Interim report Q1 May 3, 2018

Transcription

1 Interim report Q1 May 3,

2 Agenda Highlights of Q1/2018 January-March Segments Mail, Parcel and Logistics Services Itella Russia OpusCapita Outlook 2

3 Highlights of Q1/2018 3

4 January-March in a nutshell Posti in figures Q1/2018 Operational highlights , % Net sales (EUR million) Adjusted EBITDA (EUR million) Adjusted operating result (EUR million) Personnel on average, FTE Share of USO deliveries Postal transformation continued in Q1 as the market further shifted towards parcel and logistics. Parcel volumes increased by 10% compared to previous year and domestic freight volumes grew by 5%. On the other side, the number of addressed letters delivered by Posti decreased by 10% compared to the previous year. Universal service obligation was 4.0% (4.5%) of all Posti s delivery volumes. As a result of management evaluation OpusCapita s business plan, including the execution schedule and required investments to implement the plan and the risk-premium of the discount rate, an impairment loss on goodwill of EUR 30.0 million was recognized in the first quarter of the year. 's Annual General Meeting held in Helsinki on March 27, 2018 decided to distribute a dividend of EUR 27 million based on the result in 2017 and an extra dividend of EUR 13 million. Dividend distribution is altogether EUR 40 million. In March 2018, the Supreme Court did not grant leave to appeal in litigation concerning the value added tax on postal services requested by the claimants. This means that the decision given at September 2017 by the Court of Appeal of Helsinki to overrule the complaint as requested by Posti and to compensate the legal expenses of Posti remains final. The Group s adjusted operating result is expected to remain on par with 2017 or decrease slightly. 4

5 Business Environment E-commerce continues its growth. According to the Finnish Commerce Federation, e-commerce in retail increased by 8% and e- commerce of daily goods by 88% in For Posti, the growth of e-commerce offers growth potential in parcels and logistics services. According to the Finnish Ministry of Finance, the Finnish GDP is expected to grow by 2.6% in According to the Bank of Finland, economic growth in the euro area has been exceeding forecasts and both consumption and investments have increased. The positive economic outlook is also reflected in Finnish consumers expectations. The Bank of Finland forecasts the Russian GDP to grow by 2% this year. Posti s goal is to evolve into a customer-oriented and profitable logistics and postal service company by

6 Parcel services keep growing January-March 2018 The number of parcels going through Posti Parcel Lockers Parcel volume growth in Finland and in the Baltics B2C parcel volume growth in Finland and in the Baltics % +10% +21% 6

7 Letter volumes declined by 10%, freight volumes grew by 5% Letter volumes, million units Freight volumes, million units 200, ,0 150,0 100,0-10% 0,5 0,53 0,56 50,0 +5% 0, , Source: Posti * The reported figure for domestic freight excludes food logistics 7

8 January-March

9 Net sales and operating result January-March Net sales by quarters, EUR million Q1 Q2 Q3 Q Net Sales EUR million and change, % % % Adjusted EBITDA EUR million and % % % Adjusted operating result EUR million and % % % Operating result EUR million and % % %

10 Key figures % % Net sales, EUR million Adjusted EBITDA, EUR million % % EBITDA, EUR million % % Adjusted operating result, EUR million % % Operating result, EUR million % % Result for the period, EUR million % % Return on equity (12 months), % Return on capital employed (12 months) Net debt, EUR million Net debt / Adjusted EBITDA 0.1x -0.5x Gross capital expenditure, EUR million Personnel on average, FTE 16,911 18,058 Easter took place earlier in 2018 than last year, thus reducing the number of working days during the first quarter. The Group s net sales decreased by 1.5%. Net sales grew by 0.2% in Finland and declined by 11.9% in other countries. The decline in international operations net sales was mainly due to the divestment of OpusCapita s Finance and Accounting Outsourcing business and related subsidiaries during Q3/2017. The decline in the adjusted EBITDA was attributable to the weaker result of Mail, Parcel and Logistics Services and Group overheads. As a result of management evaluation OpusCapita s business plan, including the execution schedule and required investments to implement the plan and the risk-premium of the discount rate, an impairment loss on goodwill of EUR 30.0 million was recognized in the first quarter of the year.

11 Segments External net sales by segments Adjusted operating result by segment , EUR million OpusCapita 4 % Itella Russia 6 % 4.4%* -2.1%* %* %* 16.0 Mail, Parcel and Logistics Services 90 % 11.5 Mail, Parcel and Logistics Services Itella Russia OpusCapita Other operations Posti Group * percent of net sales 11

12 Mail, Parcel and Logistics Services Q1 net sales grew slightly despite of mail volume decline. The Mail and Marketing Services net sales decrease was driven by a decline in volume, which was largely mitigated by pricing and mix changes. The Press net sales increase was driven by the acquisition last May. Strong volume growth continued to drive parcel net sales growth. However, net sales growth was below volume growth due to product mix changes, a decrease in the net sales of small items (not included in volumes) and in the average price. Logistics volumes were also affected by a shorter Q1 period, net sales still grew by 1.8%. Warehouse fill rates also improved. The result decrease was driven by a core postal volume decline, with operational costs affected by the collective labor agreement increasing salary levels, and a long winter and a challenging flu season that required the utilization of an additional workforce. The Q1 results included approx. EUR 3 million for cost items that are not expected to continue. The renewal of the service point network has proceeded as planned. Posti had a total of 1,515 service points in Finland, of which 597 were Posti Parcel Lockers (March 31). EUR million % of Net sales Net sales Net sales change, % 0.7% 5.4% % of Net sales Adjusted EBITDA % % EBITDA % % Adjusted operating result % % Operating result % % Addressed letters % 170 Volumes, million pcs Parcels % 10.4 Domestic freight* % * The reported figure for domestic freight excludes food logistics

13 Net sales of Mail and Marketing Services, Press Services, Parcel Services and Logistics Services EUR million ,4 161,5 91,0 92,7 69,1 71,8 41,7 42,0-1.7% +0.9% +4.0% +1.8% MAIL AND MARKETING SERVICES PRESS SERVICES PARCEL SERVICES LOGISTICS SERVICES 13

14 Itella Russia Net sales grew in local currency. Itella Russia s net sales measured in local currency grew by 8.8%. However, reported euro-denominated net sales decreased due to currency translation effects. The growth in net sales (measured in local currency) was attributable to higher volumes among the existing customers in the warehousing business and transport, as well as to the stabilization in the economy. The average fill rate for warehouses in Moscow was 85% (76%), while in other regions it was 78% (79%). The slight improvement in operating result was driven by a release of provisions. EUR million % of Net sales % of Net sales 100% Warehouse fill rates Net sales Net sales change, % -2.7% 31.0% Adjusted EBITDA % % 90% 80% 70% 92% 86% 89% 81% 84% 76% 85% 83% 69% 77% 90% 86% 86% 89% 85% 87% 82% 77% 85% 74% 77% 80% 75% 75% 90% 67% 89% 82% 86% 75% EBITDA % % Adjusted operating result % % Operating result % % 60% 50% Moscow Other areas 14

15 OpusCapita Paper invoice volumes and the Easter holidays affected the net sales. OpusCapita net sales declined mainly due to paper invoice sending volumes. Business Network product line volumes and net sales were impacted by the timing of the Easter holidays and the decline in transactions. Adjusted EBITDA declined as a result of weakening net sales and increased investments in products, sales and marketing. As a result of management evaluation OpusCapita s business plan, including the execution schedule and required investments to implement the plan and the risk-premium of the discount rate, an impairment loss on goodwill of EUR 30.0 million was recognized in the first quarter of the year. EUR million % of Net sales % of Net sales Net sales Net sales change, % -3.3% 20.3% Adjusted EBITDA % % EBITDA % % Adjusted operating result % % Operating result % % 15

16 Outlook 16

17 The updated Outlook 2018 Net sales The net sales in 2018 are expected to remain on a par with 2017 or decrease slightly. The development of exchange rates, especially the ruble exchange rate, may affect the Group s net sales, result and balance sheet. Operating result The Group s adjusted operating result is expected to remain on a par with 2017 or decrease slightly. Capital expenditure Capital expenditure, excluding acquisitions and disposals, is expected to decrease slightly. The Group s business is characterized by seasonality. Net sales and operating profit in the segments 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. 17

18 Thank you! 18