Investor presentation. First quarter 2018

Transcription

1 Investor presentation First quarter 2018 May - June 2018

2 Investor presentation first quarter 2018 Contents bpost at a glance Highlights 1Q18 4 Outlook Overview 6 Products 7 Strategy 8 Domestic Mail: volume & revenue 9 Domestic Mail: regulation 10 Domestic Parcels 11 International Parcels 12 & 13 Additional sources of revenues 14 M&A strategy 15 Radial DynaGroup 22 Ubiway 23 Transformation 24 Vision & 26 Productivity 27 Hybrid network 28 Stakeholders 29 CSR strategy 30 Dividend policy 31 Summary of key financials FY17 32 Balance sheet 33 Disclaimer Relationship with State 34 Management 35 More detail on 1Q18 EBITDA bridge 37 Key financials 38 Revenues 39 Domestic Mail 40 Parcels 41 Additional sources of revenues 42 Costs 43 Cash flow 44 Additional Info European mail market 46 Key contacts 47 Financial Calendar More on corporate.bpost.be/investors Capital Markets Day (Brussels) (17:45 CET) Quarterly results 2Q (17:45 CET) Quarterly results 3Q (17:45 CET) Interim dividend 2018 announcement Payment date of the interim dividend This presentation is based on information published by bpost in its First Quarter 2018 Interim Financial Report, made available on May, 2 nd 2018 at 5.45pm CET, and in its 2017 Annual Report both available 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 forward-looking 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 1Q18 Revenues up 27.0% Driven by acquisitions and continued strong parcels growth, partly offset by declining Domestic Mail revenues Underlying Domestic Mail evolution -6.6% vs. the best quarter of 2017 at -4.7% Transactional Mail at -6.7% improved vs. FY17 at -8.1% Advertising Mail impacted by phasing towards 2Q18 and one-off campaigns last year Outstanding parcels performance Domestic: continued double-digit volume growth driven by thriving e-commerce and C2C; price/mix effect of -6.1% fully mix related Logistic Solutions: mainly driven by Radial acquisition ( m) Organic costs impacted by higher parcels volumes, wage drift & absenteeism Opex influenced by acquisitions ( m) 916.2m -6.6% +28.3% m m Organic cost increase mainly in payroll & interim, transport, rent & project related costs EBITDA below last year, in line with guidance BGAAP net profit of bpost SA/NV 140.2m 72.3m 2018 outlook: normalized EBITDA at the low end of the range due to mail volume decline, absenteeism and productivity in parcel sorting; dividend at least

5 Outlook for Normalized EBITDA at the low end of the 560 to 600m range Dividend payment at least at the same level as 2017 Revenues Increase driven by: Growth in domestic parcels: volume double digit, price/mix effect between -3% and -6% Continued growth in international parcels supported by newly acquired businesses Stable Radial revenues Partly offset by volume decline in domestic mail 2 up to -7%, average domestic mail price/mix effect of +4% Continued decline in Banking & Financial revenue Operating expenses Increase driven by: Increase in transport cost (reflecting growth in International Parcels & Mail) Consolidation of acquired businesses Salary indexation expected as of November 2018 Radial costs impacted by phase out webstore business and higher than expected opex (medical benefits & inflation) not fully compensated by productivity improvements Partly compensated by continued productivity improvements and optimized FTE mix and Continued cost optimization Capex Recurring & Vision 2020 investments and business development investments for new subsidiaries (Radial, Ubiway and Dynagroup) for an estimated total amount of ~ 140m 1 Outlook for 2018 includes the acquisitions of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc. and Active Ants 2 2Q18 will count 1 working day less on stamps, 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

6 Belgium s leading postal operator Built on strong foundations and with ambitious targets 3.0bn revenues 598.0m 19.8% EBITDA 501.6m 16.6% EBIT 329.3m 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 8.1m letters handled every day 190,000 parcels handled every day post offices 5 sorting centres franchised post points 26,906 average # FTE & interims 2017 figures (normalized) 6

7 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, the Netherlands, Germany, Spain, Poland, China, HK, Singapore, Australia and New Zealand 3,024m 1 revenues 2017 Domestic Mail 1,353m 45% Parcels 796m 26% Additional sources of revenues 832m 27% Transactional mail 808m 27% 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% Retail & Other 2 289m 10% 1 45% Domestic Mail, 26% Parcels, 27% Additional sources of revenues and 1% Corporate revenue 2 Including a.o. SGEI compensation for the retail network, philately and retailer products 7

8 Focused strategy to create value and reward shareholders We are mail We grow We are lean, agile & flexible We 8

9 We are mail - we continue to focus on core mail business Volume & revenue drivers Transactional mail E-substitution (volume impact): mainly banking/insurance & telco & utilities combined with higher acceptance of e-documents at the receiver s side Rationalization (volume & price impact): systematic optimization of outgoing mail flows resulting in lower volumes which shift towards cheaper products Consolidation of mail volumes (price impact): smaller mail volumes are bundled by consolidators Advertising mail Illustration for search, number of times considered important per 100 purchases, end-to-end Strongly linked to GDP growth (+1.7% in 2017, forecast 2018: +1.8%) 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, home, SMEs Press Distribution of newspapers and periodicals are both part of the SGEIs 1 Revenues consist of: Compensation from the Belgian State: agreed in the newspapers and periodicals contracts (cfr. p. 33) Invoices sent directly to the editors 1 Services of General Economic Interest 9

10 We are mail - we continue to focus on core mail business Regulatory aspects New Postal Law into force since 10 February 2018 Designated provider of the Universal Service Obligation until end 2023 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 Fully liberalized market since 2011 with clear licensing conditions 3 operational licensing conditions (geographical coverage, frequency of distribution and uniform pricing over entire territory) removed Employ contractual workers maintained Stable & predictable 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) New price cap formula to check affordability & cost orientation Price cap = inflation - (volume evolution + cost reduction factor x efficiency gains sharing factor) Price increases done in practice on a yearly basis: +4.7% on average in 2018 on all domestic mail items 10

11 We grow Domestic Parcels We have an established position in domestic parcels 2016 parcel market 1 100% = 1,285m CAGR , % B2C B2C ~15% C2C C2C ~5% B2B B2B 0-4% 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) 152 parcel lockers in B (>450 Cubee lockers by end 2018), 61 de Buren lockers in NL Click & Collect Non-exclusive partnership with DPDHL for B2C parcel delivery into Belgium 1 Source: Effigy, 2017 not yet available 11

12 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 13 countries Asset-light business model 12

13 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 13

14 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 (license plates, decoder swap, bclose) Solutions tailored to specific needs decoder swap bclose Traffic fines Permit Check 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 14

15 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 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 15

16 We accelerate the expansion of our e-commerce logistics business Acquisition of US-based ~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 Key data Sales 2017: $ 1,082m Normalized EBITDA 2017: $ 57m 6,200 FTEs 24 fulfillment centers (of which 2 in Europe) 100% acquisition of the shares Enterprise Value: $ 820m Financed with a bridge facility at closing (16 November 2017) Financial indicators Expected total integration costs in 2018 & 19: $ 35m to $ 40m, frontloaded in 2018 and mainly relating to EBITDA impact of webstore phase-out Capex: $ 35 to $ 40m/year Losses carried forward in the next 3 years % based on normalized 2017 revenues 16

17 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 financial performance in 2018 & 2019 as expected for an amount of $ 35m to $ 40m compared to Commercial function requires an improvement to address a number of critical points: Customer churn is higher than expected due to: insourcing, bankruptcies, acquisitions and insufficient focus on customer satisfaction Total Contract Value ( TCV ) of new contracts signed in 2017 was below target. 1Q18 is also showing a slow start reflecting an insufficient pipeline. Lead time in fulfillment and transport between customer decision and top line impact could be around ~9 to 18 months Radial s international activities are considered as a strategic asset for bpost s future and will be integrated with other European fulfillment facilities under bpost leadership Action plan Commercial initiatives defined and being implemented to grow the top line including: Robust lead generation to improve pipeline management and increase TCV realization Hire top Chief Revenue Officer Initiatives taken to improve customer satisfaction Initiatives taken to keep costs under control 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 $ 27-37bn 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 ~$ 460bn total US online Retail e-commerce (*) (*) $ 460bn 1 expected US online retail revenue in 2017 Value chain specialists Insourcing 1 Source: Forrester Data, Online Retail Forecast, 2017 (*) 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 Sales 2017: 132.2m 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 & diversification 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 Accelerate product diversification in order to enhance profitability Footprint expansion (30 to 45 new stores in the next 3 to 5 years) and remodeling Grow in line with convenience & proximity retail market 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) Purchase price: 81.3m (incl. 44.5m cash) Sales 2017: 281.7m Fully cash financed 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 Continuous improvement is in our DNA. We have a 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 2017 Launch New Brussels X sorting facility 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 24

25 and we have plans for further productivity gains with Vision H H Centralize & Automate Preparation Install additional MSMs in 5 sorting centres (24 installed to date) Automate & Centralize preparation activities Parcels Sorting Complete building Install PSM & migrate parcel sorting Increase Parcel sorting capacity Distribution Network Reorganize distribution offices around 60 Mail Centres (~230 currently) 25

26 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

27 We are leveraging the age pyramid to optimize the FTE mix bpost significantly reduced # FTEs through cost improvements across the entire organization. Recent uplift in FTEs is driven by acquisitions and high growth in parcels Historic FTE evolution Average FTEs, % p.a The age pyramid allows bpost to optimize the FTE mix replacing mainly statutory workers by auxiliary postmen Age pyramid Headcount per age, ,699 7,233 9,453 37% of bpost s employees are above 50 years old* Non pay-scale contractuals Pay-scale contractuals Civil servants * Natural attrition of c. 1,200 FTE p.a. being replaced to capture parcels growth which outpaces productivity improvements. Most of these replacements are at a lower cost (auxiliary postmen cost c. 30% less than bpost average payroll cost/fte) 27

28 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 152 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 28

29 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: C (C is average score) Customer satisfaction 2 Percent Committed employer Commitment & well-being Work accidents -2.5% Recognize experience 247 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, 2017 figure not yet available 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 29

30 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 30

31 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 ( 173m end 2017) +16% * Final gross DPS ( ) Interim gross DPS ( ) * Proposed final gross dividend per share to be approved by General Meeting of May 9,

32 Summary of key financials FY17 million Reported Normalized 1 FY16 FY17 FY16 FY17 % Δ Total operating income (revenues) 2, , , , % Operating expenses 1, , , , % EBITDA % Margin (%) 24.2% 19.8% 24.2% 19.8% EBIT % Margin (%) 20.5% 16.3% 20.5% 16.6% Profit before tax % Income tax expense Net profit % FCF (485.8) (485.8) bpost S.A./N.V. net profit (BGAAP) % Net Debt/ (Net cash), at 31 December (492.7) (492.7) m linked to amortization on intangible assets (purchase price allocation PPA Ubiway, Dynagroup & de Buren) Tax impact of PPA on amortization of 2.5m 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 32

33 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 3, , Interest-bearing loans & borrowings, bank overdrafts Provisions Trade & other payables 3, , , ,206.5 Termination (early retirement) Post retirement (family allowance, transport, bank, ) Deferred tax asset Other long term benefits (disability annuities) PPE & intangible assets 1, ,600.2 Employee benefits Long term benefits Pension savings days Quota days Part-time work Total equity No pension liabilities 1 Dec 31, 2017 Mar 31, 2018 Dec 31, 2017 Mar 31, 2018 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 33

34 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 Shareholder Belgian State # shares 102,075,649 bpost provides SGEIs 1 on behalf of the State bpost provides a range of public services 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 (actual amount: 270.0m), 257.6m in 2018, 252.6m in 2019 and 245.6m in 2020 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) Free float 97,925,295 1 SGEI stands for Services of General Economic Interest 2 All amounts need to be adjusted for inflation on a cumulated yearly basis 34

35 bpost s management team and organization Pierre Winand Director Parcels & Logistics North America Kurt Pierloot Director Mail & Retail Nico Cools CIO Koen Van Gerven CEO Dirk Tirez CLO Henri de Romrée CFO Luc Cloet Director Parcels & Logistics Europe & Asia Mark Michiels CHRO 35

36 Current Trading 1Q18

37 1Q18 EBITDA impacted by anticipated mail volume decline, lower gain on building sales and organic cost increase million -36.8m / -20.8% inorganic (excl. Radial) EBITDA 1Q17 Domestic Mail Parcels (excl. Radial) Additional sources of revenues Corporate Costs (excl. Radial) EBITDA Radial EBITDA 1Q18 Total operating income (revenues) Lower gain from building sales ( -5.5m) 37

38 1Q18 Summary of key financials 1Q18 million Reported Normalized 1 1Q17 1Q18 1Q17 1Q18 % Δ Total operating income (revenues) % Operating expenses % EBITDA % Margin (%) 24.5% 15.3% 24.5% 15.3% EBIT % Margin (%) 21.4% 11.4% 21.4% 11.7% Profit before tax % Income tax expense Net profit % FCF % bpost S.A./N.V. net profit (BGAAP) % Net Debt/ (Net cash), at 31 March (659.1) (659.1) m linked to amortization on intangible assets (purchase price allocation PPA Ubiway, Dynagroup & de Buren) Tax impact of PPA on amortization of 0.5m 1 Normalized figures are not audited 38

39 1Q18 Total operating income (revenues) million 1Q17 1Q18 % 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 % Distribution % Retail & Other % Corporate % TOTAL % 1 Defined as domestic and Belgian in- and outbound 39

40 1Q18 Domestic mail underlying volume trend at -6.6% driven by weak advertising mail & continued e-substitution Total operating income (revenues), million 1Q17 Working day impact Tough comparable base at -4.7% for 1Q17 (best quarter of 2017). Transactional Mail: continued e-substitution (banking/insurance, telco & utilities) and rationalization (banking/insurance & public sector). Advertising Mail: mainly impacted by phasing towards 2Q18 and one-off campaigns last year. Press: in line with LY at -3.1%. Volume Price/mix 1Q Reported Underlying 1 FY17 1Q18 FY17 1Q18 Transactional mail -8.3% -7.0% -8.1% -6.7% Advertising mail 1.5% -7.6% 1.5% -7.6% Press -3.7% -3.3% -3.7% -3.3% Domestic Mail -5.9% -6.8% -5.8% -6.6% Price increase on non-regulated items as of 1 January and SUB as of 1 March partly offset by shift towards cheaper products Q18 had 1 working day less on franking machines vs. 1Q17 40

41 1Q18 Continued outstanding domestic parcels performance, growth in Logistic Solutions driven by Radial Total operating income (revenues), million 1Q Radial Consolidation of Radial as of 16 November 2017 (revenues are reported under Logistic Solutions), revenues slightly below last year. 1Q17 rebased Domestic Parcels Reported volume growth of +28.3% driven by thriving e-commerce and the online C2C product offering. Price/mix of -6.1%: price increase fully offset by product & client mix effect. International Parcels Logistic Solutions Growth driven by higher revenues from Europe and US (despite negative FX impact), slight decrease in revenues from Asia. Mainly Leen Menken consolidated as of January Q Defined as domestic and Belgian in- and outbound 41

42 1Q18 Additional sources of revenues driven by acquisitions Total operating income (revenues), million 1Q International mail 13.9 Driven by consolidation of Imex & M.A.I.L., Inc. 1 as of January VAS 0.8 Driven by management of cross-border fines on behalf of the Belgian State. Banking & Financial Distribution Retail & Other Lower revenues from bpost bank savings accounts due to low interest rate environment; lower revenue from financial transactions managed on behalf of the State. Mainly decline of Alvadis due to legislative change on prepaid mobile phone cards (June 2017), decline of press volumes partly compensated by price increases and launch of the Panini stickers for the world cup Higher sales Ubiway Retail offset by lower sales bpost retail products. 1Q M.A. I.L., Inc. 1Q18 contains January & February Consolidation of March figures deferred to a later quarter. 42

43 1Q18 Opex influenced by acquisitions ( m), payroll & interim impacted by higher parcels volumes, wage drift & absenteeism Operating expenses excl. depreciation and amortization, million Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc. 1Q Excluding scope change, driven by evolution of the international activities. Transport Payroll & Interim Other SG&A Average reported FTE & interim increase of 7,022 leading to +91.0m additional costs and explained by the integration of FTE & interims from new subsidiaries, higher parcels volumes and absenteeism. Favourable FTE mix of -3.1m driven by the recruitment of auxiliary postmen. Price effect of +6.0m mainly explained by salary indexation, CLA and merit increases only partially compensated by the impact of the tax shift. Other costs Excluding scope change, increase in rent and rental costs (mainly new Brussels sorting centre) and project related costs. 1Q Excluding scope change, decrease driven by higher recoverable VAT and lower material costs

44 1Q18 Lower operating FCF 1 mainly due to decreased operating results million 1Q17 1Q18 Delta Cash flow from operating activities Cash flow from investing activities Operating free cash flow Financing activities Net cash movement Capex Operating results: -23.6m Changes in working capital: -2.1m Proceeds from sale of buildings: -8.7m Higher capex: -1.5m Cash outflows related to acquisitions: +21.0m, mainly DynaGroup acquisition cash outflow in 1Q17 vs. contingent consideration in 1Q18: +8.2m LGI shares in 1Q17: +31.7m New acquisitions: -19.1m Transactions with minorities: -0.3m Payments related to borrowings and leasing liabilities: -3.3m 1 Operating free cash flow = cash flow from operating activities + cash flow from investing activities 44

45 Additional info

46 European mail market A relatively resilient mail market vs. other European operators Addressed mail volume per capita 2017 operator level* CAGR for addressed mail volumes as reported by major incumbent European postal operators, percent 1 CH DE 5 10 UK 208 (1) -3.2 CH 1 5 DE AU AU BE 8 3 SW UK 10 (2) 2 FR SW 3 EU FR 2 8 BE EU 4 NL NL 4 7 IT 58 (1) -9.4 IT 7 (2) 6 DK 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 (1) 2016 data (2) data 46

47 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 47

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