Investor presentation. Third quarter 2017

Transcription

1 Investor presentation Third quarter 2017 November December 2017

2 Investor presentation third quarter 2017 Contents bpost at a glance Highlights 3Q17 4 Outlook Overall guidance Overview 7 Products 8 Strategy 9 Domestic Mail: volume & revenue 10 Domestic Mail: regulation 11 Domestic Parcels 12 International Parcels 13 & 14 Additional sources of revenues 15 M&A strategy 16 Radial DynaGroup 22 Ubiway 23 International parcels acquisitions 24 Transformation 25 Productivity 26 Vision & 28 Hybrid network 29 Stakeholders 30 CSR strategy 31 Dividend policy 32 Disclaimer Summary of key financials FY16 33 Balance sheet 34 Relationship with State 35 Management 36 More detail on 3Q17 EBITDA bridge 38 Key financials 39 Revenues 40 Domestic Mail 41 Parcels 42 Additional sources of revenues 43 Costs 44 Cash flow 45 Additional Info EBITDA bridge YTD17 47 Key financials YTD17 48 Revenues YTD17 49 Cash flow YTD17 50 European mail market 51 Key contacts 52 Financial Calendar More on corporate.bpost.be/investors (17:45 CET) Interim dividend 2017 announcement Ex-dividend date (interim dividend) Dividend payment date (17:45 CET) Annual results FY (17:45 CET) Quarterly results 1Q18 This presentation is based on information published by bpost in its Third Quarter 2017 Interim Financial Report, made available on November, 8 th 2017 at 5.45pm CET on corporate.bpost.be/investors. This information forms regulated information as defined in the Royal Decree of 14 November The information in this document may include forwardlooking statements 1, 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 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-looking statements 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 changes in 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. 1 as defined among others under the U.S. Private Securities Litigation Reform Act of

3 bpost at a glance

4 Highlights of 3Q17 Revenues up 20.4% Driven by very strong growth in Parcels and acquisitions partly offset by lower Domestic Mail revenues in line with guidance Domestic Mail underlying evolution as expected Continued e-substitution but overall underlying volume trend in line with guidance Very strong parcels performance Domestic: very strong reported volume increase driven by strong e-commerce growth and C2C; price/mix effect of -7.1% fully mix related International: mainly driven by increase in flows from Asia Organic cost evolution on track Opex influenced by acquisitions ( m) Increase in transport cost in line with international business evolution 647.6m -5.3% +32.8% + 9.1m m EBITDA perfectly in line with last year and guidance BGAAP net profit of bpost SA/NV up 1.5m 110.3m 52.0m 2017 outlook reconfirmed 4

5 Outlook for 2017 reconfirmed Recurring EBITDA and dividend payment at the same level as 2016 Revenues Increase driven by: Growth in domestic parcels: volume double digit, around -5% price/mix effect Continued growth in international parcels supported by newly acquired businesses Growing Ubiway Retail revenues Partly offset by decrease in domestic mail 1 : volume between -5% and -6%, average domestic mail price increase of 1.5% Operating expenses Increase driven by: Increase in transport cost (reflecting growth in International Parcels) Consolidation of acquired businesses Salary indexation confirmed as of July 2017 Partly compensated by continued productivity improvements and optimized FTE mix, and Continued cost optimization Capex Recurring and Vision 2020 investments ~ 90m Business development investments: Ubiway < 10m 1 4Q17 1 less on franking machines and 1 more on stamps vs. the same quarters of

6 Overall guidance as issued at CMD on 15 November 2016 We confirm our long term ambition of at least 620m 1 EBITDA by 2020 Revenue Increase driven by: Growth in domestic parcels: volume +75% at least (vs. 2015), -2 to -3% price/mix effect Growth in international parcels: revenue x2 at least (vs. 2015) Decrease in domestic mail: volume up to -6% Operating expenses Increase driven by: Increase in transport cost (reflecting growth in International) Integration of acquired businesses Inflation Partly compensated by up to 4% FTE & interim productivity increase p.a. at current scope and Optimized FTE mix Capex Further Vision 2020 investments in : ~ 90m p.a. excluding Ubiway capex Maintenance capex level in : ~ 60m p.a. excluding Ubiway capex Maintenance of dividend policy At least 85% pay-out of BGAAP net profit M&A on top of overall 2020 EBITDA guidance Accretive contribution supported by strong balance sheet. Any decision must be evaluated on 5 criteria (cfr. p. 16). 1 including acquisitions of FDM, Apple Express, Ubiway, Parcify and de Buren 6

7 Belgium s leading postal operator Built on strong foundations and with ambitious targets 2.4bn revenues 586.9m 24.2% EBITDA 496.5m 20.5% EBIT 324.1m net profit Leading market position in the resilient Belgian mail market with a balanced regulatory framework Focused mail and parcels business with a proven strategy for profitable growth Scope for continued cost improvements Strong financial performance supporting a high level of cash flow generation and dividends Proven performance track record 8.6m letters handled every day 148,000 parcels handled every day post offices 5 sorting centres franchised post points 24,850 average # FTE & interims 2016 figures (normalized) 7

8 A modern and diversified mail operator Revenues % of total One integrated domestic distribution network for mail and parcels International player hubs in London LHR and Brussels strategically located facilities in US, Canada, Poland, China, HK, Singapore, the Netherlands, Australia and New Zealand 2,425m 1 normalized revenues 2016 Domestic Mail 1,414m 58% Parcels 379m 16% Additional sources of revenues 600m 25% Transactional mail 873m 36% Advertising mail 248m 10% Press 293m 12% Domestic 182m 8% International 190m 8% Special Logistics 8m 0% International mail 162m 7% Value added services 103m 4% Banking and finance 192m 8% Other 2 143m 6% 1 58% Domestic Mail, 16% Parcels, 25% Additional sources of revenues and 1% Corporate revenue 2 Including a.o. SGEI compensation for the retail network, philately, retailer products and Ubiway since 1 December 2016 (1 month) 8

9 Focused strategy to create value and reward shareholders We are mail We grow We are lean, agile & flexible We 9

10 We are mail - we continue to focus on core mail business Volume & revenue drivers Transactional mail e-substitution mainly in administrative mail; however, 79% satisfaction level for the paper channel (vs. 54% on average for digital channels) 1 General cost cutting on all categories Mix effect: shift towards cheaper products or reduced weight of mail items Advertising mail Illustration for search, number of times considered important per 100 purchases, end-to-end Strongly linked to GDP growth (+1.2% in 2016, forecast 2017: +1.7%) Marketing mix is more balanced between different channels Focus on 6 key segments with growth potential: retail & distribution (food + non-food), automotive, FMCG (food), retail fashion, travel & leisure, SMEs Press Distribution of newspapers and periodicals are both part of the SGEIs 2 Revenues consist of: Compensation from the Belgian State: agreed in the newspapers and periodicals contracts (cfr. p. 35) Invoices sent directly to the editors 1 Source: bpost commissioned market research, 2016 (1,015 face to face interviews) 2 Services of General Economic Interest 10

11 We are mail - we continue to focus on core mail business Regulatory aspects Designated provider of the Universal Service Obligation Collection, sorting, transport and distribution of postal items up to 2kg and postal packages up to 10kg Collect and deliver 5x per week Cover full territory of Belgium Apply uniform tariffs and an identical service across the territory Fully liberalized market since 2011 with clear licensing conditions Cover 80% of the territory of the 3 regions within 5 years Deliver 2x per week within 2 years Uniform pricing over entire territory Employ contractual workers Mail pricing regulation For single piece mail & USO parcels falling within small user basket : 5 criteria to comply with, i.e. (1) affordability, (2) non-discrimination, (3) transparency, (4) uniformity and (5) cost orientation Volume and operational discounts allowed for other USO products (bulk) Price increases done in practice on a yearly basis (1 January): +1.5% on average in

12 We grow Domestic Parcels We have an established position in domestic parcels Current parcel market 100% = 1,075m B2C CAGR , % B2C ~10-12% C2C C2C 0-3% B2B B2B 0-3% Ambition: We want to capture e-commerce growth and realize profitable volume growth of at least +75% by 2020 (vs. 2015) 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) >2,200 pick-up & drop-off points (incl. 1,000 open access Kariboo! points) 150 parcel lockers in B (>450 Cubee lockers by end 2018), 51 de Buren lockers in NL Click & Collect Non-exclusive partnership with DPDHL for B2C parcel delivery into Belgium 12

13 We grow International Parcels bpost has a global footprint through Landmark Global and a nation-wide coverage in the US through Radial Strategic locations in 11 countries Asset-light business model 13

14 We grow International Parcels We enable global e-commerce through Landmark Global Unique selling proposition Support mid-sized e-tailers to expand their business beyond their national borders Provide additional services enabling customers to reach new markets at a reasonable cost without disruption Fulfillment services as an absolute differentiator Full range of e-commerce and end-to-end solutions Ambition We want to at least double international parcels revenues by 2020 (vs. 2015) through a continued focus on cross border parcel shipments: North America and Australia: we will continue profitable growth Europe: we aim to become a stronger leader in parcels Asia: we want to gain a substantial footprint Offer services to more complex developing markets (e.g. Mexico and Brazil) Enablers to realize our strategy Further leverage our state of the art technology system Mercury Acquisitions and partnerships are key Proprietary technology Web-based, carrier-neutral platform Easy integration with clients, vendors and new acquisitions 14

15 We grow bpost has other sources of revenues besides mail and parcels International mail What? Business model Mail originating from foreign countries and delivered to other countries Asset-light business model and fully variable costs Dedicated sorting centre and hub in Brussels Active in the US, Europe and Asia Value added services Customer specific solutions which leverage our key assets: last mile, retail network and financial backbone Collect and handling services for mail Services at the front door (gaz, water, electricity) Solutions tailored to specific needs decoder swap Banking & finance Agent of bpost bank ~50% of revenue (commissions) Associate 50/50 with BNP Paribas Fortis (bpost is sole retail agent) Direct offering ~50% of revenue Payment services, cash at the counter, public finance solutions 15

16 We grow We also support growth through selective and targeted M&A Rationale M&A strategy Illustrations Respond to and anticipate market trends Fast growing e-commerce Growing demand for convenience and proximity Leverage combination of mail and digital solutions Leverage our strong balance sheet Small bolt-on acquisitions to be the strategic partner of choice for our customers Diversify in growing and profitable markets linked to our core competencies Leverage and monetize our know-how in successful transformation of a postal company 1 Create an even stronger operator in a globalizing market Cross-border postal consolidation to create a stronger domestic and international operator 1 Close to our core business Improve our proximity and convenience product offering 1 Not realized Strict investment criteria Maintain sustainable dividend policy Maintain financial solidity 16

17 We accelerate the expansion of our e-commerce logistics business Acquisition of US-based (Closing expected in 4Q17) ~15-20% Omnichannel technology Optimizing efficiency of order management, ship-fromstore and in-store pick up Payment, tax & fraud protection services Processing global payments, maximizing successful authorization and reconciling tax districts and global duties Warehouse management ~70-75% & fulfillment services Adapting warehouse management and parcels preparation to e-commerce with pragmatic automation Transport management & last-mile delivery and returns Managing a large network of carriers for a seamless customer experience Customer Care Services ~10% & Technology Having a single view of customer s history and profile combined with leading self-service tech % based on normalized 2017 expected revenues Key data Expected sales 2017: $ 970-1,020m Expected normalized EBITDA 2017: $ 65-70m 6,200 FTEs 24 fulfillment centers 100% acquisition of the shares Enterprise Value: $ 820m Financing with a bridge facility at closing Financial ambitions EPS & DPS accretive as of 2020 Annual sales growth e: 6 to 8% p.a. Expected total integration costs in 2018 & 19: $ 35m to $ 40m, frontloaded in 2018 Expected high single digit EBITDA margin % as of 2020 Capex: $ 35 to $ 40m/year Losses carried forward in the next 3 years 17

18 Radial: Why integrated e-commerce logistics? Integrated e-commerce logistics solutions provide access to a large and more attractive profit pool 20% p.a. Global e-commerce sector is expected to grow at 20% p.a., with cross-border e-commerce growing at >25% p.a. Close to bpost s current capabilities (e.g. cross-border trade lanes with Landmark Global, FDM, AppleExpress, return logistics with DynaGroup) Beyond last mile and cross-border services, offer simple E2E solutions to mid-market e-commerce players and an accelerated roll-out/ scale-up of their e-commerce operations Offer a seamless and high-quality experience to consumers and have access to a larger and more attractive profit pool 18

19 Why Radial? Radial brings a distinctive set of capabilities that would otherwise take years to develop Build a significant presence in the advanced US e-commerce logistics sector with proven client base, IT and infrastructure Inject new expertise and capabilities along the e-commerce logistics value chain e.g. omnichannel technology, fulfilment, payment, tax & fraud protection and customer care, which are critical to scale the EU e-commerce logistics business Build on track record in successfully stitching together different parts of the e-commerce logistics value chain to accelerate development of e-commerce logistics business Scale bpost s e-commerce logistics capabilities in the Benelux and Europe 19

20 Radial: Why the US? Radial offers access to the advanced US e-commerce logistics sector and allows to tap into transatlantic flows bpost has a proven track record of doing business in the US through Landmark Global The US is an advanced e-commerce market that will continue to grow fast, offering the ideal opportunity to accelerate the development in the EU e-commerce logistics market, and gain a competitive edge A meaningful presence in the US provides a gateway to a global market, allowing Belgian consumers to shop online for US brands and retailers, and Belgian companies to benefit from transatlantic trade flows and export globally 20% Presence in US taps into the origin of EU e-commerce as it represents ~20% of export flows 20

21 Radial: market dynamics and competitive landscape Online revenue e-tailers, US Addressable e-commerce logistics sector $ 25-35bn addressable e-commerce logistics $ 2,000m $ 20m Radial s target audience ($ 20m 2bn revenues) Mid-market segment ($ m online revenue) Enterprise segment ($ m) Some selected key accounts ($ 600m-$ 2bn) Radial s target audience e-commerce revenue $ bn Competitive landscape E2E integrated players ~$ 400bn total US e-commerce (*) (*) $ 400bn US online retail revenue in 2016 Value chain specialists Insourcing (*) Not exhaustive examples 21

22 We grow Acquisition of (6 January 2017) Rationale: support growth strategy of parcels E-commerce related high-end deliveries requiring nonstandard, 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 Repair of e.g. smartphones, coffee machines, etc. 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. Supply chain services for banks and insurance companies: e.g. sensitive document handling, ID verification Sales 2015: 88.5m Normalized EBITDA 2015: 6.8m (7.7% margin) Initial purchase price: 51.0m Financial ambitions EPS & DPS accretive Double digit sales growth for coming years By 2020: sales x2, low double-digit EBITDA margin Total capex planned 2-3m/year 22

23 We grow Acquisition of (30 November 2016) Convenience & Proximity Retail Non- Press Logistics Retail (220 shops) Convenience distribution Pre-paid services (Alvadis) Impulse products (Burnonville) Parcels & Logistic Services (1,000 pick-up drop-off points) Rationale for bpost Diversify into the growing proximity & convenience distribution Grow in line with convenience & proximity retail market (4-6% annually ) Footprint expansion (30 to 45 new stores in the next 3 to 5 years) and remodeling Accelerate product diversification in order to enhance profitability Press Logistics Press distribution to 5,345 POS Newspaper Magazines International press Further enable domestic parcels growth strategy Improve delivery options and increase coverage (network of > 2,200 points across Belgium) Transaction details Sales 2015: 338m 1 Normalized EBITDA 2015: 14m (4.1% margin) Fully cash financed (purchase price: 81.4m, incl. 44.5m cash) Fully accretive as of 2017 Preliminary synergy estimate of 4-5m annually after full integration Total capex planned < 10m/year 1 431m disclosed in closing press release of 1 Dec. 2016, restated to 338m under accounting policies of bpost Group and IAS 18 Revenue 23

24 We grow Bolt-on acquisitions in international parcels SPE (Poland) Logistics, distribution and fulfillment across Europe for US e-tailers 100% acquisition in Nov. 2015, full consolidation as of Dec Key figures FDM (Australia) Third Party Logistics (3PL), warehousing, transport & distribution for US e-tailers 100% acquisition in March 2016, full consolidation as of April 2016 Key figures Apple Express (Canada & US) Last mile delivery, transportation and fulfillment for clients in Canada & US 100% acquisition in June 2016, full consolidation as of July 2016 Key figures Purchase price: 3.5m + earn-outs Purchase price: 14.4m + earn-outs Purchase price: 12.5m + earn-outs Sales 2014: US$ 3.4m Sales 2015: c. 24.0m Sales 08/ 15-07/ 16: c. 26.1m EBITDA 2014: NA EBITDA 2015: c. 2.4m EBITDA: c. 2.1m Rationale for bpost Support our international e-commerce cross-border parcels strategy Offer complete service range to international e-commerce customers (including fulfillment) Further build out the US market through a complete service offering Economize on last mile distribution In-house last mile distribution vs. use of incumbent postal operators or alternative distributors 24

25 Continuous improvement is in our DNA. We have a 10-year proven transformation track record Transformation journey Building of new sorting centres Transformation of the network Start of continuous optimization of delivery rounds 2007 Automated round sorting and mail sequencing 2009 Implementation of new distribution structure with reduced number of buildings Strategic Vision 2020 program in mail service operations to further increase efficiency Key events 2003 New management & start of the transformation period 2006 CVC and Danish Post enter into the capital for 50%-1 share (split 50/50), government holds 50%+1 share 2008 Danish Post sells its stake to CVC 2013 IPO in June at 14.5/share CVC sells 30% in IPO and remaining 20% in December Normalized 1 EBIT 1 Normalized figures are not audited 25

26 and we have plans for further productivity gains supported by our natural attrition rate Historic FTE evolution Average FTEs, 000 bpost has a systematic, well-rounded approach to identify and capture cost improvements across the entire organization -3.7% p.a bpost has plans for further productivity gains supported by natural attrition and Vision 2020 Age pyramid Headcount per age, ,311 7,487 9,565 38% of bpost s employees are above 50 years old* Non pay-scale contractuals Pay-scale contractuals Civil servants * Natural attrition of c. 1,600 FTE p.a. of which > 50% is replaced as auxiliary postmen which cost c. 30% less than bpost average payroll cost/fte 26

27 Vision 2020 will drive substantial productivity improvements in the field H H Centralize & Automate Preparation Install additional MSMs in 5 sorting centres (target 30 vs. 23 installed to date) Centralize Mail Bag Preparation New Brussels X Parcels Sorting Complete building Install PSM & migrate parcel sorting Distribution Network Reorganize distribution offices around 60 Mail Centres (~230 currently) Transition to new distribution model 27

28 New Brussels X Sorting Centre fully operational Total surface: 103,000 m² Working area: 80,000 m² Letter sorting hall: 50,000 m² (2 floors) Parcel sorting hall: 25,000 m² Parking on the roof: 25,000 m² Offices: 5,800 m² 1,500 FTEs 1 high-tech parcel sorting machine (PSM) Operational 24/7 with 30 high-tech machines Capacity: 300,000 parcels/day & 2,500,000 letters/day

29 High performance hybrid network We will play an architect role defining which network is best suited to handle each type of parcel Standard Specific Our integrated mail distribution and retail networks DynaGroup High-end deliveries (same day, time slot, 2XL) Parcify B/C2Me Highly specific Urgent items No packaging or label Home delivery Large volume weekdays Saturday standard format PUDO > 2,200 points 150 parcel lockers open networks External partners Sunday delivery Evening delivery (6-9pm) Urgent items Volume peaks 2-man delivery, CityDepot/Bubble Post City centers Mobility Green Euro-Sprinters Urgent items Non-standard format Technical intervention We will capitalize on high density and synergy of our integrated network We will start using an ecosystem of networks in complementary ways 29

30 We want to keep stakeholders on board Distribution quality Environment Percentage letters 1 in D st on the IPC Environmental Ranking CO 2 reduction objective: -45% by 2020 (vs. 2007) Carbon disclosure project: B (C is average score) Customer satisfaction 2 Percent 88 Committed employer Commitment & well-being Frequency rate work accidents -15% Recognize experience 243 people graduated Note: more information regarding bpost s Corporate Social Responsibility is available on the website: 1 D+1 delivery of domestic single piece items up to 2 kg, stamped at Prior tariff 2 Satisfied customers (score of 5 or above on a scale from 1 to 7 on the question: Overall, how satisfied are you about bpost? ) based on bpost commissioned survey by Ipsos-Synovate 30

31 We will achieve sustainable growth through our 3-pillar CSR strategy linked to Employee health & safety Employee training and talent development Ethics & diversity Social dialogue People we care about our employees and engage them Shared Value Creation Planet we strive to reduce our impact on the environment Green fleet Green buildings Waste management Continuity of our business Employee satisfaction and engagement Customer satisfaction Proximity we are close to the society To our community To our suppliers To our customers through our services 31

32 We create value for shareholders 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 ( 144m end 2016) % +2% +2% Final gross DPS ( ) Interim gross DPS ( ) 32

33 Summary of key financials FY16 million Reported Normalized 1 FY15 FY16 FY15 FY16 % Δ Total operating income (revenues) 2, , , , % Operating expenses 1, , , , % EBITDA % Margin (%) 22.8% 24.2% 24.2% 24.2% EBIT % Margin (%) 19.2% 20.5% 20.5% 20.5% Profit before tax % Income tax expense Net profit % FCF bpost S.A./N.V. net profit (BGAAP) % Net Debt/ (Net cash), at 31 December (549.5) (492.7) (549.5) (492.7) -10.3% Gain from sale of sizeable building 26.1m Alpha social plan provision of 54.5m Positive tax impact of Deltamedia liquidation 22.2m Note: an Excel download of detailed financials per quarter is available on the website: 1 Normalized figures are not audited 33

34 Supported by a strong balance sheet million Assets Equity and liabilities Employee benefit liabilities Cash, cash equivalents & investment securities Other assets Investments in associates Trade & other receivables Inventories PPE & intangible assets 2, , Interest-bearing loans & borrowings, bank overdrafts Provisions Trade & other payables Employee benefits Total equity 2, , , Termination (early retirement) Post 4.1 retirement 82.1 (family allowance, transport, bank, ) Deferred tax asset Other long term benefits (disability annuities) Long term benefits Pension savings days Quota days Part-time work No pension liabilities Dec 31, 2016 Sept 30, 2017 Dec 31, 2016 Sept 30, 2017 Mostly unfunded (no investment risk) Volatility mainly through the discount rate 1 bpost has no pension deficit: as is customary in Belgium all pensions are paid as part of national social security 34

35 bpost s long term relationship with the Belgian State State as a long term shareholder Belgian State has 51% shares bpost 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 provides SGEIs 1 on behalf of the State bpost provides a range of public services Fifth Management Contract (covering ) Compensation of ~ 288m in 2015 based on Net Avoided Cost State as important customer State 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) Shareholder Belgian State Free float # shares 102,075,649 97,925, press distribution contracts (newspapers & periodicals) Sixth management contract for other SGEIs Contractual amounts (excl. inflation 2, volume impact & sharing of efficiency gains) of 261.0m in 2016 (actual amount: 264.9m), 260.8m in 2017, 257.6m in 2018, 252.6m in 2019 and 245.6m in SGEI stands for Services of General Economic Interest 2 All amounts need to be adjusted for inflation on a cumulated yearly basis 35

36 bpost s management team and organization Marc Huybrechts Director Mail & Retail Solutions Kurt Pierloot Director International & Parcels Koen Van Gerven CEO Mark Michiels CHRO Koen Beeckmans CFO Philippe Dubois Director Mail Services Operations 36

37 Current Trading 3Q17

38 3Q17 EBITDA slightly up and driven by very strong Parcels growth and acquisitions million +0.2m / +0.2% EBITDA 3Q16 Domestic Mail Parcels Additional sources of revenues Corporate Costs EBITDA 3Q17 Total operating income (revenues) 38

39 3Q17 Summary of key financials 3Q17 million 3Q16 3Q17 % Δ Total operating income (revenues) % Operating expenses % EBITDA % Margin (%) 20.5% 17.0% EBIT % Margin (%) 16.3% 13.5% Profit before tax % Income tax expense Net profit % FCF (71.9) (76.3) bpost S.A./N.V. net profit (BGAAP) % Net Debt/ (Net cash), at 30 September (657.7) (518.6) -21.1% 39

40 3Q17 Total operating income (revenues) million Domestic mail Parcels Additional sources of revenues 3Q16 comparable 3Q17 % Transactional mail % Advertising mail % Press % Domestic parcels % International parcels % Logistic solutions International mail % Value added services % Banking and financial % Distribution Retail & Other % Corporate % TOTAL % 1 Defined as domestic and Belgian in- and outbound 40

41 3Q17 Domestic Mail underlying volume trend at -5.3% in line with guidance Total operating income (revenues), million 3Q YTD16 1,033.2 Working day impact Volume Price/Mix Transactional Mail: continued e-substitution. Advertising Mail: continued growth of focus segments in unaddressed, slight decrease in direct mail. Press: newspapers witness a stable trend vs. 1H17 while periodicals will benefit from volume shift towards 4Q17. Reported Underlying 1 FY16 1Q17 2Q17 3Q17 YTD17 FY16 1Q17 2Q17 3Q17 YTD17 Transactional mail -5.9% -6.0% -11.0% -7.3% -7.9% -5.9% -7.0% -9.9% -6.5% -7.7% Advertising mail -3.0% 2.7% 4.5% -1.6% 1.8% -3.0% 2.3% 4.5% -1.6% 1.8% Press -2.8% -3.1% -5.0% -4.3% -4.1% -2.8% -3.1% -5.0% -4.3% -4.1% Domestic Mail -5.0% -3.9% -7.4% -5.9% -5.6% -5.0% -4.7% -6.7% -5.3% -5.5% Q Impacted by regulatory decision on small user basket pricing and shift towards cheaper products. YTD Q17 had 1 working day less than 3Q16 for franking machines and 2 less for stamps 41

42 3Q17 Very strong parcels performance, growth in Logistic Solutions driven by DynaGroup Total operating income (revenues), million 3Q16 comparable Domestic Parcels Very strong reported volume growth of +32.8% driven by e-commerce growth and the online C2C product offering. Price/mix of -7.1%: price increase fully offset by product & client mix effect. YTD16 comparable International Parcels 9.1 Increase in flows from Asia, Europe and US Logistic Solutions Consolidation of DynaGroup as of 1 January Q YTD Defined as domestic and Belgian in- and outbound 2 New category, previously called Special Logistics 42

43 3Q17 Additional sources of revenues driven by the acquisition of Ubiway Total operating income (revenues), million 3Q16 comparable YTD16 comparable International Mail -1.5 Business mail volume decline. 1.8 VAS 1.4 Mainly driven by management of cross-border fines on behalf of the Belgian State Banking & Financial -1.4 Lower revenues from bpost bank savings accounts due to low interest rate environment and lower revenue from financial transactions managed on behalf of the State Distribution Consists of Ubiway press distribution as well as convenience distribution through Alvadis (pre-paid services) and Burnonville (impulse products) Retail & Other Consists of Ubiway proximity and convenience retail as well as other revenues Q YTD New category

44 3Q17 Organic cost evolution on track. Opex influenced by acquisitions ( m). Increase in transport cost in line with positive international business evolution. Operating expenses excl. depreciation and amortization, million FDM, Apple Express, Ubiway, DynaGroup, Parcify and de Buren 3Q YTD16 1,289.2 Transport Excluding acquisitions, increase driven by growth in the international business Payroll & Interim Other SG&A Average reported FTE & interim increase of 1,488 leading to +20.0m additional costs and explained by the integration of new subsidiaries. Favourable FTE mix of -2.9m mainly driven by the recruitment of auxiliary postmen. Price effect & others for an impact of -2.6m explained by salary indexation, CLA, merit increases, the evolution of provisions and positive phasing on CLA Other costs 3Q Excluding acquisitions, mainly increase of rent and rental costs (new Brussels sorting centre), M&A related costs, maintenance and repairs, energy costs and ICT outsourcing. YTD , ,

45 3Q17 Lower operating FCF 1 due to higher capex million 3Q16 3Q17 Delta Cash flow from operating activities Cash flow from investing activities Operating free cash flow Financing activities Net cash movement Capex CF from operating activities in line with 3Q16, excluding: Terminal dues payment, phasing in 3Q16: +16.8m Lower tax prepayment in 3Q17: +10.0m Proceeds from sale of buildings: -3.0m Higher capex: -23.8m mainly explained by Vision 2020 Cash outflow Apple Express in 2017: -2.7m 1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities 45

46 Additional info

47 YTD17 Domestic mail decline compensated by an excellent performance in parcels, acquisitions and organic cost savings million +1.2m / +0.3% EBITDA YTD16 Domestic Mail Parcels Additional sources of revenues Corporate Costs EBITDA YTD17 Total operating income (revenues) 47

48 YTD17 Summary of key financials YTD17 million YTD16 YTD17 % Δ Total operating income (revenues) 1, , % Operating expenses 1, , % EBITDA % Margin (%) 25.7% 21.6% EBIT % Margin (%) 21.8% 18.2% Profit before tax % Income tax expense Net profit % FCF bpost S.A./N.V. net profit (BGAAP) % Net Debt/ (Net cash), at 30 September (657.7) (518.6) -21.2% 48

49 YTD17 Total operating income (revenues) million YTD16 comparable YTD17 % Domestic mail Parcels Additional sources of revenues Transactional mail % Advertising mail % Press % Domestic parcels % International parcels % Logistic solutions International mail % Value added services % Banking and financial % Distribution² Retail & Other % Corporate % TOTAL 1, , % 1 Defined as domestic and Belgian in- and outbound 2 While the purchase price allocation for the Ubiway acquisition has not been finalized yet, this exercise has led to some alignments of the accounting policies of Ubiway and hence some restatements of the figures reported during 1Q17. Some revenues which had been booked in 1Q17 under the principal model have been restated to the agent model in order to be in line with the accounting policies of the bpost Group and with IAS 18 Revenue. This also necessitates no further rework under IFRS 15 revenue from contracts with customers which will become applicable as of January 1 st, As a consequence certain sales and cost of sales are now being presented on a net basis, this led to a decrease of revenues and materials costs of 42.5m for 1Q17, within the MRS operating segment but didn t have an impact on the EBITDA, EBIT or net result. 49

50 YTD17 Decrease in operating FCF 1 mainly driven by acquisitions and phasing in working capital evolution million YTD16 YTD17 Delta Cash flow from operating activities Cash flow from investing activities Operating free cash flow Financing activities Net cash movement Capex Alpha pay-outs: +16.6m Terminal dues payment, phasing in 3Q16: +16.8m Working capital evolution: -43.9m, mainly explained by a negative phasing in suppliers Proceeds from sale of buildings: -6.7m Higher capex: -23.9m M&A activities: -40.3m Investment securities: +12.0m Payment of a dividend to minority interest in 2016 ( +2.0m) compensated by higher final dividend in 2017 ( -2.0m) 1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities 50

51 European mail market A relatively resilient mail market vs. other European operators Addressed mail volume per capita 2016 operator level* CAGR for addressed mail volumes as reported by major incumbent European postal operators, percent 1 CH DE 5 5 DE CH 1 10 UK AU AU BE 8 3 SW SW 3 2 FR UK 10 EU FR 2 8 BE EU 4 NL NL 4 6 DK IT 7 7 IT DK 6 Note: definition of addressed mail may differ by operator 1 Includes addressed mail 2 Includes addressed mail 3 Includes addressed mail 4 Includes addressed mail 5 Includes mail communication and dialogue marketing 6 Includes addressed mail 7 Includes addressed mail (publishers services excl.) 8 Includes addressed mail excluding press 9 Includes all domestic mail SOURCE: Company information; Annual reports; Investor presentations; IPC; Eurostat 10 Includes inland addressed mail 11 Includes letter mail and addressed direct mail / media post * Excludes domestic competitors 51

52 Key contacts Baudouin de Hepcée Director External Communication, Investor Relations & Public Affairs Direct: +32 (0) Mobile: +32 (0) Address: bpost, Centre Monnaie, 1000 Brussels, Belgium Saskia Dheedene Manager Investor Relations saskia.dheedene@bpost.be Direct: +32 (0) Mobile: +32 (0) Address: bpost, Centre Monnaie, 1000 Brussels, Belgium 52

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