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TRANSCRIPT
Posti Group Corporation Financial result 2015
February 12, 2016
Contents
• October–December 2015
• Year 2015
• Business groups
- Postal Services
- Parcel and Logistics Services
- Itella Russia
- OpusCapita
• Current issues
• Appendices
Posti Group
February 12, 2016
2
The market situation remained challenging
Posti Group3
• The year 2015 was difficult for Posti due to digitalization in the communications
sector, the economic recession and the weak market situation.
• Volumes in heavy traffic (changes over 12 months) on Finnish main roads have
decreased for 44 consecutive months since May 2012.
• Competition has intensified further. Posti’s competitors started building a network of
parcel points in Finland, and media companies started delivering letters in early-
morning delivery.
• The number of parcels delivered by Posti reached a new record; a total of over 33
million parcels.
• In OpusCapita, demand of traditional iPost product decreased, volumes of
electronic invoices increased.
• Posti found new business by providing delivery services to Russia for Chinese
online stores.
• The economic problems in Russia became more severe, and the closing rate of the
ruble was down 12% year-on-year.
February 12, 2016
Posti Group
905836
0
200
400
600
800
1000
2014 2015
219200
0
50
100
150
200
250
2014 2015
-8%-9%
377
277
0
100
200
300
400
2014 2015
-27%
32,6
33,4
30
31
32
33
34
2014 2015
+2%
Million
units
OpusCapita’s electronic transactionsDomestic freightParcels
MagazinesNewspapersAddressed letters
Volumes 2015
Million
units
4
2,742,54
2,17
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2013 2014 2015
159,9173,1 179,9
191.0205,0
0
50
100
150
200
250
2011 2012 2013 2014 2015
February 12, 2016
October–December
Posti Group5
February 12, 2016
Key events
Posti Group
• Operating result before non-recurring items improved,
particularly due to the improved result of Parcel and
Logistics Services and Posti’s successful Christmas
season.
• Posti delivered over 30 million Christmas cards, and the
number of parcels delivered to consumers in December
grew by 7%.
• Posti signed several logistics outsourcing agreements.
A robot-assisted hybrid warehouse was opened in Vantaa
and a new logistics center in Lieto.
• Posti recruited 3,350 seasonal assistants for the
Christmas season.
• The Group’s comparable net sales decreased by 6%.
• The decline in the volume of addressed letters
accelerated in Q4.
• Q4 was weak in Russia as demand fell and the ruble
depreciated.
• Posti had no labour agreement in force in November.
Strikes had a negative impact particularly on parcel
volumes.
+
–
491,7434,7
-7%
-11,6 %-15%
-10%
-5%
0%
0
100
200
300
400
500
600
Q4 2014 Q4 2015
NET SALES
MEUR Growth %
6
23,525,4
4,8 %5,8 %
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
0
10
20
30
Q4 2014 Q4 2015
OPERATING RESULT*
MEUR Liiketulos-%
*excluding non-recurring itemsFebruary 12, 2016
Key figures October–December 2015
Posti Group
• Net sales decreased by 11.6%.
Comparable net sales, excluding
the international freight business,
decreased by 6.4%.
• Operating result before non-
recurring items was satisfactory
and improved thanks to the strong
performance of Parcel and
Logistics Services.
• The operating result was weighed
down by non-recurring items of
EUR -15.7 million, which includes
provisions related to Itella Russia’s
warehousing business.
• Strikes in October–November
resulted in losses, particularly
through lost parcel volume to
competitors.
10-12/
2015
10-12/
2014
Net sales, EUR million 434.7 491.7
Operating result (non-IFRS),
EUR million*
25.4 23.5
Operating result (non-IFRS), %* 5.8 4.8
Operating result (EBIT), EUR
million
9.7 10.9
Operating result (EBIT), % 2.2 2.2
Result before taxes, EUR million 6.1 7.6
Result for the period, EUR
million
4.2 4.5
Gross capital expenditure, EUR
million
16.8 14.6
7
February 12, 2016
Change in costs*Q4/2014 => Q4/2015
Posti Group* excluding non-recurring items
8
February 12, 2016
Year 2015 Posti Group9
February 12, 2016
Key events 2015
Posti Group
• Operating result before non-recurring items
improved in relative terms, and the operating result
improved substantially due to property sales.
• Parcel services volume grew by 2.3%.
• OpusCapita’s electronic transaction volume was 205
million transactions, electronic invoice volume grew
by 6%.
• Posti launched a renewal of its retail network.
• The Group continued its EUR 75 million
performance improvement program and achieved
90% of its targets.
• Consolidated net sales declined by 11%, particularly
due to the divestment of the international freight
business. Comparable net sales decreased by -6%.
• Volumes continued to decline, with addressed letters
down -8% and OpusCapita’s iPost volumes -12%.
• The logistics market continued to be weak, and the
fall in fuel prices reduced net sales further.
• In Russia, the market situation and demand
deteriorated substantially. The exchange rate of
ruble remained highly volatile.
+
–
1 858,71 650,3
-6,0 %
-11,2 %
-20,0 %
-15,0 %
-10,0 %
-5,0 %
0,0 %
0
500
1000
1500
2000
2014 2015
NET SALES
MEUR Growth %
10
50,8 48,7
2,7 %2,9 %
0,0 %
2,0 %
4,0 %
6,0 %
0
10
20
30
40
50
60
2014 2015
OPERATING RESULT*
MEUR Liiketulos-%
*excluding non-recurring itemsFebruary 12, 2016
Key figures Year 2015
Posti Group
• Net sales decreased by 11%. Net
sales decreased in all business
groups.
• The decline was due to the
divestment of the international
freight business, falling postal
delivery volumes, the weak logistics
market and the depreciation of the
ruble.
• The operating result before non-
recurring items amounted to EUR
48.7 (50.8) million.
• The operating result was improved
by income from real estate sales.
• Operations under the universal
service obligation amounted to EUR
154.8 million, or 9.4% of the
Group’s net sales.
2015 2014
Net sales, EUR million 1,650.3 1,858.7
Operating result (non-IFRS), EUR million* 48.7 50.8
Operating result (non-IFRS), %* 2.9 2.7
Operating result (EBIT), EUR million 55.9 5.8
Operating result (EBIT), % 3.4 0.3
Result before taxes, EUR million 43.3 -4.6
Result for the period, EUR million 36.0 -4.4
Return on equity (12 months), % 6.1 -0.7
Return on invested capital (12 months), % 6.3 1.0
Equity ratio 47.8 45.9
Gearing, % -10.5 17.2
Gross capital expenditure, EUR million 60.6 57.5
11
February 12, 2016
Change in costs*2014 => 2015
Posti Group12* excluding non-recurring items
February 12, 2016
Posti’s profitability has declinedThe rate of decline was accelerated by the 2008 economic crisis
13
98 89 102 69 47 32
-6
39 10 6 56
-10
10
30
50
70
90
110
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Operating result, MEUR
Return on invested capital, % (12 months), target is at least 10%
15.4% 14.1% 15.6% 12.4% 5.8% 4.2% -0.2% 4.8% 1.3% 1.0% 6.3%
Posti Group
February 12, 2016
Employees
Number of employees in Finland and abroad
• At the end of the year, the
number of employees stood
at 21,598.
• Of these, 16,874 worked in
Finland.
• The Group’s personnel
expenses decreased by
nearly 11% year-on-year.
• As of December 31, 2015, a
total of 1,327 employees
have applied for the Uusi
polku (New path) program,
and 925 have been
accepted.
0
5 000
10 000
15 000
20 000
25 000
30 000
2011 2012 2013 2014 2015
Othercountries
Finland
Posti Group
Employees
by business groupPostal Services
Parcel andLogistics Services
Itella Russia
OpusCapita
Other operations
Other operations
includes all employees
in Operations and Group
Functions.
14
February 12, 2016
Business groups
Posti Group15
February 12, 2016
Postal Services
* before non-recurring itemsPosti Group
10-12/2015 10-12/2014 Change % 2015 2014 Change %
Net sales 207.3 215.5 -3.8% 742.3 769.0 -3.5%
Operating result
(non-IFRS)*
24.8 36.9 -32.8% 56.4 66.0 -14.5%
Operating result
(EBIT)
24.8 37.0 -33.0% 57.3 66.1 -13.3%
Operating result
(non-IFRS), %*
12.0% 17.1% 7.6% 8.6%
Operating result
(EBIT), %
12.0% 17.2% 7.7% 8.6%
October–December
• The decrease in net sales was due to a
decline in the domestic delivery product
volume.
• Cost adaptation measures have not fully
compensated for the decline in the volume
of domestic delivery products.
Year 2015
• Mail delivery volumes continued to decline
as expected.
• The volumes of unaddressed deliveries
increased as a result of Postinen, which was
launched in March.
• New business from delivering items shipped
by Chinese online stores to Russia.
16
February 12, 2016
Postal Services
October–December
• The decline in the volume of addressed
domestic letters accelerated.
• Posti delivered more than 30 million
Christmas cards, 4% fewer than the
previous year.
* before non-recurring itemsPosti Group
Year 2015
• The volumes of addressed letters,
newspapers and magazines decreased.
• Electronic letter volume grew by +4%.
• The number of Netposti users increased by
8% to 636,000 at the end of the year.
17
905836
0
200
400
600
800
1000
2014 2015
219200
0
50
100
150
200
250
2014 2015
-8% -9%
377
277
0
100
200
300
400
2014 2015
-27%
MagazinesNewspapersAddressed letters
Million
units
February 12, 2016
Parcel and Logistics Services
* before non-recurring itemsPosti Group
10-12/2015 10-12/2014 Change % 2015 2014 Change %
Net sales 148.6 184.3 -19.4% 596.7 722.7 -17.4%
Operating result
(non-IFRS)*
-0.4 -12.6 - 0.6 -21.7 -
Operating result
(EBIT)
-2.2 -20.2 - -12.6 -34.2 -
Operating result
(non-IFRS), %*
-0.3% -6.8% 0.1% -3.0%
Operating result
(EBIT), %
-1.5% -11.0% -2.1% -4.7%
October–December
• Comparable net sales decreased. The decline
was due to falling volumes in domestic freight,
lower fuel surcharges due to the development
of oil prices, declining processing volumes
and fill rates in the warehousing business, and
the general economic situation.
• Significant improvement in the result,
particularly due to the divestment of
international freight operations.
Year 2015
• Net sales decreased, but the operating result before
non-recurring items turned to profit.
• The improved operating result was particularly
attributable to the divestment of international freight
operations, higher demand for parcel services, and
measures implemented by the Group to increase the
efficiency of production operations.
18
February 12, 2016
Parcel and Logistics Services
October–December
• Volumes grew in consumer parcels. The
number of parcels to consumers Posti
delivered in December increased by 7%.
• Posti signed several logistics outsourcing
agreements. A robot-assisted hybrid
warehouse was opened in Vantaa and a new
logistics center in Lieto.
Posti Group
Domestic freight
0
50000
100000
150000
200000
250000
300000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2014 2015
items
* before non-recurring items
Year 2015
• Parcel services volume grew by 2.3%. Posti
delivered over 33 million parcels in Finland.
• Road freight operations in Sweden, Norway and
Denmark, as well as the international freight
business in Finland were sold in April.
• 1,401 service points and 480 parcel points on
December 31, 2015.
19
32,6
33,4
30
31
32
33
34
2014 2015
+2%
Million
units
Parcels
February 12, 2016
Itella Russia
* before non-recurring itemsPosti Group
10-12/2015 10-12/2014 Change % 2015 2014 Change %
Net sales 30.8 40.7 -24.5% 118.9 172.0 -30.9%
Operating result
(non-IFRS)*
-0.9 2.1 - -5.1 2.5 -
Operating result
(EBIT)
-12.8 2.1 - -25.0 2.4 -
Operating result
(non-IFRS), %*
-2.8% 5.2% -4.3% 1.5%
Operating result
(EBIT), %
-41.6% 5.2% -21.0% 1.4%
October–December
• Measured in local currency, net sales
decreased by 10%.
• The decline was due to the general weak
economic situation as well as lower demand
for air and sea freight and lower warehouse
processing volumes.
• Euro-denominated net sales decreased by
24.5%.
Year 2015
• The operating result declined due to lower
volumes as well as the development of the
ruble exchange rate and currency-linked lease
expenses.
• By December 31, 2015, the closing rate of the
Russian ruble had declined by 12% year-on-
year.
20
February 12, 2016
Itella Russia
October–December
• Operational efficiency in warehousing
was improved.
• The warehouse fill rate was at a good
level.
Posti Group
91%94%
89%85% 86%
93% 92%
86%83%
77%
89%86%
65%
71% 71%
79%81%
76%
69%
76%
81%84% 85%
90%
40%
50%
60%
70%
80%
90%
100%
3–2013 6–2013 9–2013 12–2013 3–2014 6–2014 9–2014 12–2014 3–2015 6–2015 9–2015 12-2015
Moscow Other areas
Warehouse fill rates
Year 2015
• The average warehouse fill rate during the
year was 84% in Moscow and 86% in
other areas.
21
Dec 31, 2015:
Moscow: 86%
Other areas: 90%
February 12, 2016
OpusCapita
* before non-recurring itemsPosti Group
10-12/2015 10-12/2014 Change % 2015 2014 Change %
Net sales 63.2 67.2 -6.0% 256.7 259.6 -1.2%
Operating result (non-
IFRS)*
3.5 3.4 1.8% 14.5 20.0 -27.2%
Operating result
(EBIT)
3.6 -0.1 - 13.3 12.7 5.1%
Operating result (non-
IFRS), %*
5.5% 5.1% 5.7% 7.7%
Operating result
(EBIT), %
5.7% -0.1% 5.2% 4.9%
October–December
• Net sales were reduced by a decline of 14% in
iPost product volumes. The decline in volumes
accelerated in Q4.
• The operating result before non-recurring items
remained at the previous year’s level. The
operating result was improved by cost saving
measures implemented in Q4.
Year 2015
• Net sales down 1.2%.
• The operating result improved to EUR 13.3
(12.7) million. Due to digitalization, paper
communications are moving online at an
accelerating rate.
• OpusCapita transmitted a total of 540 million
transactions during the year.
22
February 12, 2016
OpusCapita
October–December
• On November 11, 2015, OpusCapita
signed an agreement to sell all of its
business operations serving the local
markets in the Baltic states to BaltCap.
The transaction supports greater focus
on strategic business areas in Europe.
Posti Group
159,9173,1 179,9
191.0205,0
0
50
100
150
200
250
2011 2012 2013 2014 2015
Electronic messages
Year 2015
• On April 30, 2015, OpusCapita acquired the
Swedish companies Kredithanterarna and
Svenska Fakturaköp. The acquisitions see
OpusCapita further strengthen its offering in
Order-to-Cash management.
• Patrik Sallner was appointed as OpusCapita’s
CEO effective from October 5, 2015.
• OpusCapita ceased its operations in Slovakia.
23
February 12, 2016
Outlook for 2016
Market environment
• The Group’s business is characterized by seasonality. Net sales and operating profit in the
business groups are not accrued evenly over the year. In postal services and consumer parcels,
the first and fourth quarters are typically strong, while the second and third quarters are weaker.
Net sales
• Comparable net sales in euros for 2016 are expected to decrease compared to 2015.
Operating result (EBIT)
• The Group’s operating result before non-recurring items is expected to improve from 2015.
There is significant uncertainty related to the development prospects of the result achieved in
Russia. The operating result for 2016 will continue to include significant non-recurring items.
The development of exchange rates, especially the ruble exchange rate, may affect the Group’s
net sales, result and balance sheet.
Capital expenditure
• Capital expenditure is expected to increase remarkably from 2015.
Posti Group24
February 12, 2016
Appendices
Posti Group25
February 12, 2016
• Operating profit percentage exceeds 5%
• Gearing does not exceed 35%
• Return on invested capital is at least 10%
• More than 10% of the Group’s net sales will
come from new business areas in 2018.
Financial targets
Posti Group
22,1 23,521,1
17,2
-10,5-15
-10
-5
0
5
10
15
20
25
30
2011 2012 2013 2014 2015
-0,2
4,7
1,3 1,0
6,3
-2
0
2
4
6
8
2011 2012 2013 2014 2015
%%
Return on invested capitalGearing
1,6
2,7 2,6 2,72,9
0
1
2
3
4
2011 2012 2013 2014 2015
Operating profit percentage
%
We will create new
warehouse
and transport services in
areas such as food
logistics
We will develop digital
marketing and
information services by
leveraging Posti’s
data
We will develop Home
services including
meal delivery, care,
security and property
services
26
February 12, 2016
• The EUR 100 million target for the performance
improvement program for 2013–2014 was
reached ahead of schedule. The total savings
amounted to nearly EUR 140 million.
• The Group continued its EUR 75 million
performance improvement program with 90% of
its targets achieved to date. The full target is
expected to be reached in Q1/2016.
• The aims include achieving synergy benefits
through the consolidation of production,
improving the efficiency of the ICT function,
achieving savings in sourcing, and simplifying
the product portfolio.
• In the ‘Way of Working’ program, nearly EUR 5
million in savings were achieved in travel,
recreation and training costs.
Performance improvement programs
Posti Group
140
68
0
20
40
60
80
100
120
140
160
2013-2014 2015-2016
EUR million
Target: 100 million
Target: 75 million
27
February 12, 2016
Group cost structureYear 2015
Posti Group
47%
9%
17%
8%
6%
4%1%
8%
Personnel expenses Subcontracting
Freight and transport Lease expenses
Depreciation IT expenses
Sales and marketing Other
Indirect costs, EUR million
509
433
0
100
200
300
400
500
600
2014 2015
-15%
28
February 12, 2016
Balance sheet
Posti Group
EUR million
183 186
516406
117
87
474626
1 291 1 305
2014 2015
ASSETS
Goodwill Tangible assets
Other non-current assets Current assets
574 604
45,9 % 47,8 %
2014 2015
EQUITY AND EQUITY RATIO
Equity Equity ratio (%)
29
February 12, 2016
Cash flow
Posti Group
2015 2014
Result for the period 36.0 -4.4
Cash flow from operating
activities before financial items
and taxes
92.4 108.6
Cash flow from operating
activities
81.9 93.2
Cash flow from investing
activities
-40.4 -46.3
Cash flow from financing
activities
-8.0 -23.2
Change in cash and cash
equivalents
33.4 23.7
Cash and cash equivalents at
the end of the review period
130.1 98.7
86119
81 93 82
-67
-123
-49 -46 -40
-150
-100
-50
0
50
100
150
2011 2012 2013 2014 2015
Cash flow from investing activities, EUR million
Cash flow from operating activities, EUR million
• The consolidated cash flow from operating
activities before capital expenditure was
EUR 81.9 (93.2) million.
• Capital expenditure amounted to EUR 55.9
(46.6) million, including investments in
transport vehicles, production-related
projects, Parcel Points, and terminal
improvement projects.
• Proceeds from the sale of property, plant
and equipment totaled EUR 136.4 (2.6)
million.
30
February 12, 2016
Net debt and the maturity structure of
loans
Maturity structure of loans and financing
arrangements, EUR million
Posti Group
Net debt and
gearing
147161
139
99
-64
22,1 % 23,5 %21,1 %
17,2 %
-10,5 %-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-100
-50
0
50
100
150
200
2011 2012 2013 2014 2015
Net debt, EUR million Gearing (%)
150
100
150
0
20
40
60
80
100
120
140
160
2015 2016 2017 2018 2019 2020
Bonds Unused credit limits
31
February 12, 2016
Result announcements
in 2016
Annual Report: March 17, 2016
Q1: April 29, 2016, at 10:00 a.m.
Q2: July 18, 2016, at 10:00 a.m.
Q3: October 31, 2016, at 10:00 a.m.