investor presentation - bpost/media/files/b/bpost... · outlook for 2018 includes the acquisitions...

August - September 2018

Investor presentationSecond quarter 2018

2

Investor presentation second quarter 2018

Financial Calendarbpost at a glance

Highlights 2Q18 – 4Outlook 2018 – 5Outlook 2019-22 – 6Investment rationale – 7Overview – 8Transformation – 9Vision & strategy – 10 & 11Business segments – 12Mail & Retail – 13-23Parcels & Logistics Eur & Asia – 24-32Parcels & Logistics N. America – 33-39Dividend policy – 40Summary of key financials FY17 – 41Balance sheet – 42Relationship with State – 43Management – 44Sustainability – 45

More detail on 2Q18

EBITDA bridge – 47Radial 2Q18 – 48Key financials – 49Revenues – 50Domestic Mail – 51Parcels – 52Additional sources of revenues – 53Costs – 54Cash flow – 55

Contents

Additional Info

EBITDA bridge 1H18 – 57Key financials 1H18 – 58Revenues 1H18 – 59Cash flow 1H18 – 60LT CF guidance – 61USO & SGEI – 62Pro forma 2017 financials – 63European mail market – 64Key contacts – 65

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 Second Quarter 2018 Interim Financial Report, made available on August, 8th 2018 at 5.45pm CET, in its 2017 AnnualReport 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 Royal Decree of14 November 2007. The information in this document may include forward-looking statements1, which are based on current expectations and projections of management about futureevents. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factorsbecause 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

07.11.2018(17:45 CET)Quarterly results 3Q18

03.12.2018(17:45 CET)Interim dividend 2018 announcement

10.12.2018Payment date of the interim dividend

bpost at a glance

4bpost at a glance

Highlights of 2Q18 – on track towards FY18 guidance

Underlying Domestic Mail volume evolution• Driven by better Transactional Mail supported by easy comparable base (-9.9% in

2Q17 vs. -3.2% in 2Q18) and specific mailings in the quarter

Parcels performance in line with guidance• Domestic: continued double-digit organic volume growth driven by strong growth of

e-commerce and C2C; price/mix effect of -6.2% fully mix related• Logistic Solutions: mainly driven by Radial acquisition (€ +196.1m)

-4.1%

+25.8%

+ € 247.7m

Total operating income up 32.7%• Driven by acquisitions and excellent parcels growth € 928.4m

Lower EBITDA as expected impacted by higher organic costs

BGAAP net profit of bpost SA/NV up 8.1%

2018 outlook and back-loaded trajectory confirmed

€ 140.4m

€ 82.6m

+ € 202.9mPhasing of costs in line with FY18 trajectory, organic costs under control• Opex from acquisitions (€ +221.5m)

• Excluding one-offs (€ +4.5m net), organic cost base impacted by growth of domestic parcels for € +8.3m and transport cost linked to evolution of international activities

5bpost at a glance

Outlook for 20181 – 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 expected 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 ~ € 140m1 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 3Q18 will count 1 working day more on franking machines and 2 more on stamps and 4Q18 will count 2 working days more on franking machines vs. the same quarters of 2017.

6

Guidance over 2019-22

bpost at a glance

Actuals 2018 guidance

CMD Guidance2019-2022

436480 494 497 502

18

572

2013 1514 2016 17 19 21 2022

EBITDA

EBIT

537584 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 payment at least at the same level as 2017

Management to deliver

earnings to be in a

position to sustain

dividends

91%Pay-out ratio 85% 90% 85% 90% 85-100%

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.63

…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


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


-5.4%-5.0% -5.8%-4.4%-4.2% -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

-5.0%-3.7% -5.0%-5.9%-5.3%-8.1%

2013 2014 2015 2016 2017 1H18

-4.9%

-9.1%-7.7%

1.5%

-3.0%-3.0%

-2.9%-2.8% -2.8% -3.7%-2.8%-3.0%

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


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


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


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


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


Postal points (mail, parcels)

9671

(38%)

220(9%)“Kariboo”

pick-uppoints

Post offices (mail, parcels, bank)

674(27%)

Proximity retail

662(26%)

100% = 2,523

+ ~4,000 stamp shops

Composition of retail network in Belgium# point of presence, % Geographical footprint of retail network

Franchised

1 Excluding 11 PUDO points in Luxembourg

26

Ubiway progressing towards acquisition rationale


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.


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


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


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


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)

• >2,500 pick-up & drop-off points (incl. ~1,000 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 2016-20, %

0-4%

C2C

B2B

B2C

~5%

~15%

B2C

C2C

B2B

2016 parcel market1

100% = € 1,285m

1 Source: Effigy, 2017 not yet available

2016 bpost domestic parcels revenue€ 186m

32

New partnership with DHL Parcels NL will allow 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 (~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


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


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


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


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%


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


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

• 1Q18 also showed a slow start reflecting an insufficient pipeline

• 2Q18 new business sales were stronger than 2Q17 but actual TCV 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


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, …)

44

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


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

45

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

PPE & intangibleassets

Cash, cashequivalents

& investmentsecurities

June 30, 2018

3,016.8

Inventories

Trade & otherreceivables

Investments inassociates

Other assets

1,612.4

Dec 31, 2017

50.4

564.4

491.2

39.1

728.8

329.2

1,620.8

466.0

39.5

257.4

40.9

3,223.3

Provisions

758.2

766.6

Interest-bearingloans & borrowings,

bank overdrafts

Employee benefits

777.8

3,223.3

June 30, 2018

3,016.8

333.1

Trade & otherpayables and

derivativeinstruments

326.9

30.5

Dec 31, 2017

783.3

1,315.0

Total equity

1,103.2

45.4

€ 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

46

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

47

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

48

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): 95.9%#1 (Fifth 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 Trading2Q18

502Q18

140.4 129.6

144.0

159.3

Domestic Mail

One-offs2Q18

+10.8

EBITDA 2Q18excl.

one-off

EBITDARadial

+2.3

-27.6

ReportedEBITDA 2Q18

Corporate

-5.4

Additional sources of revenues

+15.6

Parcels Costs

-21.7

+20.7

EBITDA 2Q17excl.

one-off

+1.7

ReportedEBITDA 2Q17

-15.3

Positiveone-off2Q17

EBITDA impacted by higher organic costs from growth of domestic parcels and international activities

Total operating income

€ million

Opex from acquisitions(excl. Radial)

€ -14.4m / -10.0%

• Reversal of provision (€ +14.9) • One-off SG&A (€ -4.1m) related

to support on specific projects and ATM attacks

IAS19 non-cash gain related to termination of

transport benefit

Of which € -8.3m related to growth of

domestic parcels

51

Radial’s performance in 2Q18 above expectations

2Q18

• 2Q18 revenues slightly above last year driven by:

• Fulfilment & Transport revenues up 7.9% vs. 2Q17 partly offset by webstore phase-out; growth mainly from existing customers

• Growth from existing customers, new business (signed 2018) and clients that signed in 2017 outpaces loss from clients terminating with Radial

• 2Q18 EBITDA better than budget due to higher volume from existing clients, better productivity and tighter control on SG&A spend, but below LY as a result of:

• Phase-out of (high margin) webstore business

• Increase in charge backs resulting from increased fraud activity

Reported€ m 2Q18Total operating income (revenues) 196.1Operating expenses 193.8

Transport (33%) 64.2Payroll & interim (40%) 77.7Other SG&A (30%) 57.9Other costs (-3%) (5.8)

EBITDA 2.3Margin (%) 1.2%

52

2Q17 2Q18 2Q17 2Q18 % ΔTotal operating income 699.6 928.4 699.6 928.4 32.7%Operating expenses 540.3 788.0 540.3 788.0 45.8%EBITDA 159.3 140.4 159.3 140.4 -11.9%Margin (%) 22.8% 15.1% 22.8% 15.1%EBIT 136.0 100.3 136.0 102.6 -24.6%Margin (%) 19.4% 10.8% 19.4% 11.1%Profit before tax 140.1 98.7 140.1 101.0 -27.9%Income tax expense 40.4 33.2 40.4 33.7Net profit 99.7 65.5 99.7 67.3 -32.6%FCF 0.8 (78.6) 0.8 (78.6)bpost S.A./N.V. net profit (BGAAP) 76.5 82.6 76.5 82.6 8.1%Net Debt/ (Net cash), at 30 June (596.2) 275.6 (596.2) 275.6

Normalized1Reported

Summary of key financials 2Q18

2Q18

€ million





€ 0.6m

53


2Q18

€ million

1 Defined as domestic and Belgian in- and outbound

2Q17 ∆ 2Q18 % ∆

Transactional mail 201.6 5.0 206.6 2.5%Advertising mail 62.6 -2.5 60.1 -4.0%Press 72.1 -0.7 71.3 -1.0%

Domestic parcels1 54.6 9.6 64.2 17.6%International parcels 54.5 4.3 58.8 7.9%Logistic solutions 36.4 202.9 239.3 -

International mail 40.1 21.5 61.5 53.6%Value added services 24.9 3.2 28.0 12.7%Banking and financial 47.8 -6.9 40.9 -14.4%Distribution 24.2 -0.7 23.5 -3.1%Retail & Other 71.3 -1.3 70.0 -1.9%

Corporate 9.6 -5.4 4.2 -56.2%

699.6 228.8 928.4 32.7%

Domestic mail

Parcels

Additional sourcesof revenues

TOTAL

54

Domestic mail underlying volume trend at -4.1% driven by better transactional mail volumes

2Q18

Total operating income, € million

• Transactional Mail: support from easy comparable base at -9.9% for 2Q17 and positive impact of specific mailings (e.g. GDPR, MIFID II).

• Advertising Mail: continued competitive advertising market, campaigns around World Cup did not materialize, phasing effect towards 3Q18.

• Press: in line with previous quarter and supported by easy comparable at -5% for 2Q17 due to 2 working days.

1 Concerns mailings on digital security, client/product info (e.g. MIFID, GDPR), loyalty, branding, mobility and CSR2 2Q18 had 1 working day less on stamps vs. 2Q17

Volume

2Q

18

-12.9

338.0

+1.7

Price/mix 15.1

2Q

17

-0.5Working dayimpact

336.3

FY17 1Q18 2Q18 1H18 FY17 1Q18 2Q18 1H18Transactional mail -8.3% -7.0% -3.5% -5.3% -8.1% -6.7% -3.2% -5.0%Advertising mail 1.5% -7.6% -7.8% -7.7% 1.5% -7.6% -7.8% -7.7%Press -3.7% -3.3% -2.5% -2.9% -3.7% -3.3% -2.5% -2.9%Domestic Mail -5.9% -6.8% -4.3% -5.6% -5.8% -6.6% -4.1% -5.4%

Reported Underlying 2

680.4

-12.5

-33.7

692.9

1H

18

22.5

1H

17

-1.2

55

Organic parcels growth supplements international acquisitions revenue contribution

2Q18



DomesticParcels1 9.6

Radial 196.1

2Q

17

InternationalParcels

LogisticSolutions

2Q17rebased

+20.7

6.8

341.6

4.3

362.3

2Q

18

145.5

• Reported organic volume growth of +25.8% driven by strong e-commerce growth and the online C2C product offering.

• Price/mix of -6.2%: price increase fully offset by product & client mix effect.

• Growth driven by higher revenues from US (despite negative FX impact) and Europe.

• Mainly consolidation of Leen Menken and Active Ants.

• Consolidation of Radial as of 16 November 2017 (revenues are reported under Logistic Solutions), revenues slightly up vs. 2Q17.

1H

18

712.4

11.5

+37.8

389.5

1H

17

285.1

674.6

5.8

20.5

56

Additional sources of revenues driven by acquisitions

2Q18

208.2

2Q

17

+15.6

VAS

-0.7

2Q

18

Retail &Other

21.5

-6.9

Distribution

-1.3

3.2

Banking &Financial

223.9

InternationalMail

• Driven by consolidation of Imex & M.A.I.L., Inc.1 as of January 2018 and higher volumes from Asia (mainly registered).

• Mainly decline of Alvadis due to legislative change on pre-paid mobile phone cards (June 2017).

• Lower revenues from bpost bank savings accounts due to low interest rate environment; lower revenue from financial transactions managed on behalf of the State.

• Higher sales Ubiway Retail offset by lower sales bpost retail products.

• Driven by management of cross-border fines on behalf of the Belgian State.

1 M.A.I.L., Inc. 2Q18 contains March to June 2018.


1H

17

419.8

+22.5

4.0

35.3

-3.3

1H

18

442.3

-3.8

-9.8

57

Organic cost increase under control and mainly explained bygrowth of domestic parcels and international activities

2Q18

Operating expenses excl. depreciation and amortization, € million

Domestic parcelscost increase 8.3

One-off 4.5

766.3

Transport

-2.3

221.5

-1.5

2Q18

Consolidationeffect (opex

acquisitions)1

Other costs

9.8

Payroll & Interim

SG&A

2Q17rebased

788.0

540.3

+21.7

7.4

2Q17

1 Opex of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc., Active Ants (see appendix for more detail)

• 2Q17 IAS19 non-cash gain related to termination of transport benefit in payroll & interim (€ +15.3m).

• 2Q18 reversal of provision in other costs (€ -12.5m), other SG&A (€ -1.5m) and transport (€ -0.9m).

• One-offs for a total amount of € +4.1m related to (1) support on specific projects in SG&A, which was anticipated, and (2) ATM attacks in other costs.

• Contains additional FTEs for parcels volumes, NBX rent allocated to parcels, additional fleet and related fuel & maintenance, increase in domestic transport cost.

• Increase driven by evolution of the international activities (mail & parcels).

• Negative price effect (mainly indexation & CLA) and absenteeism compensated by better productivity, favourable FTE mix, tax shift and favorable evolution of some payroll provisions.

• Mainly increase in project related costs, insurance, rent & rental (mainly NBX allocated to mail) and energy delivery costs resulting from higher fuel price.

• Decrease mainly driven by lower materials costs. 1,564.0

1H

18

+40.7

-12.7

22.2

2.7

1,523.3

1H

17

1,084.8

434.0

4.5

16.0

12.5

58

FCF1 mainly impacted by phasing in tax prepayments

2Q18

• Total proceeds PPE 1H18 at € 5.3m, we confirm € 100m of combined proceeds for 2018 & 2019 as communicated on CMD of June 21st

• Total capex 1H18 at € 39.5m, we confirm FY18 guidance of € 140m

• Variance mainly explained by investment securities coming at maturity in 2Q17: € -12.0m

• Payments related to borrowings and leasing liabilities: € -3.4m

1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities

€ million 2Q17 2Q18 Delta

Cash flow from operating activities +2.8 -61.6 -64.5Cash flow from investing activities -2.0 -17.0 -15.0Operating free cash flow +0.8 -78.6 -79.4Financing activities -49.4 -52.8 -3.4Net cash movement -48.6 -131.5 -82.9

Capex -18.8 -25.1 -6.2

• Phasing in tax prepayments: € -60.0m (1st prepayment in 2Q18 instead of 3Q17)• bpost bank dividend in 2Q17: € -5.8m

Additional info

601H18

269.7

22.5

37.8 321.0 336.3

Positiveone-off2Q17

Costs

-40.7

CorporateParcels ReportedEBITDA 1H18

Additional sources of revenues

+3.7280.6

Positiveone-off2Q18

EBITDA 1H18excl.

one-off

-48.3

EBITDARadial

+10.8

-13.8

Domestic Mail

-15.3-12.5

ReportedEBITDA 1H17

EBITDA 1H17excl.

one-off

EBITDA impacted by higher organic costs from growth of domestic parcels and international activities


€ million

€ -51.3m / -16.0%

Opex from acquisitions(excl. Radial)

IAS19 non-cash gain related to termination of

transport benefit

• Reversal of provision (€ +14.9) • One-off SG&A (€ -4.1m) related

to support on specific projects and ATM attacks

Of which € -16.0m related to growth of

domestic parcels

61

1H17 1H18 1H17 1H18 % ΔTotal operating income 1,421.1 1,844.6 1,421.1 1,844.6 29.8%Operating expenses 1,084.8 1,564.0 1,084.8 1,564.0 44.2%EBITDA 336.3 280.6 336.3 280.6 -16.6%Margin (%) 23.7% 15.2% 23.7% 15.2%EBIT 290.2 205.1 290.2 209.4 -27.8%Margin (%) 20.4% 11.1% 20.4% 11.4%Profit before tax 290.4 196.8 290.4 201.1 -30.8%Income tax expense 94.7 68.8 94.7 69.8Net profit 195.8 127.9 195.8 131.3 -32.9%FCF 167.1 72.7 167.1 72.7bpost S.A./N.V. net profit (BGAAP) 170.8 154.9 170.8 154.9 -9.3%Net Debt/ (Net cash), at 30 June (596.2) 275.6 (596.2) 275.6

Reported Normalized1

Summary of key financials 1H18

1H18

€ million





€ 1.1m

62


1H18

€ million


1H17 ∆ 1H18 % ∆

Transactional mail 415.8 -3.0 412.8 -0.7%Advertising mail 130.0 -6.5 123.5 -5.0%Press 147.1 -3.0 144.1 -2.1%

Domestic parcels1 107.0 20.5 127.5 19.2%International parcels 107.8 5.8 113.7 5.4%Logistic solutions 70.3 400.9 471.3 -

International mail 82.2 35.3 117.5 43.0%Value added services 50.9 4.0 54.9 7.9%Banking and financial 94.4 -9.8 84.6 -10.3%Distribution 50.4 -3.3 47.1 -6.5%Retail & Other 142.0 -3.8 138.3 -2.7%

Corporate 23.3 -13.8 9.5 -59.3%

1,421.1 423.5 1,844.6 29.8%

Domestic mail

Parcels

Additional sourcesof revenues

TOTAL

63

Lower operating FCF1 mainly due to lower operating results

1H18

• Lower proceeds from sale of buildings: € -5.4m• Higher capex: € -7.7m• Investment securities in 2Q17: € -12.0m• Cash outflows related to acquisitions: € +20.9m

• Transactions with minorities: € -0.3m• Payments related to borrowings and leasing liabilities: € -6.8m

1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities

€ million 1H17 1H18 Delta

Cash flow from operating activities +258.4 +168.3 -90.2Cash flow from investing activities -91.4 -95.6 -4.2Operating free cash flow +167.1 +72.7 -94.4Financing activities -49.7 -56.8 -7.1Net cash movement +117.3 +15.9 -101.4

Capex -31.8 -39.5 -7.7

• Phasing in tax prepayments: € -60.0m (1st prepayment in 2Q18 instead of 3Q17)• bpost bank dividend in 1H17: € -5.8m• Excluding these elements, lower operating results: € -30.7m

64

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, & distri-bute 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 being negotiated with 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

65

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

66European 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

67

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

investor presentation - bpost/media/files/b/bpost... · outlook for 2018 includes the acquisitions...

Documents