ 310.8m8.1%EBIT
€ 181.2mnet profit
9
2019 figures (adjusted)1 49.4% Mail & Retail, 21.2% Parcels & Logistics Europe & Asia, 28.6% Parcels & Logistics North America and 0.8% Corporate revenue
at a glance – Group
1Q20 Roadshow presentation
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Long-term vision & strategic aspirations
”Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium”
10
Mail services to citizens and State remain core and will continue to generate profit with a more adapted distribution model
Drive profitable growth in Parcels BeNe and further develop e-commerce logistics in Europe
Optimize Radial to deliver in the promising North American e-commerce market
1 2 3
at a glance – Group
1Q20 Roadshow presentation
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Our experienced management team has responsibilities down to the bottom-line
11
Jean-Paul Van AvermaetGroup CEO
Luc CloetCEO Mail & Retail
Kathleen Van BeverenCEO Parcels & Logistics Europe & Asia
Henri de RomréeCEO Parcels & Logistics North
America
Leen GeirnaerdtCFO
Mark MichielsCHRO
Nico CoolsCIO
Dirk TirezCLO
at a glance – Group
1Q20 Roadshow presentation
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Sustainability is at the heart of our activities
3-pillar CSR strategy linked to United Nations
Peoplewe care about our employees and engage them
• Employee health & safety
• Employee training and talent development
• Ethics & diversity• Social dialogue
Planetwe strive to reduce our impact on the environment
• Green fleet• Green buildings• Waste management
Proximitywe are close to the society
• To our community• To our suppliers• To our customers
through our services
Selected awards and recognition• IPC EMMS Scorecard 2019 (sector index): #3• 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 17.7% (low risk)• MSCI: Score A• Vigeo Eiris: 91% (sector average: 71%)• ISS: Governance Score: 5, Environment Score: 1, Social Score: 3• Carbon Disclosure Project: Score B (peer average C)
Ambitious CO2 reduction targets• Since 2007 bpost Group has cut its CO2 emissions by almost 40%• Target of reducing CO2 emissions from activities by at least 20% by 2030• By 2030, at least 50% of vehicles will be fully electric
Shared Value Creation• Continuity of our business• Employee satisfaction and engagement• Customer satisfaction
12
at a glance – Group
1Q20 Roadshow presentation
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Sub-segments Revenues 2019, €m
Transactional mail
Advertising mail
Press
Proximity and convenience retail network
Value added services
Total
748
1,897
236
344
465
104
Mail & Retailat a glance
at a glance – M&R
13
~7.1mletters handled daily
Servicing 5m letter boxes
~2,300points of presence in Belgium
5industrial sorting centers
~20.1koperational FTEs
Key facts & figures
1Q20 Roadshow presentation
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Key value drivers for Mail & Retail
Key value drivers From To
14
Speed of mail volume decline -7.9% in 2019
Between 9% - 11% in 2020 (ex-COVID-19)
Share of mail volume decline compensatedthrough price increase
18-45% over 2014-2017
>50%1
Renegotiation/retendering of future 6th
Management contract and press concessionsThree contracts until end 2020; compensation contractually set
ExtensionOf the 2 press concessions until end 2022
Expected agreement on 7th Management contract
Evolution of operating model(mail collect and distribution)
Fixed D+1 based model(everywhere, everyday)
Flexible, differentiated offering (prior vs. non-prior.)
at a glance – M&R
1 58% in 2019
1Q20 Roadshow presentation
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Domestic mail volume decline expected to accelerate from -7.9% in 2019 up to ~-9% to -11% in 2020 (ex-COVID-19 impact)
1 As of start FY19 Transactional Mail excludes outbound and Press includes Ubiway press distribution
-5.0%
-9.9%
-4.2% -4.4% -5.8%-5.0%-7.9%
-5.8%
-8.8%
-3.7% -5.0% -5.3% -5.9%-8.1% -9.2%
-5.7%
2013 2014 2015 2016 2017 2018
-9.1%
1.5%
-3.0%
-16.5%
-4.9% -3.0% -4.7%-7.2%
-2.8%-3.0% -2.8%-2.8% -3.8%-6.5%
-3.7%-5.2%
20191
Underlying change in domestic mail volume
Transactional mail
Advertising mail
Press
Key drivers• E-substitution at large
corporates and SMEs• Intensifying competition in
advertising media• Shift to digital for newspapers
& magazines • Service level elasticity
from the implementation of the Alternating Distribution Model
15
at a glance – M&R
1Q20 Roadshow presentation
1Q20
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Designated provider of the Universal Service Obligation until end 20231
• 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
4 key contracts with the Belgian State
• Management contract for the provision of the USO (2019-2023)
• 6th Management Contract (2016-2020): for the provision of certain SGEIs, i.e. maintenance of retail network, cash at counter, cash payment of pensions at home
• 2 press concessions (2016-2020 extended for 2 years until end 2022): (1) for distribution of periodicals and (2) for distribution of newspapers
Postal law of 10 February 2018 provides stable & predictable mail pricing framework• Single piece mail & USO parcels falling within
“small user basket” are subject to a price cap• Price cap2 = 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 yearlybasis: +4.4% on average in 2019 on all domestic mail items; +5.1% on average for 2020
Regulatory aspects
1 Refer to slide 53 for more details2 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
16
at a glance – M&R
1Q20 Roadshow presentation
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Volume declineCompensation for mail volume decline
Larger mail volume decline results in larger allowed price increase
[V/(V+1)] with V as the expected negative volume trend on the Small User Basket
InflationCompensation for inflation
Higher inflation results in larger allowed price increase
Ratio of the health index as measured in April of the yearsn-1 and n-2
Efficiency gains
Calculation logic
Correlation to price cap
Description
New Postal Law
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%
Drivers of the price cap formula
Illustrative example assuming 2% inflation and -6% average volume decline:
(Effective as of February 10, 2018)
Price cap1: 7.6% = –[ 106.4% 0.9% ]x
Mechanism to share 1/3 of the efficiency gains targetwith consumers
Constant and fixed by law
Fixed by the law at 0.9%(i.e., 1/3 of 2.8% efficiencygains target)
17
102%
provides stable and predictable regulatory framework to increase prices in context of accelerating mail volume decline
at a glance – M&R
1Q20 Roadshow presentation
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Price increase and mix effects expected to compensate >50% of mail volume decline
1 2018 was at 70%, 2019 was 58%
57 6067 68 71
42
2720 21
13
172013 14 2018-1911615
Domestic mail volume Domestic mail price/mix
72% 45% 18%30% 31% >50%
% Share of volume effect compensated by price/mix
Volume and price/mix impact on revenue €m
Building on the New Postal Law for price regulated products
Price increase on small user basket rejected by regulator
Key drivers• Accelerating domestic mail
volume decline• New price cap mechanism of
Postal Law defining max price increase for small user basket, and serving as guideline for price increase on non-price capped products
• Price increase partlyoffset by shift to less expensivemail products
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at a glance – M&R
1Q20 Roadshow presentation
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Management has developed an extended set of cost control options
Industrial Mail Centers
• Optimize mail sorting centers footprint
• Pursue continuous improvement
Collect & Transport
• Align number of red boxes to mail volume decline
• Stop collect on Saturday and increase flexibility of pick-up, delivery and dispatch timing constraints
• Transport optimization (fill-in rate and routes)
Distribution
• 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)
Operating model
• Differentiated offering and Alternating Distribution Model
• Take measures to address absenteeism
FTE Unit cost
• Further optimize FTE mix
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at a glance – M&R
1Q20 Roadshow presentation
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NewspapersSame day delivery
ParcelsD+1 offering
Acceptance for D+3-41
A differentiated offering enables a new distribution model to accommodate changing customer needs
D+1Available to consumers who need D+1 delivery
MailAdjusted “day certain” distribution frequency: in a given street, mail will be distributed on selective days of the weekD+1 delivery will remain available as a separate product (“Prior”)
Within D+3Service level agreement (SLA) “within 3 days” No
changeIndividuals
~92%
94%
Professionals
1 Based on a bpost SA/NV study with 1,000 households & 500 businesses (< 200FTE) interviewed in February 2015
2004 2018 2022 2022
~70~55 <50
~70
Model until mid-March 2020: everywhere, everyday
ADM: D+3 combined
with D+1
Differentiated offeringas of January 1st 2019
Alternating Distribution Modelas of mid-March 2020
Optimizing drop densityShare of houses receiving mail on any given day, %
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at a glance – M&R
1Q20 Roadshow presentation
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Labor cost will benefit from decrease of mail related FTEs and optimized employee mix
1 bpost SA/NV scope, excluding retail network
Operational FTE evolution1Average FTEs and interims, ‘000
Age pyramidHeadcount bpost SA/NV per age, 31/12/19
Operational FTE mix evolution1 Average cost per contract type1Indexed
2016
Allocated to mail
17 18
Allocated to parcels
80-85%
15-20%19
18.8 19.3 20.0 20.1
39% 35% 31% 28%
34% 39% 42% 47%
18% 17% 17% 16%10% 10% 9%Other
17
8%
16 18 19
ContractualAuxiliarypostman
Civil servant
~74
~95Contractual
Auxiliarypostman
Civil servant 100
0-39 40-49
9,739
50+
9,633
6,787Pay-scale contractualsNon pay-scale contractuals
Civil servants
Natural attrition
Average natural attrition is expected to range from 1,200 to 1,300 FTEs/year
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at a glance – M&R
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3 main cross-border activity centers
i.e. Brussels brucargo, Heathrow UK and Hong Kong
Sub-segments Revenues 2019 (€m)
Parcels BeNe• Last-mile B2C delivery in the
Benelux• Total of ~74m parcels in 2019
E-commerce logistics
• Mostly fulfilment & transport activities in Europe spread over 11 locations
• Activities include Radial EU, Active Ants and DynaFix
Cross-border
• International mail & parcels• Majority of cross-border volume is
inbound mail and parcels from Europe and Asia
Total
381
813
133
300
Parcels & Logistics Europe and Asia at a glance
at a glance – PaLo Eurasia
Peak days of up to 480k parcels in December
Key facts & figures
Fulfilment footprint
covers 11 locations across 6 countries in Europe
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Key value drivers for Parcels & Logistics Europe & Asia
Key value drivers From ToAbility to capture profitable growth in a competitive environment
BeNe-wide offering addressing customer requirements
Optimized last-mile operations based on parcels characteristics and in line with delivery requirements
Volume growth rate of 20-30% with price/mix effect up to -6% over 2016-2018
Focus on Belgium (sales force, contracts, DHL partnership)
Parcel hubs where enough density
Double-digit volume growth rate, address price/mix
BeNe-wide approach
Flexible parcels distribution footprint in close collaboration with Mail & Retail
at a glance – PaLo Eurasia
Ability to organically capture market growth of ~10% p.a. (vs. in-sourcing, pan-European players)
E-commerce logistics in PL, NL & BE and DynaFix
Increase scale & skills by leveraging capabilities of Radial US and Active Ants
Develop international cross-border parcels, also across continents
Ability to maintain international mail volume
Natural business evolution Developing international parcel flows driven by growing e-commerce activity
Sub-segments
Parcels BeNe
E-commerce logistics
Cross-border
23 1Q20 Roadshow presentation
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Differentiate pricing policy• Strategic pricing initiatives
Integrated BeNe offering• Dedicated, specialized
sales force • Integrated commercial
offers• Partnership with DHL
Parcels
Attract key foreign e-commerce players• Partnerships with
e-commerce players • E2E service offering
(“gateway to Europe”)
Convenience & Cost leadership• Increased convenience
through improved receiver journey and additional pick-up drop-off lockers (KPI: Net Promoter Score)
• Flexible distribution footprint in close collaboration with Mail & Retail
• Increase sorting capacity• Fulfilment infrastructure • Transport optimization• Digital excellence
Four strategic initiatives for Parcels BeNe at a glance – PaLo Eurasia
Focus on 4 strategic initiatives
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We have an established position in the Belgian B2C/C2C parcels market
at a glance – PaLo Eurasia
Unique selling propositionOffer best last-mile and broadest delivery options, supported by acquisitions and partnerships:• Home delivery 7/7 & evening delivery,
including high-end deliveries (2-man)
• ~2,300 pick-up & drop-off points
• ~250 parcel lockers in Belgium
• Click & Collect
• Non-exclusive partnerships with DPDHL for B2C parcel delivery into Belgium (from Germany/France & Benelux)
B2C
C2C
B2B
2019e parcel market1: 100% = € 1.6bn
CAGR 2018-20e1, %
B2C / C2X B2B
~12%
0-4%
1 Source: Effigy
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Partnership with DHL Parcels NL allows to cover the full BeNe region and to capture important cross-border flows
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 (~20% of import flows)• BE consumers mainly buy from NL players such as Bol.com and Coolblue
at a glance – PaLo Eurasia
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Launched in June 2018
1Q20 Roadshow presentation
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The parcels operating model will be continuously optimized
Optimize distribution cost using drop density of mail rounds
• Maximize parcels in mail rounds• Cost advantage due to higher drop density
leading to lower unit costs
Evolve towards dedicated parcel infrastructure to match customer requirements
• Nationwide Parcel distribution footprint to accommodate distribution of parcels that are not in mail rounds
• Benefits for customer proximity and special services e.g. late-in services, “large scale” evening distribution or same day distribution
Increase sorting capacity
• Increase sorting capacity in the existing centersof Brussels, Ghent & Antwerp to cope with increasing volume (optimizing sorting footprint mail & parcels)
• Use technology (e.g. address recognition)
at a glance – PaLo Eurasia
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Supported by acquisitions, bpost Group has initial assets along the entire value chain of e-commerce logistics
Order
• Order management
• Payment services, tax services and fraud prevention
at a glance – PaLo Eurasia
1Fulfilment
• Order reception in warehouses in the proximity of clients
• Preparation for shipment
2
Delivery
• Hybrid transport network for high-end and urgent delivery
• Last-mile delivery
4Customer Care
• Phone, email, social media & chat support
• Advanced analytics
3
28
Realtime technology
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11fulfilment centers / facilities
6Countries
~€ 133m2019 revenue
~1,100Employees
E-commerce logistics activities in Europe can be developed thanks to an already strong European footprint
at a glance – PaLo Eurasia
Cold chain facility Fulfilment sites Personalized logistics
29
Poland
Germany
UKThe
Netherlands
Belgium
Italy
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Type of clients E-tailers & click-and-mortar (omnichannel) Pure e-tailers
Size of clients Medium/large Small/medium
Level of automation Lower, depends on client High (AutoStore + automated packaging)
Level of Customization High, product and price tailored by client Very low
Current locations UK, Germany, Belgium, The Netherlands, Italy and Poland The Netherlands
E-commerce logistics in Europe has 2 complementaryengines of growth i.e. Radial Europe and Active Ants
1 Including Landmark Global and Belgium fulfilment
Leveraging knowledge and experience from Radial US
Leveraging NL success story in other European countries
at a glance – PaLo Eurasia
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1
1Q20 Roadshow presentation
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Sub-segments Revenues 2019, €m
E-commerce logistics1
International Mail2
Total
1,008
1,098
89
Parcels & Logistics North America
1 Radial North America, Landmark Global, Apple Express and FDM2 MSI, Imex, Mail Inc. = The Mail Group
Objective• Growth engine for bpost
Group, to be a leading e-commerce logistics player in US
• Grow with cross-border commerce
• International mail providers delivering profit through infrastructure optimization
at a glance – PaLo N. Am.
at a glance
International mail solutions and catalogue fulfilment through US companies
Capabilities to support mid-sized e-tailers to expand cross-border and last-mile distribution in Canada and Australia
US e-commerce logistics provider fulfilling 72m parcels p.a. with proven client base, IT infrastructure and capabilities along the E2E value chain
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Acquisition of US-based Radial on 16 November 2017
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 Group’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 (+15% 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
Key acquisition data Radial Global• Enterprise Value: $ 820m• Sales 2017: $ 1,082m • EBITDA 2017: $ 57m (5.3% margin)• 100% acquisition of the shares• Financed through a € 650m 8-year bond issue carrying a coupon of
1.25% (issued 4 July 2018)
Key indicators for Radial North America• TCV of new business went from $ 217m in 2018 to $ 385m in 2019• ~7,100 average # of FTEs & interims (2019)• 24 fulfilment centers (mainly US)
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at a glance – PaLo N. Am.
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Radial North America offers multiple services across the entire e-commerce logistics value chain
Revenuesshare %
Radial North America assets Description and key strengths
Tech
nolo
gyO
pera
tions
Payment, Tax, and Fraud Prevention
Fraud Zero software Processing global payments, maximizing successful authorization and reconciling tax districts and global duties
• 98.3% approval rate vs. 97.1% industry average
• 1.6% manual review rate vs. 25% industry average
Omnichannel Technology
8,700 Stores with fulfilment12,500 Dropship suppliers
Optimizing efficiency of order management, ship-from-store and in-store pick-up
• Ability to handle complex orders
• < 12 weeks to deployment vs. competition 4-6 months
• Scalability of technology
Warehousing & fulfilment
24 fulfilment 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 employees / workforce up to ~20k peak capacity
Freight 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 average
Customer Care 3,400+ Seats across 4 sites
Having a single view of customer’s history and profile combined with leading self-service tech
• Advanced data analytics
33
17%
74%
9%
at a glance – PaLo N. Am.
1Q20 Roadshow presentation
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~$ 680bn total US online Retaile-commerce
Radial’s targetaudience e-commerce revenue $ 225-230bn
$ 45-57bn addressable e-commerce logistics
Online revenue e-tailers, US$ 680bn1 expected US online retail revenue in 2020
$ 20m
$ 2,000m
Radial North America market dynamics and competitive landscape
Independent e-commerce logistics providers• Mid-market segment ($ 20-200m online revenue)
• Enterprise segment ($ 200-600m)
• Some selected key accounts ($ 600m-$ 2bn)
Addressable e-commerce logistics sector
34
1 Source: Forrester Data, Online Retail Forecast, 2020
at a glance – PaLo N. Am.
1Q20 Roadshow presentation
Omnichannel & PT&F
Fulfilment Freight Customer Care
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Positive commercial development at Radial and financial results in line with expectations
Commercially heading in the right direction
• We continue to reap benefits from our customer-focused approach, strong new signings in 2019, along with continued improvement in NPS. Strong 2019 peak with a double-digit increase in shipped parcels vs. 2018.
• Starting in 2Q18 and continuing in FY19, we are seeing a positive contract renewal cycle for existing clients.
• New contracts signed had a TCV of $ 385m for FY19, which was above target and above the previous 3 years ($ 150m in 2016 and 2017, $ 217m in 2018).
• Positive TCV development continued through 1Q20.
FY19 results in line with expectations
• Good end of year 2019 peak management, with productivity gains partly offset by higher costs related to maintaining a sufficient labor pool within a tight US labor market.
FY18 & FY19 results impacted, as expected, by:• Churn (mostly in Fulfilment & Transport) and repricing, with
revenue growth from new and existing customers not compensating revenue loss from clients terminating with Radial.
• Webstore business phase-out complete, impacting FY18 EBITDA by $ -21.2m and FY19 EBITDA by $ -2.6m. Final client exits tailing off in 3Q19.
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at a glance – PaLo N. Am.
1Q20 Roadshow presentation
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1Q20 Results
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37 1Q20 Roadshow presentation
COVID-19 drove 1Q20 EBIT decline through significant Advertising Mail drop and Group-wide additional costs
€ million
1Q20
1 Adjusted previously called Normalized, change of terminology “Adjusted” in order to align the label of this APM to the ESMA guidelines, definition and approach remain unchanged. Adjusted excludes items that are non-recurring in nature and significant (> € 20m). All profits or losses on disposal of activities are adjusted whatever the amount they represent, as well as the amortization and impairment on the intangible assets recognized throughout the Purchase Price Allocation (PPA) of the acquisitions. Reversals of provisions whose addition had been excluded from income are also adjusted whatever the amount they represent.
Adjusted1
Reported
5.5
8.0 4.6
90.4
EBIT1Q19
-27.4
Mail & Retail
-1.2
PaLo Eurasia
0.4
PaLo N. America
Corporate
71.0
EBIT1Q20
95.8
75.6
-20.2
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38 1Q20 Roadshow presentation
€ million1Q19 1Q20 1Q19 1Q20 % ↑
Total operating income 906.8 934.6 906.8 934.6 3.1%Operating expenses 755.7 797.4 755.7 797.4 5.5%
EBITDA 151.1 137.2 151.1 137.2 -9.2%Depreciation & Amortization 60.7 66.1 55.3 61.5 11.3%
EBIT 90.4 71.0 95.8 75.6 -21.0%Margin (%) 10.0% 7.6% 10.6% 8.1%Financial result -7.5 -4.3 -7.5 -4.3
Profit before tax 81.5 71.5 86.9 76.1 -12.4%Income tax expense 31.3 23.6 31.8 23.8
Net profit 50.2 47.9 55.1 52.2 -5.1%FCF 186.1 194.2 195.4 246.2 26.0%Net Debt at 31 March 613.1 619.9 613.1 619.9 1.1%Capex 15.7 20.5 15.7 20.5 31.0%Average # FTEs and interims 33,966 34,695 33,966 34,695 2.1%
Reported Adjusted
Key financials 1Q20
Amortization of intangibles recognized during PPA is adjusted, leading to increase in EBIT (€ +4.6m) and income tax expense (€ +0.2m)
Adjusted FCF excludes the cash Radial receives on behalf of its customers for performing billing services
1
2
1 1
1 1
2 2
1Q20
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39 1Q20 Roadshow presentation
Results by segment 1Q20 1Q20
€ millionM&R PaLo Eurasia PaLo N. Am. Corp Eliminations Group
External operating income 457.8 210.5 259.9 6.4 0.0 934.6Intersegment operating income 42.2 3.0 1.4 90.4 -137.1 0.0
Total operating income 500.0 213.5 261.3 96.8 (137.1) 934.6Operating expenses 413.8 192.2 250.9 77.5 -137.1 797.4
EBITDA 86.1 21.3 10.4 19.3 137.2Depreciation & Amortization 21.6 5.1 21.2 18.3 66.1
Reported EBIT 64.6 16.2 -10.8 1.0 71.0Margin (%) 12.9% 7.6% -4.1% 1.1% 7.6%
Adjusted EBIT 65.2 16.9 -7.4 1.0 75.6Margin (%) 13.0% 7.9% -2.8% 1.1% 8.1%
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40 1Q20 Roadshow presentation
Top-line decrease driven by COVID-19 impacts on Advertising Mail and on retail and by deconsolidation of Alvadis
1Q20 – M&R
Transactional-8.8% underlying volume decline of which:
-8.1% YTD Feb-20: no change in structural trends, i.e. continued e-substitution by big senders and SMEs, higher acceptance of e-documents at the receivers’ side and digitization of C2B communication through smartphone apps.
-10.2% Mar-20: impact from COVID-19 on smaller administrative mail volumes and registered letters.
Domestic MailOperating income decline at € -17.6m i.e. € +1.0m working days impact, € -29.1m volume (-9.9% underlying volume decline, i.e. -7.1% YTD Feb-20, -15.6% Mar-20), and € +10.5m price/mix.
Proximity and convenience retail networkDecrease mainly driven by:
- the deconsolidation of Alvadis(€ -7.6m) as of September 2019
- COVID-19 impact on Ubiway retail revenues
- Decline in banking & finance revenues from low interest rate environment
M&R external operating income, € million
Advertising-16.5% underlying volume decline:
-3.9% YTD Feb-20, better than FY19 at -4.7%, driven by dedicated marketing & sales efforts to re-boost advertising mail.
-39.4% Mar-20 driven by cancelled campaigns from COVID-19 ban on promotions and enforced closure of all non-essential items stores.
Press-5.2% underlying volume decline driven by e-substitution and rationalization.
Value added servicesHigher revenue from fines and document management.
3 1 4
2 3 5
1
2
3
4
5
21
1Q19
Transactional
486.5
-2.2
-13.1Advertising
-2.3Press
-13.2Proximity andconvenience
retail network
2.2Value addedservices
1Q20 457.8
-28.7
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41 1Q20 Roadshow presentation
M&R EBIT impacted by COVID-19 mail evolution and additional opex to guarantee continuity of service
Key takeaways 1Q20• Total operating income decline of € -27.5m primarily driven by
domestic mail volume decline and the deconsolidation of Alvadis. Mainly Advertising Mail was significantly impacted by a ban on promotions during the COVID-19 lockdown that started March 18, 2020.
• Despite COVID-19, operating expenses (incl. adjusted D&A) remained nearly stable (€ +0.1m). Higher payroll costs from a.o. COVID-19 premium and higher absenteeism were fully compensated by the favorable evolution of the FTE mix, the decrease of material costs from Ubiway Retail (incl. Alvadis deconsolidation impact) and higher recoverable VAT.
• COVID-19 impacted EBIT by an estimated € -14.4m. This is mainly explained by the top-line development on domestic mail as well as additional costs related to a premium for operational staff in duty applicable since March 1st, higher absenteeism and increased health & safety measures.
• M&R adjusted EBIT declined by € -27.4m to € 65.2m.
1Q20 – M&R
1Q19 1Q20 % ↑486.5 457.8 -5.9%195.5 193.3 -1.1%60.9 47.8 -21.5%88.4 86.1 -2.6%116.3 103.1 -11.4%25.3 27.5 8.5%41.1 42.2 2.9%
527.5 500.0 -5.2%414.1 413.8 -0.1%
113.4 86.1 -24.0%21.4 21.6 0.9%
92.1 64.6 -29.8%17.4% 12.9%
92.6 65.2 -29.6%17.6% 13.0%
21,882 22,175 1.3%
-9.2% -9.9%-9.8% -8.8%-7.6% -16.5%-8.7% -5.2%
€ million
Underlying Mail volume decline
PressAdvertising
Value added servicesIntersegment operating income
Operating expenses
EBITDA
Reported EBIT
Average # FTEs and interims
Transactional
Additional KPIs
Mail & Retail
Depreciation & Amortization
Margin (%)
Adjusted EBITMargin (%)
Total operating income
External operating incomeTransactionalAdvertisingPressProximity and convenience retail network
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42 1Q20 Roadshow presentation
Parcels BeNe & E-commerce logistics growth partly offset by COVID-19 impact on Cross-border
1Q20 – PaLo Eurasia
E-commerce logisticsRevenue growth mainly driven by Active Ants organic business development combined with the integration of MCS Fulfilment as from October 1, 2019.Growth at Radial Europe from new customers gained in 2019.
Parcels BeNeParcels BeNe volume growth of +20.5%, higher than YTD Feb-20 17.9% growth, driven by increased online sales since the March 18, 2020 lockdown (March 2020 volumes up 26.0%). Parcels BeNe volumes include continuous positive volume development at DynaLogic with a strong quarter vs 1Q19.Negative price/mix fully mix-driven.
Cross-borderCross-border revenues impacted by COVID-19 (€ -5.7m). Revenue loss driven by international parcels volume decline and mail volume declines on in- and outbound, with the main impact in March 2020.Terminal dues settlements showed a negative YoY evolution of € -1.0m.
PaLo Eurasia externaloperating income, € million
1
2
3
1 2 3
17.3
8.5
-7.0
E-commercelogistics
210.5
1Q19 191.7
Parcels BeNe
Cross-border
1Q20
+18.7
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43 1Q20 Roadshow presentation
Lower EBIT through COVID-19, 1Q19 additional VAT recovery and YoY unfavourable evolution of terminal dues
Key takeaways 1Q20• Total operating income € +16.7m (+8.5%) primarily driven by Parcels
BeNe (€ +17.3m, +19.8%) and E-commerce logistics partly offset by Cross-border largely impacted by COVID-19 (€ -5.7m) and by the unfavourable evolution of terminal due settlements (€ -1.0m).
• Excluding additional VAT recovery in 1Q19 (€ -2.4m YoY) and the unfavourable evolution of terminal due settlements (€ -0.5m YoY), the operating expenses (incl. adjusted D&A) increased by € -14.9m (+8.1%), mainly from higher payroll, interim and transport costs driven by Parcels BeNe & E-commerce logistics volume growth, COVID-19 premium and increase in absenteeism, and negative channel mix (higher use of subcontractors).
• COVID-19 had an estimated EBIT impact of € -1.8m, mainly from the partial suspension of Cross-border activities, slightly higher Parcels BeNe revenues offset by the aforementioned additional opex, and increased health & safety measures.
• Adjusted EBIT decreased by € -1.2m to € 16.9m. Excluding the impacts of the 1Q19 additional VAT recovery, YoY terminal dues settlements (€ -1.4m) and COVID-19, adjusted EBIT would be up € +4.5m (+31%) operationally.
1Q20 – PaLo Eurasia
1Q19 1Q20 % ↑191.7 210.5 9.8%87.4 104.7 19.8%30.8 39.3 27.4%73.5 66.5 -9.6%
5.1 3.0 -40.7%
196.8 213.5 8.5%174.8 192.2 10.0%
22.0 21.3 -3.4%5.7 5.1 -10.4%
16.3 16.2 -0.9%8.3% 7.6%
18.0 16.9 -6.4%9.2% 7.9%
3,096 3,435 10.9%
16.9% 20.5%
€ million
Reported EBITMargin (%)
Adjusted EBITMargin (%)
Depreciation & Amortization
Parcels & Logistics Europe and Asia
Total operating incomeOperating expenses
External operating income
EBITDA
Intersegment operating income
Parcels BeNeE-commerce logisticsCross-border
Average # FTEs and interims
Additional KPIsParcels volume growth
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44 1Q20 Roadshow presentation
Parcels & Logistics North America driven by 2019new business and growth at existing clients
1Q20 – PaLo N. Am.
E-commerce logisticsYoY increase of +16.4%, or +13.2% at constant exchange rate.Revenue increase mainly driven by Radial North America recording growth of existing customers as well as new clients launched in 2019 and positive FX development partly offset by client churn.
International mailDeclining revenues at The Mail Group1 (-3.2%) despite positive FX evolution (-6.1% at constant exchange rate).No material COVID-19 impact in March 2020 yet.
1 Combination IMEX, Mail Inc & MSI
1
2
1 2
PaLo North America externaloperating income, € million
33.5
1Q20
1Q19 227.2
E-commercelogistics
-0.7Internationalmail
259.9
+32.8
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45 1Q20 Roadshow presentation
1Q19 1Q20 % ↑227.2 259.9 14.4%204.5 238.0 16.4%
22.7 21.9 -3.2%1.4 1.4 -0.4%
228.5 261.3 14.3%222.7 250.9 12.7%
5.9 10.4 77.6%16.9 21.2 25.5%
-11.0 -10.8 -2.3%-4.8% -4.1%
-7.8 -7.4 -4.5%-3.4% -2.8%
7,349 7,445 1.3%
187.2 215.1 14.9%-1.9 4.1
-15.2 -12.9
€ million
Parcels & Logistics North AmericaExternal operating income
Total operating income
EBITDA
International mailIntersegment operating income
Operating expenses
E-commerce logistics
Average # FTEs and interims
Additional KPIs, adjustedRadial North America revenue, $m
Depreciation & Amortization
Reported EBITMargin (%)
Adjusted EBITMargin (%)
Radial North America EBITDA, $mRadial North America EBIT, $m
Positive EBIT evolution of Radial largely offset by continuing margin pressure in International mail
Key takeaways 1Q20• Total operating income increase of € +32.8m or +14.3% (+11.2% at
constant exchange rate) mainly driven by growth at Radial from existing customers and new customers launched in 2019.
• Operating expenses (incl. adjusted D&A) increased by € -32.4m (€ -25.8m excl. FX) driven by higher variable costs from volume growth, a slightly negative client mix effect, higher payroll costs and increased D&A from the 3 new fulfilment centers last year. International mail business impacted by YoY increase in transport costs.
• COVID-19 impacted EBIT by an estimated € -0.3m, mainly related to additional health and safety measures.
• Adjusted EBIT up € +0.4m driven by positive evolution in E-commerce logistics, in particular at Radial. This was largely offset by continuing margin pressure in International mail from higher competition, lower volumes and increased transport costs.
1Q20 – PaLo N. Am.
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46 1Q20 Roadshow presentation
Corporate EBIT increase driven by higher building sales and lower opex
Key takeaways 1Q20• External revenues up € +4.9m driven by higher building sales
(€ +5.2m), partly delays from 2019 which materialized in 1Q20. This was partly offset by lower rental income.
• Operating expenses (incl. D&A) increased by € -2.6m driven by higher reinvoicing of services to the operational Business Units (€ +5.7m intersegment operating income). Especially for IT-related projects, an increase in demand was noticed. Net of the intersegment operating income, the opex (incl. D&A) was down € +3.1m.
• COVID-19 impacted EBIT by an estimated € -0.2m, mainly related to additional costs for health and safety measures.
• As a result, adjusted EBIT increased by € +8.0m.
1Q20 – Corporate
1Q19 1Q20 % ↑1.5 6.4
84.7 90.4 6.7%
86.2 96.8 12.3%76.4 77.5 1.4%
9.8 19.3 97.6%16.7 18.3 9.0%
-7.0 1.0-8.1% 1.1%
-7.0 1.0-8.1% 1.1%
1,639 1,640 0.1%
€ million
CorporateExternal operating incomeIntersegment operating income
Average # FTEs and interims
Total operating incomeOperating expenses
EBITDADepreciation & Amortization
Reported EBITMargin (%)
Adjusted EBITMargin (%)
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47 1Q20 Roadshow presentation
Reported - € million1Q19 1Q20 Delta
Cash flow from operating activities 202.2 203.6 1.4Cash flow from investing activities -16.1 -9.4 6.7
Free cash flow 186.1 194.2 8.1Financing activities -44.2 -26.6 17.5
Net cash movement 141.9 167.6 25.7Capex (15.7) (20.5) (4.9)
Positive evolution of FCF1 mainly driven by higher cash flow from investing activities through higher building sales
+
CF from operating activitiesMore cash payments related to “due to” Radial’s clients: € -42.6m, mainly phasing
Tax assessments on previous years: € +21.3m YoY variance (€ +7.5m positive settlement in 1Q20 vs. € -13.8m in 1Q19)
Excluding the above, CF from operating activities: € +22.8m, of which:- improvement in working capital evolution: € +35.2m, primarily driven by improvement in
payables- partly offset by lower operating results
CF from investing activitiesProceeds from buildings sales: € +11.1m
Higher capital expenditures: € -4.9m
CF from financing activitiesCommercial papers issuance: € +15.6m
1 Free cash flow = cash flow from operating activities + cash flow from investing activities
+=+=
1Q20
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48 1Q20 Roadshow presentation
Balance Sheet 1Q20
Main balance sheet movementsTrade & other receivables decreased due to the settlement of the SGEI receivable and the peak sales of year-end 2019.
Cash and cash equivalents increased mainly due to the settlement of the SGEI compensation.
Trade & other payables decreased due to phasing year-end peak 2019. The decrease was partially offset by the increase of other payables mainly due to the advance payment of the SGEI compensation.
€ millionAssets Dec 31, 2019 Mar 31, 2020PPE 1,133.6 1,120.2Intangible assets 898.3 904.9Investments in associates and joint ventures 239.5 234.2Other assets 41.8 38.8Trade & other receivables 759.0 583.6Inventories 34.7 36.8Cash & cash equivalents 670.2 844.4
Total Assets 3,777.1 3,762.9
€ millionEquity and Liabilities Dec 31, 2019 Mar 31, 2020Total equity 682.6 731.9Interest-bearing loans & borrowings (incl. bank overdrafts) 1,449.9 1,464.2Employee benefits 320.6 319.6Trade & other payables 1,278.5 1,174.7Provisions 29.8 30.7Derivative instruments 1.3 0.5Other liabilities 14.3 41.3
Total Equity and Liabilities 3,777.1 3,762.9
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49 1Q20 Roadshow presentation
Financing Structure & Liquidity 1Q20
Liquidity: Cash & Committed credit linesTotal available liquidity at March 31, 2020 consisted out of € 844.4m cash & cash equivalents of which € 653.4m is readily available on bank current accounts and as short-term deposits.
In addition, bpost Group has 2 undrawn revolving credit facilities for a total amount of € 375.0m.
External Funding & Debt Amortization (excl. IFRS16 lease liabilities)Out of € 1,011.3m external funding on balance sheet at March 31, 2020:
- € 165.2m needs to be repaid or will be rolled over between 2Q20 and 4Q20 (i.e. commercial paper with maturity ranging between 1 to 9 months)
- € 9.1m during 4Q20 (i.e. the current portion of the EIB loan).
€ millionAvailable Liquidity Dec 31, 2019 Mar 31, 2020Cash & cash equivalents 670.2 844.4
Cash in network 163.6 156.0Transit accounts 105.8 45.8Cash payment transactions under execution -26.7 -10.8Bank current accounts 377.4 488.4Short-term deposits 50.0 165.0
Undrawn revolving credit facilities 375.0 375.0Syndicated facility - 10/2024 300.0 300.0Bilateral facility - 06/2024 75.0 75.0
Total Available Liquidity 1,045.2 1,219.4
€ millionExternal Funding Dec 31, 2019 Mar 31, 2020Long-termLong-term bond1 (1.25% - 07/2026) 650.0 650.0Bank loans 183.2 187.1
Amortizing Loan (€ 100m) EIB - 12/2022 18.2 18.2Term Loan ($ 185m) Bank of America - 07/2022 165.0 168.9
Shor t-termBank loans: Amortizing Loan (€ 100m) EIB - 12/2022 9.1 9.1Commercial Papers 164.5 165.2
Total External Funding 1,006.8 1,011.3
1 € 650m long-term bond with a carrying amount of € 642.8m, the difference being the re-offer price and issuance fees.
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Additional info
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€ millionFY18 FY19 FY18 FY19 % ↑ FY19 IFRS16
Total operating income 3,850.2 3,837.8 3,850.2 3,837.2 -0.3%Operating expenses 3,279.1 3,300.2 3,279.1 3,300.2 0.6% +107.6
EBITDA 571.1 537.6 571.1 537.0 -6.0% +107.6Depreciation & Amortization 177.7 247.7 146.8 226.2 -105.3
EBIT 393.4 289.9 424.3 310.8 -26.7% +2.3Margin (%) 10.2% 7.6% 11.0% 8.1%Financial result -23.8 -61.5 -23.8 -61.5 -9.7
Profit before tax 381.0 244.3 411.9 265.2 -35.6%Income tax expense 117.4 89.6 121.4 92.1
Net profit 263.6 154.7 290.4 173.1 -40.4%FCF 241.2 302.0 231.5 288.0 24.4% +112.3bpost S.A./N.V. net profit (BGAAP) 262.3 172.6 262.3 172.6 -34.2%Net Debt at 31 December 344.8 779.9 344.8 779.9 +432.3Capex 114.9 162.3 114.9 162.3 41.2%Average # FTEs and interims 36,109 35,377 36,109 35,377
Reported Adjusted1
Key financials FY19
51
Amortization of intangibles recognized during PPA is adjusted, leading to increase in EBIT (€ +21.5m) and income tax expense (€ +2.4m)
Adjusted FCF excludes the cash Radial receives on behalf of its customers for performing billing services
bpost net profit BGAAP excludes Centre Monnaie’s profit on disposal:Since the sales price will be reinvested, the profit on disposal and related taxation will be spread throughout the depreciation of these reinvestmentsThis lowers the tax costs on the profit on disposal as the statutory tax rate decreased as from 2020 to 25%
1
3
2
1 Unaudited figures
FY19
1
3
1
1 1
2 2
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Results by segment FY19
52
FY19
€ millionM&R PaLo Eurasia PaLo N. Am. Corp Eliminations Group
External operating income 1,897.1 813.2 1,097.5 30.1 0.0 3,837.8Intersegment operating income 174.7 17.8 6.8 372.0 -571.2
Total operating income 2,071.7 830.9 1,104.2 402.1 (571.2) 3,837.8Operating expenses 1,734.2 747.7 1,048.7 340.7 -571.2 3,300.2
EBITDA 337.5 83.2 55.5 61.4 537.6Depreciation & Amortization 83.7 21.7 71.6 70.8 247.7
Reported EBIT 253.8 61.5 -16.1 -9.3 289.9Margin (%) 12.3% 7.4% -1.5% -2.3% 7.6%
Adjusted EBIT 257.4 65.8 -3.0 -9.3 310.8Margin (%) 12.4% 7.9% -0.3% -2.3% 8.1%
1Q20 Roadshow presentation
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bpost Group’s long-term relationship with the Belgian State
Belgian State
State as a long-term shareholder• Belgian State has 51% shares
• bpost Group’s board is composed of 5 board members and CEO appointed by the Belgian State and 6 independent directors
• Belgian State supports a regular dividend policy
bpost Group provides SGEIs1
on behalf of the State2016-2020
• 2 press distribution contracts (newspapers & periodicals) – prolonged for 2 years until the end of 2022
• Sixth management contract for other SGEIs
• Contractual amounts (excl. inflation2, 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 (actual amount: € 271.4m), € 252.6m in 2019 (actual amount: € 271.0m) and € 245.6m in 2020
State as important customer• State is a key commercial client to bpost Group
• Several other agreements in place with the State, such as European license plates (won by bpost Group through tender)
1 SGEI stands for Services of General Economic Interest cfr. slide 16 and 542 All amounts need to be adjusted for inflation on a cumulated yearly basis
Other SGEIsPress
Shareholder
Belgian State
Free float
# shares
102,075,649
97,925,295
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Sixth management contract and press concessions will be renegotiated before 2022
Scope
€ 271m state compensation in 2019Amount including inflation, volume variance and sharing of efficiency gains
State compensation possible in case of USO being financial burden
Timing
USO & SGEI
Universal Service Obligation (USO)• 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 ContractServices not typically associated with mail operators(SGEI), e.g.,• Retail network
(1,300 postal service points of which at least 650 post offices)
• Cash at Counter• Election mail (distribution)• Cash payment of pensions at home
Press concessions• Also part of SGEIs• Newspaper early delivery 6x/week• Periodical delivery 5x/week• Quality control obligation of maximum 7
complaints per 10,000 deliveries• FTEs
• ~1,700 FTEs for newspaper deliveries which are dedicated rounds
• Delivery of periodicals is integrated in the regular mail rounds
• Complementary management contract granted by the State
• Runs until end of 2023, renewable by consecutive terms of 5 years
• Runs until end of 2020• Notified and validated by European Commission
under State Aid rules
• Runs until end of 2022• Notified and validated by European Commission
under State Aid rules
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55 1Q20 Roadshow presentation
2008-19 CAGR for addressed mail volumesas reported by major incumbent European postal operators, percent
A relatively resilient mail market vs. other European operators
Addressed mail volume per capita 2019 operator level*
1 Includes addressed mail2 Includes addressed mail3 Includes addressed mail4 Includes addressed mail
European mail market
210
189
175
155
136
136
133
132
102
45
42
SW
UK
CH
AU
DE
FR
BE
NL
IT
DK
EU
Note: definition of addressed mail may differ by operatorSource: Company information; Annual reports; Investor presentations; IPC; Eurostat
5 Includes mail communication and dialogue marketing6 Includes addressed mail7 Includes addressed mail (publishers services excl.)8 Includes addressed mail excluding press
9 Includes all domestic mail10 Includes inland addressed mail11 Includes letter mail and addressed direct mail / media post
1
* Excludes domestic competitors
5
11
10
2
3
8
4
7
6
-5.4% SW
-12.9%
UK
DE
CH-3.5%
FR
AU
BE
EU
NL
IT
DK
-2.2%
-3.5%
-4.4%
-5.0%
-5.7%
-6.0%
-8.6%
-9.1%
5
1
11
9
10
3
2
4
7
6
(1) 2018 data(2) 2008-18 data
(1)
(2)
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Stéphanie VoisinManager Investor Relations
Email: [email protected]: +32 (0) 2 276 21 97 Mobile: +32 (0) 478 48 58 71Address: bpost Group, Centre Monnaie, 1000 Brussels, Belgium
Saskia DheedeneHead of Investor Relations
Email: [email protected]: +32 (0) 2 276 76 43Mobile: +32 (0) 477 92 23 43Address: bpost Group, Centre Monnaie, 1000 Brussels, Belgium
Key contacts
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Questions
2