European postal markets an overview

Transcription

1 European postal markets 2018 an overview

2 Index 1. Foreword 3 2. Country comparison PPO comparison Update postal operators 23 2

3 Foreword By Herna Verhagen PostNL continues to make considerable progress transforming into a logistics e-commerce company, helping us to realise our ambition to be the postal and logistic solutions provider in our chosen markets, which reflects the increasing e-commerce growth and shrinking mail volumes. PostNL does this against the background of an improved financial position. Regulation impacts PostNL operationally and financially more than expected whilst volume decline of Dutch mail volumes is one of the highest in Europe. In The Netherlands this will ultimately harm the accessibility and reliability of Dutch postal services. From an European perspective the differences in regulatory regime and the state aid or net cost compensation that many national postal operators receive in many countries create an unlevel playing field. In this document you find useful background information that enables you to place the Dutch market and PostNL in perspective to that of other countries and postal operators. I hope you will enjoy reading! 3

4 4 Country comparison 2016

5 Competition letter mail in Europe as per 2017 Volumes addressed mail in %* 38% Full end-to-end competition Competition with limitations End-to-end competition less than 5% 51% 11% * Figure based on market volumes in Austria, Belgium, Denmark, Finland, France, Germany, Italy, The Netherlands, Spain, Sweden, UK in 2016 Sources: Annual Reports, IPC, National Regulators, PostNL Team Analysis 5

6 Volume development in Europe Volumes addressed mail in %* 19% 29% < 2% 2% to 4% 4% to 6% 6% to 8% > 8% 31% 21% * Figures are based on market volumes of Austria, Belgium, Denmark, Finland, France, Germany, Italy, The Netherlands, Spain, Sweden, UK Note: The compound annual market decline rate of Germany is based on figures from the Bundesnetzagentur, wherein 2016 is still a forecast Sources: Annual Reports, National Regulators, PostNL Team Analysis 6

7 Universal Service Obligation and VAT exemption as per 2018 NL DE SE FI UK ES IT AT FR BE DK Standard letter mail Bulk letters Direct mail Periodicals Non-priority letter mail Standard parcel post Bulk parcels universal service obligation and VAT exempt universal service obligation but not VAT exempt no universal service obligation Note: Germany has an USO, but no designated Universal Service Provider Note: Direct Mail is partially designated in France Note: This table concerns domestic services Sources: IPC, PostNL Team Analysis 7

8 Country comparison Total addressed mail items in 2016 (in billion items) Germany UK France Spain Italy Netherlands Sweden Austria Belgium Finland Denmark Austria UK France Sweden Belgium Germany Finland Netherlands Denmark Spain Italy PPO 27 Sources: Annual Reports, Eurostat, National Regulators, PostNL Team Analysis Addressed PPO* & market mail items per household in Alternative postal companies % -4.6% -5.0% -4.1% -4.3% -0.1% -5.2% -10.8% -19.4% -3.4% -8.7% Germany, the UK, and France combined add up to approximately 70% of the total addressed mail market (in volume) of the countries listed. In Belgium and Germany periodicals are not included, for Denmark, Spain, and Finland this is unknown. The percentages denote the change in addressed mail items per household compared to Network competition in Germany, The Netherlands and Sweden is the largest with volume market shares of resp. 17%, 22% and 23%. For Spain the total PPO mail items are used, since the PPO (Correos) does not report the addressed mail items. * See page 42 for definition 8

9 E-commerce E-commerce in 2017 UK Sweden Denmark Netherlands Germany Finland France Austria Belgium Spain Italy 32% 50% 82% 81% 80% 79% 75% 71% 67% 62% 60% E-commerce definition of Eurostat: Proportion of individuals who purchased online within the last 12 months Parcels per capita in 2016 reported by PPO Royal Mail Deutsche Post PostNL PostNord (SE) Austrian Post PostNord (DK) Posti La Poste bpost Poste Italiane Sources: Annual Reports, Eurostat, IPC report, PostNL Team Analysis Correos did not report their parcel volumes 9

10 10 PPO comparison 2016

11 Corporate Social Responsibility Carbon footprint in 2016 Austrian Post bpost Royal Mail La Poste PostNL PostNord Correos Posti Deutsche Post 32.7 (+19.2%) Scope 1* Scope 2* Scope 3* Gender profile in % 0% 7% (27%) 14% (21%) 64.2 (-0.7%) 69.4 (+7.5%) 74.3 (+1.5%) 29% 76.2 (-5.2%) 89.7 (+0.5%) 38% 33% 30% (48%) 96.1 (+0.3%) (+1.6%) (+4.6%) PostNL 50% (26%) 50% (29%) Royal Mail Poste Italiane Posti La Poste PostNord Deutsche Post Correos bpost Austrian Post (23%) (31%) (47%) Grams CO2 per euro revenue according to the Greenhouse Gas Protocol. CO2 emission is strongly influenced by the kind of activities executed by the PPO. See page 18 for the diversification. The percentages between brackets denote the change with respect to Notes: For Royal Mail the emission and revenue of the UKPIL segment is reported. For La Poste the total emission and revenue of the group (including financial services) is shown. For Deutsche Post the emission and revenue of the Post-eCommerce-Parcel segment is reported. Poste Italiane does not report the emission, and is therefore not included in this graph. This figure shows the percentage of females in the board of management of the PPO. The percentages between brackets denote the fraction of females in management positions, as reported by IPC. However, their definition of manager is not entirely clear. Notes: For Posti and Correos, the fraction of female managers is unknown. The source of the fraction of female managers of PostNL is the annual report. * See page 42 for definition Sources: IPC, Annual Reports, Corporate Reports, PostNL Team Analysis 11

12 Next-day delivery Next-day delivery of PPO and statutory obligation in 2016 PostNL Austrian Post Deutsche Post Royal Mail PostNord (SE) PostNord (DK) bpost 96.4% (95.0%) 95.7% (95.0%) 94.0% (80.0%) 93.0% (93.0%) 91.5% (85.0%) 91.5% (93.0%) 90.9% (93.0%) La Poste Poste Italiane Posti 82.0% (80.0%) 83.9% (80.0%) 84.9% (85.0%) The percentages between brackets denote the statutory obligations. Correos has a D+3 target of 93%, which it realises (93.2%). D+1 performance is unknown. Sources: Annual Reports, National Regulators, PostNL Team Analysis 12

13 Rate comparison: weighted single item rates Single item rate 20g (D+1), DL format, CPL corrected (1/1/2018, ) Weighted single item rate (D+1), CPL corrected (1/1/2018, ) Royal Mail PostNord (SE) Austrian Post PostNL La Poste Deutsche Post Posti bpost PostNord (DK) Poste Italiane Correos Single item rates are weighted by the different size and weight categories. Moreover, rates have been corrected for the Dutch Comparative Price Level (CPL). The CPL is the ratio of Purchasing Power Parity (PPP) of a country to Dutch PPP. Note: The standard rates of Correos, Poste Italiane, and PostNord (DK) are based on a D+3, a D+4, and a D+5 service level, respectively. Here, the weighted D+1 rates are reported. Note: The countries using also size based rates next to weight are Belgium, Spain, Germany, Italy, and the UK. Note: A new weighting matrix is applied, due to changes in size and weight ratios. This results in a 3 percent decrease for PostNL comparing to the old weighting matrix. Note: bpost will apply a rate change of 10.1% in March The single item rate and weighted single item rate will become 0.87 and 1.49, respectively. Sources: OECD, PostNL Team Analysis, Websites of PPOs 13

14 Rate comparison: bulk item rates Bulk item rate 0-20g, C5 format, D+1, CPL corrected (1/1/2018, ) PostNord (SE) PostNL La Poste bpost Royal Mail Deutsche Post Posti Austrian Post PostNord (DK) Poste Italiane Correos Usually, the rates also depend on the amount of letters sent by the client. Here, we show public rates for a costumer sending a batch of 1000 letters, without discounts. Note: The presented rates are based on unsorted delivery by the customer. Note: For Correos, the bulk item rate equals the single item rate for a D+1 service level. Sources: OECD, PostNL Team Analysis, Websites of PPOs, Copenhagen Economics Analysis 14

15 Rate comparison: bulk item rates Bulk item rate 40-50g, C4 format, D+1, CPL corrected (1/1/2018, ) PostNord (SE) PostNL Royal Mail La Poste Posti bpost Deutsche Post Poste Italiane Austrian Post PostNord (DK) Correos Usually, the rates also depend on the amount of letters sent by the client. Here, we show public rates for a costumer sending a batch of 1000 letters, without discounts. Note: The presented rates are based on unsorted delivery by the customer. Note: For Correos, the bulk item rate equals the single item rate for a D+1 service level. Note: Austrian Post treats a C4 format letter as a parcel. Sources: OECD, PostNL Team Analysis, Websites of PPOs, Copenhagen Economics Analysis 15

16 Rate comparison: domestic parcel rates Domestic parcel rates, CPL corrected (1/1/2018, ), consumer tariffs kg 5 kg 10 kg PostNL bpost PostNord (DK) Austrian Post Poste Italiane PostNord (SE) Posti Correos Royal Mail Deutsche Post La Poste Note: For all PPOs the parcel rate of the product that most closely resembles the PostNL product, is reported. (service level of D+1, including Track & Trace). Note: Size restrictions differ per PPO. The following sizes are used: 20 x 14 x 8 cm for 2 kg, 30.5 x 21.5 x 11 cm for 5 kg, and 48.5 x 36 x 26 cm for 10 kg. All PPOs charge for oversized parcels. Royal Mail designates different size classes in their tariff structure. Note: For La Poste and Deutsche Post the D+1 parcel rates are relatively high because their standard service is D+2. These tariffs for 2, 5, and 10 kg are as follows. La Poste: 8.65, 13.15, and Deutsche Post: 6.99, 6.99, and Note: For Correos and PostNord (SE) the service level can be either D+1 or D+2, depending on the distance between the origin and destination of the parcel. Note: bpost will increase the domestic parcel rates of the considered categories with 0.20 in March Sources: Websites of PPOs, PostNL Team Analysis 16

17 Rate comparison: international parcel rates Parcel rates from and to The Netherlands kg 5 kg 10 kg PostNL bpost Austrian Post Deutsche Post Posti La Poste Poste Italiane PostNord (DK) PostNord (SE) Royal Mail Correos Parcel rate from The Netherlands to another EU-country, CPL corrected (1/1/2018, ) Parcel rate from other EU-countries to The Netherlands CPL corrected (1/1/2018, ) Note: For PostNL, the price for sending a parcel to each of the other reported countries, except Finland, is displayed. Note: For the other PPOs, the price for sending a parcel to The Netherlands is reported. Note: All reported rates are consumer tariffs. Note: Size restrictions differ per PPO. If the size affects the parcel rate, the following sizes are used: 20 x 14 x 8 cm for 2 kg, 30.5 x 21.5 x 11 cm for 5 kg, 48.5 x 36 x 26 cm for 10 kg. This holds for Austrian Post, PostNord, and Royal Mail. Note: For all PPOs, the parcel rate of the product that most closely resembles the PostNL product, is reported. Sources: Websites of PPOs, PostNL Team Analysis 17

18 Revenue Split % 80% 60% 40% Other Logistics & Freight Financial services Parcels and Express International Mail 20% 0% Deutsche Post Poste Italiane La Poste Royal Mail PostNord PostNL bpost Austrian Post Posti Correos Note: Only positive revenue is shown. The percentage reported is the sum of the positive revenues of each of the segments. Note: Posti does not report Mail, Parcel, and Logistics revenues separately. Therefore, the sum of these three is reported as Mail. Note: PostNord does not report Parcel and Logistics revenues separately. Therefore, the sum of these two is reported as Parcels. Note: The following negative percentages are constructed by calculating the negative revenue as part of the sum of the positive revenues: Poste Italiane reported a negative revenue for Adjustments and Elimination of -13.4%. Deutsche Post reported a negative revenue for Consolidation of -4.1%. Posti reported negative revenue for Intra group sales of -3.8%. La Poste reported negative revenue for Eliminations of -20.9%. PostNL reported negative revenue for Other of -18.3%. Austrian Post reported a negative revenue for Consolidation of -12.4%. Sources: Annual reports of PPOs, IPC, PostNL Team Analysis 18

19 EBIT Split % 80% 60% 40% Other Logistics & Freight Financial services Parcels and Express International Mail 20% 0% Deutsche Post Poste Italiane La Poste Royal Mail PostNord PostNL bpost Austrian Post Posti Correos Note: Only positive EBIT is shown. The percentage reported is the sum of the positive EBIT of each of the segments. Note: The Parcels and Express EBIT of bpost includes the International segment. Note: Parcel and Mail EBIT were not always reported separately. In these instances the sum of the two has been reported as Mail. This holds for Poste Italiane, La Poste, Deutsche Post, Royal Mail, PostNord, Posti, and Correos. In addition, the Mail EBIT of Posti includes Logistics as well. Note: The following negative percentages are constructed by calculating the negative EBIT as part of the sum of the positive EBIT: Poste Italiane reported a negative EBIT for mail of -29.5%. Deutsche Post reported a negative EBIT for Corporate Center/Other of -9.3%. Posti reported a negative EBIT for Itella Russia (-4.0%) and Opus Capita (-7.8%) of in total -11.8%. La Poste reported a negative EBIT for Digital Services (-0.3%), Shared Services (-9.3%), and Unallocated (- 39.2%) of in total -48.7%. Austrian Post reported a negative EBIT for Corporate/Consolidation of -50.1%. bpost reported a negative EBIT for Corporate (reconciliation post) of -7.7%. Correosand PostNord reported a negative EBIT. Sources: Annual reports of PPOs, IPC, PostNL Team Analysis 19

20 Financial comparison PPOs Mail revenue (2016, in billion ) Deutsche Post La Poste Royal Mail Poste Italiane PostNL Correos Austrian Post bpost Posti PostNord (SE) PostNord (DK) Mail EBIT (2016, in million ) Deutsche Post La Poste bpost Austrian Post Royal Mail PostNL PostNord (SE) Posti Correos PostNord (DK) Poste Italiane Sources: Annual Reports, PostNL Team Analysis 1, Mail revenue of Deutsche Post, Poste Italiane, Posti, and Correos includes domestic parcels The revenues include domestic and cross border activities The mail revenue of PostNL concerns national mail Mail EBIT of Deutsche Post, La Poste, Royal Mail, Posti, Correos, and Poste Italiane includes parcels For bpost the group EBIT is shown PPOs that receive substantial USO and/or SGEI support: La Poste ( 514 million), bpost ( million), Austrian Post ( million), Correos ( 180 million), and Poste Italiane ( 371 million) 20

21 Financial comparison PPOs Mail revenue development Deutsche Post Posti Correos Poste Italiane Austrian Post La Poste PostNord (SE) bpost Royal Mail PostNL PostNord (DK) -11.4% -0.4% -1.2% -1.5% -1.5% -1.6% -2.0% -3.0% -3.4% -3.4% -4.3% Difference between 2015 and 2016 mail revenues in local currency Mail revenues of Deutsche Post, Poste Italiane, Posti, and Correos include parcels The revenues include domestic and cross border activities The mail revenue of PostNL concerns national mail Group revenue development Poste Italiane Royal Mail La Poste Correos bpost PostNL PostNord Posti Deutsche Post Austrian Post -16.0% -2.2% -2.5% -3.2% -0.3% -0.4% -1.4% 1.1% 5.7% 7.7% Difference between 2015 and 2016 group revenues in local currency PostNord (SE) and PostNord (DK) are not reported separately, because they are in the same group. Sources: Annual Reports, PostNL Team Analysis 21

22 Quality versus weighted postal rate Domestic next-day delivery (2016) 100% 95% 90% Top end PostNL (NL) Austrian Post (AT) Royal Mail (UK) PostNord (SE) Deutsche Post (DE) bpost (BE) European average PostNord (DK) Note: The weighted postal rate is a weighted average of the CPL-corrected single item rates in the different weight and size categories. Note: Correos is not included due to incomparability of data; they only report their D+3 quality. Note: European average based on companies presented. 85% La Poste (FR) Poste Italiane (IT) Posti (FI) 80% Sources: Annual Reports, PostNL Team Analysis, Websites of PPOs Low end Weighted domestic single item rate 2016 (D+1, in, CPL corrected) 22

23 23 Update postal operators

24 Belgium Update postal operators Challenges Effect on market USO Large definition of USO. USO with bpost until 2018 and expected to be renewed. Market characteristics Belgium Regulatory framework Labour conditions VAT exemption Competition At present, postal legislation requires a licensing system with the condition to work with employees. Regulatory framework is under review. The revised Postal law is published 9 February The main changes are bulk parcels no longer in USO and licensing condition to work with own employees. The postal law states that postal companies are not allowed to use selfemployed people for the distribution of letter mail. bpost is exempt from charging VAT for Universal Service Products, its competitors are not. This leads to a price difference for customers who cannot settle VAT on purchases. Limited end-to-end competition. Consolidators access to bpost network is given on per sender basis. Area: Population: 30,278 km m Incumbent: bpost (50.1% state owned) Value addressed postal market: 1.2 billion (2016) State aid / net cost of USO bpost is compensated for services in the public interest. Total compensation 264.9m in Sources: BIPT, bpost, IPC, PostNL Team Analysis, Raad voor de Mededinging 24

25 Belgium - bpost Update postal operators CAGR yr 3yrs Volume total mail items (in million items) - 2,821 2,817 2, addressed mail items (in million items) 1,847 1,769 1,692 1,607 1, % -4.8% unaddressed mail items (in million items) - 1,051 1,125 1, Financials group revenue gf (in million ) 2,416 2,443 2,465 2,434 2, % -0.2% mail revenue m (in million ) 1,676 1,551 1,523 1,464 1, % -3.0% group EBIT (operating profit) gf (in million ) % 3.3% mail EBIT (operating profit) m (in million ) profit gf (in million ) % 6.3% Workforce group FTE gf 26,625 25,683 24,631 23,847 23, % -2.6% mail FTE m ,245 17, group employees gf 29,922 28,747 27,479 26,381 26, % -2.1% mail employees m Quality domestic quality 93.3% 95.7% 94.7% 91.3% 90.9% Postal rates domestic, up to 20g % 3.1% domestic, up to 50g % 3.1% domestic, up to 100g % 3.1% domestic, up to 250g % 3.1% international (Europe), up to 20g % 3.8% international (rest of the world), up to 20g % 3.2% Country exchange rate EUR/EUR inhabitants million % 0.7% households million % 0.3% land area km² 30,278 30,278 30,278 30,278 30,278 households per square kilometer 1/km² % 0.3% CPL % -0.3% GDP (in billion ) % 2.5% internet access 82% 83% 86% 86% 87% Key figures addressed volume per inhabitant items % -5.5% addressed volume per HH items % -5.1% addressed volume per FTE gf (in 1000 items) % -2.2% revenue per FTE gf (in 1000 ) % 2.5% gross margin gf EBIT/revenue 13.4% 18.4% 19.5% 19.2% 20.5% 6.9% 3.5% Notes Financials - Mail revenues of 2014 and 2015 are positively influenced by the SGEI renumerations of million and million, respectively Financials - Mail revenue of 2015 has been restated Financials - The increase in the profit of 2016 is mainly due to a decrease in tax expenses and provisions Postal rate - bpost will increase its rates with approximately 10% in March 2018 Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of bpost, WIK (2013) 25

26 France Update postal operators Challenges Competition Effect on market No significant end to end competition. Consolidators access to La Poste network is given on per sender basis. Market characteristics France Access VAT exemption Difficulties in cities with access to apartments that use La Poste s entry system. La Poste is exempt from charging VAT for Universal Service Products, which covers the complete mail market. Its competitors are not VAT exempt. This leads to a price difference for customers who cannot settle VAT on purchases. Area: Population: 549,970 km m Incumbent: La Poste (100% state owned) Value addressed postal market: 6.6 billion (2016) State aid / net cost of USO Incumbent is compensated for distributing press items and keeping a certain presence in rural areas with post offices. European Commission authorized this on Total compensation in mln. Sources: Arcep, IPC, La Poste, PostNL Team Analysis 26

27 France - La Poste Update postal operators Sources: Arcep, CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of La Poste CAGR yr 3yrs Volume total mail items (in million items) 19,454 23,452 22,233 22,013 21, % -2.3% addressed mail items (in million items) 14,500 13,668 12,889 12,045 11, % -5.5% unaddressed mail items (in million items) 4,954 9,784 9,353 9,968 10, % 1.9% Financials group revenue gf (in million ) 21,658 22,084 22,163 23,045 23, % 1.8% mail revenue m (in million ) 11,410 9,564 9,328 9,334 9, % -1.5% group EBIT (operating profit) gf (in million ) % 8.2% mail EBIT (operating profit) m (in million ) % 7.4% profit gf (in million ) % 10.2% Workforce group FTE gf 221, , , , , % -3.4% mail FTE m group employees gf mail employees m Quality domestic quality 87.9% 87.4% 86.7% 85.5% 84.9% Postal rates domestic, up to 20g % 11.8% domestic, up to 50g % 18.2% domestic, up to 100g % 2.8% domestic, up to 250g % 11.4% international (Europe), up to 20g % 8.1% international (rest of the world), up to 20g % 2.7% Country exchange rate EUR/EUR inhabitants million % -0.4% households million % 1.5% land area km² 549, , , , ,970 households per square kilometer 1/km² % 1.5% CPL % -1.0% GDP (in billion ) 2, , , , , % 1.8% internet access 83% 84% 86% 87% 88% Key figures addressed volume per inhabitant items % -5.1% addressed volume per HH items % -7.0% addressed volume per FTE gf (in 1000 items) % -2.2% revenue per FTE gf (in 1000 ) % 5.4% gross margin m EBIT/revenue 6.0% 4.9% 4.5% 7.5% 6.4% -14.5% 9.0% Note Volume - Both addressed and unaddressed mail volumes have been restated from 2013 onwards Financials - The increase in mail EBIT in 2015 was primarily driven by the large price increase as of 1 January 2015, which offset the decline in volumes delivered Financials - The mail revenue of 2013 was restated 27

28 Germany Update postal operators Challenges Effect on market Minimum wage 8.84/h, effective January 1, Higher minimum wage expected for Competition Labour conditions Market situation Nationwide end-to-end competition. Postal market under review due to digitalisation. Volume decline not visible in the German mail market, DMpotential not fully developed Postcon pays more than minimum wage due to collective wage agreement. Market share of competition of 16.5%. Postcon participates in this discussion. Positive volume development in Germany against the international trend. Digitalisation is level still lower than in other Western European countries. Market characteristics Germany Area: Population: 348,672 km m Incumbent: Deutsche Post (20.7% state owned) Value addressed postal market: 9.2 billion (2016) Regulatory framework Ex-ante price control by regulatory authority currently only for private mail. No new Postal Law planned up to now. Sources: Bundesverband Briefdienste, Bundesnetzagentur (2017/2018) 28

29 Germany - Deutsche Post Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of Deutsche Post CAGR yr 3yrs Volume total mail items (in million items) 17,644 18,674 18,405 17,401 16, % -3.5% addressed mail items (in million items) 13,447 14,428 14,233 13,517 13, % -3.4% unaddressed mail items (in million items) 4,197 4,246 4,172 3,884 3, % -4.1% Financials group revenue gf (in million ) 57,680 54,912 56,630 59,230 57, % 1.4% mail revenue mp (in million ) 13,972 9,975 10,014 9,784 9, % -0.8% group EBIT (operating profit) gf (in million ) 2,665 2,865 2,965 2,411 3, % 6.8% mail EBIT (operating profit) mp (in million ) 1,048 1,260 1,298 1,103 1, % 4.6% profit gf (in million ) 1,762 2,211 2,177 1,719 2, % 7.9% Workforce group FTE gf 428, , , , , % 1.8% mail FTE mp 145, , , , , % 5.9% group employees gf 473, , , , , % 1.9% mail employees mp Quality domestic quality 95.0% 94.0% 94.0% 90.0% 94.0% Postal rates domestic, up to 20g % 4.1% domestic, up to 50g % 0.0% domestic, up to 100g % 0.0% domestic, up to 250g % 0.0% international (Europe), up to 20g % 6.3% international (rest of the world), up to 20g % 6.3% Country exchange rate EUR/EUR inhabitants million % 0.1% households million % 0.9% land area km² 348, , , , ,672 households per square kilometer 1/km² % 0.9% CPL % -0.7% GDP (in billion ) 2, , , , , % 3.6% internet access 84% 86% 88% 89% 91% Key figures addressed volume per inhabitant items % -3.4% addressed volume per HH items % -4.3% addressed volume per FTE mp (in 1000 items) % -8.7% revenue per FTE mp (in 1000 ) % -6.3% gross margin mp EBIT/revenue 7.5% 12.6% 13.0% 11.3% 14.8% 31.4% 5.5% Notes Volumes - The volumes from 2013 onwards have been restated due to new reporting method Financials - The decline in revenue in 2016 is mainly due to currency translation effects Financials - Deutsche Post restated their mail revenue for 2013 due to the creation of a new division Financials - Deutsche Post restated their group revenue, mail revenue and mail EBIT due to IFRS 10 and IFRS 11 Financials - The Group EBIT of 2013 is adjusted due to a revised calculation basis Financials - The increase in EBIT in 2016 is largely attributable to a revision of the terms of contracts with the UK National Health Service Quality - The decrease of domestic quality in 2015 is due to nationwide labour strikes at mail centres and in letter delivery operations 29

30 Italy Update postal operators Challenges VAT exemption Regulatory framework Competition State aid / net cost of USO Effect on market Poste Italiane is VAT exempt from for Universal Services. Competition is not resulting in price differences for VAT exempt customers. Focuses on protecting the interests of the market, including competitors. Nationwide end to end competition. Access to the incumbent s network. Poste Italiane is compensated for net cost USO by Government. Sources: AGCOM, IPC, PostNL Team Analysis, Website of Poste Italiane Individual negotiated tariffs and public tenders of public administrations are excluded from VAT exemption. In 2017 the monopoly on delivering judicial correspondence and fines has been removed from competition law. Regulation from AGCOM is pending. Competition revenue market share 17%-20% (relates to non USO market). Poste Italiane has been found guilty of abuse of dominant position in bulk mail market and fined (>20m) (AGCM, ). AGCOM decision pending on net cost calculation of 279m (2015) and 371m (2016). AGCOM approval on net costs of 393m (2013) and 409m (2014). Market characteristics Italy Area: Population: 294,140 km m Incumbent: Poste Italiane (64.7% state owned) Value addressed postal market: 2.3 billion (2016) 30

31 Italy - Poste Italiane Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of Poste Italiane CAGR yr 3yrs Volume total mail items (in million items) 4,481 4,027 3,428 3,133 2, % -11.1% addressed mail items (in million items) 3,946 3,527 3,022 2,769 2, % -10.5% unaddressed mail items (in million items) % -15.5% Financials group revenue gf (in million ) 24,069 26,268 28,512 30,739 33, % 8.0% mail revenue mp (in million ) 4,657 4,452 4,074 3,882 3, % -5.0% group EBIT (operating profit) gf (in million ) 1,382 1, , % -9.4% mail EBIT (operating profit) mp (in million ) profit gf (in million ) 1,032 1, % -14.8% Workforce group FTE gf 143, , , , , % -1.7% mail FTE mp group employees gf mail employees mp Quality domestic quality 92.9% 90.4% 90.3% 88.1% 83.9% Postal rates domestic, up to 20g % 51.8% domestic, up to 50g % 9.2% domestic, up to 100g % 5.3% domestic, up to 250g % 23.1% international (Europe), up to 20g % 1.7% international (rest of the world), up to 20g % -1.1% Country exchange rate EUR/EUR inhabitants million % 1.3% households million % 0.4% land area km² 294, , , , ,140 households per square kilometer 1/km² % 0.4% CPL % -0.7% GDP (in billion ) 1, , , , , % 1.6% internet access 58% 61% 64% 68% 71% Key figures addressed volume per inhabitant items % -11.6% addressed volume per HH items % -10.8% addressed volume per FTE gf (in 1000 items) % -8.9% revenue per FTE gf (in 1000 ) % 9.9% gross margin mp EBIT/revenue 8.9% 6.7% -12.4% -14.6% -11.4% - - Notes Workforce - From 2013 onwards, a new calculation is used to calculate the Group FTE and now includes the average amount of flexible workers Quality - The 2015 number shows a weighted average of two D+1 products, because one replaced the other in October 2015 Postal rate - The increase in domestic up to 20g and 250g tariff in 2017 is due to a product replacement 31

32 The Netherlands Update postal operators Challenges Labour conditions VAT exemption USO & regulatory framework Competition Competition and access Effect on market Dutch Postal Law requires postal operators to have 80% of mailmen working under a labour contract (per 1 January 2018). Equal treatment of all providers with VAT on bulk mail, i.e. no distortion of competition (due to small USO definition). A process has started to find a solution for the future of the Dutch USO against the background of the declining mail volumes ( Postal Dialogue ). This process has been initiated by the Dutch government and is expected to result in amendments of the regulatory framework for the postal market. Nationwide end-to-end network competition. Significant market power (SMP) regulation as from 1 January PostNL voluntarily offers nondiscriminatory access on a per sender basis. Market share competitors 20-25%. In July 2017 the supervisory authority (ACM) published the decision on SMP concerning overnight mail services requiring PostNL to offer wholesale services with cost based tariffs to postal companies per 1 August PostNL appealed against this decision. Market characteristics The Netherlands Area: Population: 33,893 km m Incumbent: PostNL (0% state owned) Value addressed postal market: 1.2 billion (2016) Sources: ACM, IPC, PostNL Team Analysis 32

33 The Netherlands - PostNL Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of PostNL CAGR yr 3yrs Volume total mail items (in million items) addressed mail items (in million items) 3,437 3,029 2,705 2,401 2, % -9.9% unaddressed mail items (in million items) Financials group revenue g (in million ) 4,361 4,163 3,465 3,461 3, % -6.4% mail revenue m (in million ) 2,284 2,060 2,044 1,961 1, % -3.1% group EBIT (operating profit) g (in million ) % -10.1% mail EBIT (operating profit) m (in million ) % 7.2% profit g (in million ) % - Workforce group FTE g 33,284 31,016 26,361 25,074 23, % -8.3% mail FTE m 23,278 20,466 18,656 17,378 16, % -7.5% group employees g 66,411 59,280 52,364 49,174 46, % -7.8% mail employees m 54,474 46,676 43,412 40,185 36, % -7.9% Quality domestic quality 93.9% 95.9% 96.7% 96.4% 96.4% Postal rates domestic, up to 20g % 6.4% domestic, up to 50g % 6.4% domestic, up to 100g % 6.4% domestic, up to 250g % 6.4% international (Europe), up to 20g % 6.8% international (rest of the world), up to 20g % 6.8% Country exchange rate EUR/EUR inhabitants million % 0.5% households million % 0.8% land area km² 33,893 33,893 33,893 33,893 33,893 households per square kilometer 1/km² % 0.8% CPL % 0.0% GDP (in billion ) % 2.5% internet access 93% 94% 94% 94% 94% Key figures addressed volume per inhabitant items % -10.4% addressed volume per HH items % -10.6% addressed volume per FTE m (in 1000 items) % -2.7% revenue per FTE m (in 1000 ) % 4.8% gross margin m EBIT/revenue 6.4% 7.1% 14.5% 12.1% 9.6% -20.2% 10.6% Notes Financials - Fluctuations in profits as of 2011 are explained by the (reversal of) impairment charges of TNT Express Financials - Revenue of 2013 is adjusted to reflect the impact of the adoption of IFRS 11 and IAS 28R Financials - In Mail EBIT adjustments are made for exceptional items, as well as adjustments for non-cash costs for pensions and provisions Financials - Financial figures of 2014 were restated due to TNT Express sale, transfer of Cendris from PostNL Other to Mail NL, and discontinuation of UK activities Workforce - PostNL reported a restate of the workforce figures of

34 United Kingdom Update postal operators Challenges VAT exemption Pricing End-to-end competition Effect on market Royal Mail is exempt from VAT for its USO and regulated access services; services of competitors are not exempt. This leads to a price difference for customers who cannot settle VAT on purchases. In October 2014, the High Court in London ruled that access services have to remain VAT exempt. RM has considerable freedom on pricing, only limited by competition law and specific regulation based on baskets of products in access services. RM has a price cap of a second class stamp to provide consumer protection. RM is consistently increasing prices beyond inflation (RPI) to address volume shortfalls There is no significant end-to-end competition in the UK. Royal Mail s competitor Whistl has closed down its end-to-end letter delivery operations in Judgement by Ofcom is expected against RM s anti-competitive behaviour against Whistl in Ofcom (UK postal regulator) has reviewed the regulatory framework. The USO has been pronounced secure and no changes are expected until Market characteristics United Kingdom Area: Population: 241,930 km m Incumbent: Royal Mail (0% state owned) Value addressed postal market: 4.2 billion / 5.2 billion (2016) Sources: Ofcom 2016 report, PostNL Team Analysis 34

35 United Kingdom - Royal Mail Update postal operators Sources: CIA World Factbook, OECD, PostNL Team Analysis, Website of ONS, Website of Royal Mail CAGR yr 3yrs Volume total mail items (in million items) 9,543 10,513 8,612 8,194 7, % -10.0% addressed mail items (in million items) 6,236 7,370 5,455 5,201 4, % -13.8% unaddressed mail items (in million items) 3,307 3,143 3,157 2,993 2, % -2.3% Financials group revenue g (in million ) 11,449 11,125 11,569 12,735 11, % 2.4% mail revenue mp (in million ) 5,963 5,441 5,664 6,161 5, % -1.0% group EBIT (operating profit) g (in million ) 448 1, % -48.3% mail EBIT (operating profit) mp (in million ) 313 1, % -48.9% profit g (in million ) 703 1, % -39.5% Workforce group FTE g 164, , , , % - mail FTE mp 151, , , , % - group employees g 167, , , , , % -1.5% mail employees mp 149, , , , , % -1.5% Quality domestic quality 92.5% 93.2% 93.0% 92.6% 93.1% Postal rates domestic, up to 20g % 1.6% domestic, up to 50g % 1.6% domestic, up to 100g % 1.6% domestic, up to 250g % 1.6% international (Europe), up to 20g % 6.4% international (rest of the world), up to 20g % 13.0% Country exchange rate GBP/EUR inhabitants million % 0.3% households million % 1.2% land area km² 241, , , , ,930 households per square kilometer 1/km² % 1.2% CPL % 2.7% GDP (in billion ) 2, , , , , % 5.1% internet access 89% 91% 92% 93% 95% Key figures addressed volume per inhabitant items % -14.1% addressed volume per HH items % -14.9% addressed volume per FTE mp (in 1000 items) % - revenue per FTE mp (in 1000 ) % - gross margin mp EBIT/revenue 5.3% 33.0% 3.0% 0.5% 4.5% 866.6% -48.4% Notes Volume - Reported addressed mail figures concern commercial (end-to-end) volumes calculated by Ofcom Financials - Larger than expected increase in EBIT and profits in 2013 are attributable to Pension Reforms ( 1,350 mln) Financials - Mail EBIT of 2015 includes a 413 million charge for specific items and pension adjustments Financials - Mail EBIT of 2016 includes a 222 million charge for pensions and a 7 million credit for specific items Postal rates - International (rest of the world) rates are up to 10g; tariff for letters between 10g and 20g is higher ( 1.33 in 2014) Exchange rate - For the years the annual average exchange rates are reported. For 2018 the exchange rate of 1 January 2018 is displayed. Reporting period - The financial year ends at March 31 35

36 Austria - Austrian Post Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of Austrian Post CAGR yr 3yrs Volume total mail items (in million items) 5,823 5,668 5,637 5,635 5, % -1.8% addressed mail items (in million items) 2,001 2,009 1,934 1,849 1, % -4.5% unaddressed mail items (in million items) 3,822 3,659 3,703 3,786 3, % -0.4% Financials group revenue gf (in million ) 2,438 2,437 2,498 2,501 2, % -4.8% mail revenue m (in million ) 1,508 1,510 1,488 1,502 1, % -0.7% group EBIT (operating profit) gf (in million ) % 2.8% mail EBIT (operating profit) m (in million ) % 0.4% profit gf (in million ) % 7.2% Workforce group FTE gf 23,181 24,211 23,912 23,476 21, % -3.6% mail FTE m 17,192 17,955 17,331 16,877 16, % -2.9% group employees gf mail employees m Quality domestic quality 96.0% 95.5% 96.3% 95.9% 95.7% Postal rates domestic, up to 20g % 3.1% domestic, up to 50g % 11.6% domestic, up to 100g % 19.9% domestic, up to 250g % 19.9% international (Europe), up to 20g % 4.6% international (rest of the world), up to 20g % 0.0% Country exchange rate EUR/EUR inhabitants million % 1.2% households million % 1.3% land area km² 82,445 82,445 82,445 82,445 82,445 households per square kilometer 1/km² % 1.3% CPL % -0.3% GDP (in billion ) % 2.9% internet access 81% 82% 82% 85% 85% Key figures addressed volume per inhabitant items % -5.7% addressed volume per HH items % -5.7% addressed volume per FTE m (in 1000 items) % -1.7% revenue per FTE m (in 1000 ) % 2.3% gross margin m EBIT/revenue 18.1% 18.7% 18.1% 19.0% 19.3% 1.7% 1.1% Notes Financials - The decrease in group EBIT in 2015 is explained by impairment losses trans-o-flex Group, which is held for sale. Financials - The decrease in profit in 2015 is due to impairment losses in tangible and intangible assets Financials - Increase in EBIT and profit in 2016 is due to savings in operating expenses, including a 140 million reduction in the 2015 impairment losses Financials - The decrease in group revenue in 2016 is due to the sale of all shares in trans-o-flex in March

37 Denmark - PostNord Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of PostNord CAGR yr 3yrs Volume total mail items (in million items) addressed mail items (in million items) % -15.4% unaddressed mail items (in million items) Financials group revenue g (in million ) 4,510 4,589 4,390 4,204 4, % -4.0% mail revenue mp (in million ) 1, % -11.3% group EBIT (operating profit) g (in million ) mail EBIT (operating profit) mp (in million ) profit g (in million ) Workforce group FTE g 39,713 39,305 37,407 35,256 33, % -5.4% mail FTE mp 12,730 12, group employees g mail employees mp Quality domestic quality 93.5% 93.2% 94.8% 92.8% 91.5% Postal rates domestic, up to 20g Kr % 39.2% domestic, up to 50g Kr % 39.2% domestic, up to 100g Kr % 12.4% domestic, up to 250g Kr % 21.6% international (Europe), up to 20g Kr % 23.0% international (rest of the world), up to 20g Kr % 17.8% Country exchange rate SEK/EUR inhabitants million % -0.1% households million % 0.7% land area km² 42,434 42,434 42,434 42,434 42,434 households per square kilometer 1/km² % 0.7% CPL % -1.0% GDP (in billion ) % 2.3% internet access 93% 95% 96% 97% 97% Key figures addressed volume per inhabitant items % -15.3% addressed volume per HH items % -15.9% addressed volume per FTE mp (in 1000 items) revenue per FTE mp (in 1000 ) gross margin g EBIT/revenue 1.3% 1.7% 0.9% 1.4% 2.8%- - - Notes Volumes - The decline in mail volumes in 2016 is largely attributable to a 99% decline in Priority mail/quickbrev volumes Financials - Mail revenue of 2013 has been restated due to organizational changes (mail and communications are now one department) Financials - Group profit 2013 has been restated due to adjusted report from a subsidiary Financials - Group EBIT and profit in 2016 were charged by an impairment losses on goodwill, property, plant and equipment Workforce - Mail FTE of 2012 has been restated by PostNord (due to an internal move of employees) Quality - The D+1 quality in 2015 was negatively affected by extreme weather conditions in the last few months, and an unlawful strike. Postal rate - The displayed postal rates are including 25% VAT Exchange rate - For the years the annual average exchange rates are reported. For 2018 the exchange rate of 1 January 2018 is displayed Country - Exchange rate applies to financials from the annual report. Postal rates are based on DKK exchange rate, revenue on SEK exchange rate 37

38 Finland - Posti Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of Posti, WIK (2013) CAGR yr 3yrs Volume total mail items (in million items) 2,900 2,930 2,300 2,200 2, % -11.2% addressed mail items (in million items) 1,700 1, % -7.6% unaddressed mail items (in million items) 1,200 1,930 1,400 1,370 1, % -13.2% Financials group revenue g (in million ) 1,947 1,977 1,867 1,649 1, % -6.7% mail revenue mp (in million ) 1,168 1,160 1,500 1,338 1, % 4.4% group EBIT (operating profit) g (in million ) % 45.8% mail EBIT (operating profit) mp (in million ) % -18.6% profit g (in million ) % 44.4% Workforce group FTE g 23,676 23,712 21, mail FTE mp group employees g 27,816 25,877 23,289 21,598 20, % -7.5% mail employees mp 17,844 16,706 14, Quality domestic quality 91.6% 90.0% 89.7% 82.5% 82.0% Postal rates domestic, up to 20g % 11.9% domestic, up to 50g % 11.9% domestic, up to 100g % 14.5% domestic, up to 250g % 11.9% international (Europe), up to 20g % 14.5% international (rest of the world), up to 20g % 14.5% Country exchange rate EUR/EUR inhabitants million % 0.4% households million % 0.9% land area km² 303, , , , ,815 households per square kilometer 1/km² % 0.9% CPL % -1.2% GDP (in billion ) % 2.0% internet access 91% 92% 93% 93% 94% Key figures addressed volume per inhabitant items % -8.0% addressed volume per HH items % -8.4% addressed volume per FTE g (in 1000 items) revenue per FTE g (in 1000 ) gross margin mp EBIT/revenue 6.3% 5.5% 1.1% 2.9% 2.6% -9.5% -22.0% Notes Name - Itella changed its name to Posti in 2014 Volumes - Mail volumes were restated since 2012 Financials - Numbers for the years 2014 and 2015 are restated due to change in the revenue recognition principle Financials - Mail revenue and EBIT also include Parcel and Logistics Services since 2014 Workforce - Since 2015, the group FTE and number of mail employees are not reported anymore in the annual report 38

39 Spain - Correos Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of Correos CAGR yr 3yrs Volume total mail items (in million items) 3,627 3,265 3,099 2,936 2, % -5.3% addressed mail items (in million items) unaddressed mail items (in million items) Financials group revenue gf (in million ) 1,964 2,048 1,732 1,766 1, % -4.9% mail revenue mp (in million ) 1,739 1,605 1,590 1,614 1, % -0.3% group EBIT (operating profit) gf (in million ) mail EBIT (operating profit) mp (in million ) profit gf (in million ) Workforce group FTE gf 57,275 54,556 52,514 51,383 51, % -2.2% mail FTE mp - 53,264 51,275 50,153 49, % -2.2% group employees gf mail employees mp Quality domestic quality 68.8% Postal rates domestic, up to 20g % 9.4% domestic, up to 50g % 5.7% domestic, up to 100g % 4.5% domestic, up to 250g % 3.5% international (Europe), up to 20g % 14.5% international (rest of the world), up to 20g % 13.2% Country exchange rate EUR/EUR inhabitants million % 1.3% households million % 0.4% land area km² 498, , , , ,980 households per square kilometer 1/km² % 0.4% CPL % -2.7% GDP (in billion ) 1, , , , , % 2.9% internet access 72% 74% 77% 80% 81% Key figures addressed volume per inhabitant items addressed volume per HH items addressed volume per FTE gf (in 1000 items) revenue per FTE gf (in 1000 ) % -2.8% gross margin gf EBIT/revenue -0.7% 2.8% 16.3% -3.3% -3.1% - - Notes Financials - Increase in EBIT and profit of 2013 and 2014 is explained by increased compensation for provision of the USO Financials - The decrease in profit in 2015 is to a large extent caused by a decrease in compensation for provision of the USO Postal rates - The listed rates are based on a D+3 service level as these are the standard single item rates in Spain; the D+1 rate up to 20g is relatively high ( 3.39) 39

40 Sweden - PostNord Update postal operators Sources: CIA World Factbook, Eurostat, OECD, PostNL Team Analysis, Website of PostNord CAGR yr 3yrs Volume total mail items (in million items) addressed mail items (in million items) 2,123 2,056 1,983 1,872 1, % -5.1% unaddressed mail items (in million items) Financials group revenue g (in million ) 4,510 4,589 4,390 4,204 4, % -4.0% mail revenue mp (in million ) 1,833 1,594 1,485 1,330 1, % -7.2% group EBIT (operating profit) g (in million ) mail EBIT (operating profit) mp (in million ) % 9.0% profit g (in million ) Workforce group FTE g 39,713 39,305 37,407 35,256 33, % -5.4% mail FTE mp 17,686 17, group employees g mail employees mp Quality domestic quality 95.4% 94.9% 93.5% 90.3% 91.5% Postal rates domestic, up to 20g SEK % 8.7% domestic, up to 50g SEK % 8.7% domestic, up to 100g SEK % 8.7% domestic, up to 250g SEK % 8.7% international (Europe), up to 20g SEK % 14.5% international (rest of the world), up to 20g SEK % 14.5% Country exchange rate SEK/EUR inhabitants million % 1.1% households million % 1.4% land area km² 410, , , , ,335 households per square kilometer 1/km² % 1.4% CPL % -2.6% GDP (in billion ) % 2.2% internet access 94% 95% 93% 92% 95% Key figures addressed volume per inhabitant items % -6.1% addressed volume per HH items % -6.3% addressed volume per FTE mp (in 1000 items) revenue per FTE mp (in 1000 ) gross margin g EBIT/revenue 1.3% 1.7% 0.9% 1.4% -2.8% - - Notes Financials - Mail revenue of 2013 has been restated due to organizational changes (mail and communications are now one department) Financials - Group profit 2013 has been restated due to adjusted report from a subsidiary Financials - Group EBIT and profit in 2016 were charged by an impairment losses on goodwill, property, plant and equipment Postal Rates - The lowest category (up to 20g) was increased in 2015 to up to 50g, hence they are the same in price Exchange rate - For the years the annual average exchange rates are reported. For 2018 the exchange rate of 1 January 2018 is displayed Country - As the number of households in 2015 reported by Eurostat is unrealistically large (5.10 mln), the mean of the 2014 and 2016 number is presented 40

41 Main sources CIA World Factbook The World Factbook provides information for 267 countries on the people, government, economy, and geography, including the countries' number of inhabitants and land area. Website: Eurostat Eurostat offers detailed statistics on the EU and candidate countries, including the number of private households and the share of the population that has internet access. Website: GDP GPD is also taken from Eurostat. Website: IPC IPC Postal Regulatory Database. Website: OECD The Organisation for Economic Co-operation and Development (OECD) publishes comparable statistics and economic and social data at country level, including the Comparative Price Level (CPL). Website: 41

42 Explanatory notes Abbreviations CAGR Compound Annual Growth Rate CPL Comparative Price Level PPO Public Postal Operator PPP Purchasing Power Parity USO Universal Service Obligation Definitions Comparative Price Level Value addressed postal market Postal Rates Scope 1 emission Scope 2 emission Scope 3 emission Comparative price levels are defined as the ratios of PPOs to exchange rates Value of domestic addressed letter market, excluding newspapers and cross-border mail (if possible) Postal rates as per 1 January of the referred year All direct emissions generated by sources that are owned or leased by the company Emissions from the generation of purchased electricity consumed by the company Indirect emissions that are a consequence of the company s activity but arise from sources not owned or controlled by the company Classification of figures in Postal Operator Information (page 21 38) g group figures gf group (including financial services) figures m mail division figures mp mail division (including parcels) figures 42

43 Contact information Published by PostNL, 26 February 2018 For more information, please contact Public Affairs No responsibility is taken for the accuracy of the information contained in the publication. Although every effort has been made to compile correct and up-to-date information, neither the editor nor the publisher and editorial staff will assume responsibility for possible inaccuracies and their consequences. No indemnities can be claimed for printing or typesetting mistakes or mistakes resulting from misinterpretation during research. 43