2017 HALF-YEAR RESULTS 27 September 2017

Transcription

1 2017 HALF-YEAR RESULTS 27 September 2017

2 LIMITATION OF LIABILITY Forward-looking statement (Safe Harbour) This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995), which, by their nature, involve a degree of risk and uncertainty. Forward-looking statements represent the company s judgement regarding future events, and are based on currently available information. Consequently the company cannot guarantee their accuracy and their completeness. Actual results may differ materially from those the company anticipated due to a number of uncertainties, many of which the company is not aware of. For additional factors that may cause the company s actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the company with the Autorité des Marchés Financiers (French financial markets authority - AMF).

3 AGENDA HY 2017 HIGHLIGHTS HY 2017 FINANCIAL REVIEW HY 2017 BUSINESS REVIEW OUTLOOK 3

4 PROGRESS ON NEOPOST S TRANSFORMATION 1% Group Organic Growth Improved Group Organic sales trend thanks to 0% -1% -2% -3% -4% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 solid new activities growth which needs to improve further 20% 12% 10% 8% 6% CSS Organic Growth 40% 35% 30% 25% CSS as % of Total Sales 4% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 MS Organic Decline and a more resilient legacy business -2% -3% -4% -5% -6% -7% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 4

5 WITH A HEALTHY BUSINESS MODEL Stabilized margin* at Group level with a growing EBITDA leading to a strong cash flow generation 20.1% 20.3% 138m 142m 61m 18.0% 24.9% 25.4% 44m HY 16 HY 17 HY 16 HY 17 HY 16 HY 17 HY 16 HY 17 Group Operating Margin* Excl. Temando & Innovation projects EBITDA & EBITDA margin Cash flow after CAPEX *before acquisition-related expense 5

6 AGENDA HY 2017 HIGHLIGHTS HY 2017 FINANCIAL REVIEW HY 2017 BUSINESS REVIEW OUTLOOK 6

7 HY 2017 SALES Change in sales (in million) (5) +1.0% (0.9%) % % +0.4% Communication & Shipping Solutions 27% (24% in HY 2016) Mail Solutions 73% HY 2016 Scope effect* Organic growth Currency effect H (76% in HY 2016) CSS activities at 27% of Group sales in HY 2017 * Scope effect on HY 2016 sales: acquisition of icon Systemhaus + 5,6m and divestment of DMTI Spatial - 0,2m 7

8 HY 2017 SALES BY DIVISION HY 2017 sales HY 2017 organic growth EDS Shipping* SME Solutions Elim. Total EDS Shipping* SME Solutions Elim. Total ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS In million Mail Solutions (3.7)% (3.7)% Communication & Shipping Solutions (10) % +11.6% +5.7% +3.9% +7.5% Total (10) % +11.6% (2.5)% +3.9% (0.9)% Growth, but not yet at expected pace Double digit growth essentially thanks to Packcity & CVP-500 Organic growth excluding Graphics: 13% Average rates /$ HY 2017 = 1.10 and HY 2016 = 1.12 ; / HY 2017 = 0.86 and 2016 = 0.79 * Including sales of the automated packing system CVP-500 8

9 HY 2017 SALES BREAKDOWN HY 2017 SALES PER COUNTRY ORGANIC CHANGE HY 2017 SALES PER TYPE OF REVENUE ORGANIC CHANGE Europe (2.3)% Sales of equipment & licenses +0.9% 47% 8% Rest of the world +3.7% 32% 45% 68% North America (0.1)% Recurring revenues (1.6)% Despite ongoing transformation, unchanged proportion of recurring revenues, well balanced between Europe and North America 9

10 CURRENT OPERATING INCOME In million HY 2016 HY 2017 Sales Gross margin % of sales 75.4% 75.3% EBITDA % of sales 24.9% 25.4% Current operating income (before acquisition-related expense) % of sales 18.0% 18.0% Stabilization of gross and EBIT margins Improved EBITDA Average rates /$ HY 2017 = 1.10 and HY 2016 = 1.12 ; / HY 2017 = 0.86 and HY 2016 =

11 EBIT MARGIN STABILIZED IN SPITE OF HIGH LEVEL OF INVESTMENTS Margin 12.4% Margin 1.7% 112 (5) (6) 101 HY 2017 Stabilization Margin 21.8% Margin 20.3% Margin 18.0% SME EBIT EDS EBIT Shipping excl. Temando EBIT Group EBIT excl. Investments New Innovation projects EBIT Temando EBIT EBIT Group EBIT (5) (6) 101 Margin 13.9% Margin 8.2% 100 HY 2016 Margin 21.0% Margin 20.1% Margin 18.0% SME EBIT EDS EBIT Shipping excl. Temando EBIT Group EBIT excl. Investments Innovation EBIT Temando EBIT Group EBIT 11

12 COSTS CONTROL AT SME LEVEL Transformation drives OPEX reduction net OPEX reduction objective of minimum 50m Digitalized go-to-market Simplify existing portfolio of products and solutions 60m 50m 40m m Objective 50m min. Dematerialized service Shared services 30m 20m 10m +13 0m +23 FY2014 H FY 2015 H FY 2016 H FY m of costs reduction already achieved in 2½ years, in line with 50m min. objective by end of

13 NET INCOME In million HY 2016 HY 2017 Current operating income (before acquisitionrelated expense) Acquisition-related expense (6) (6) Current operating income Optimization expenses (6) (6) Divestments & other (2) (6) Operating income Cost of debt (15) (17) Currency gains and losses and other 2 (0) Net financial income/(expense) (13) (17) Taxes (17) (17) Income from associated companies 0 0 Minority interest 2 2 Net attributable income Net attributable margin as a % of sales 10.5% 9.1% EPS 1.56* 1.34* Fully diluted EPS 1.46* 1.27* Impact of divestments and refinancing on net income: (7)m Average rates /$ HY 2017 = 1.10 and HY 2016 = 1.12 ; / HY 2017 = 0.86 and HY 2016 = 0.79 *As per IFRS treatments, the calculation takes into account the dividends paid to ODIRNANE s holders 13

14 CASH FLOW GENERATION Change relative to 31 January, in million HY 2016 HY 2017 EBITDA Other items (11) (5) Cash flow* Change in WCR (43) (25) Change in lease receivables Interest and income tax paid (17) (33) Cash flow from operations Capital expenditure (42) (44) Cash flow after CAPEX Acquisitions (23) (1) Cash flow after CAPEX & acquisitions Strong cash flow generation * Before net cost of debt and tax Average rates /$ HY 2017 = 1.10 and HY 2016 = 1.12 ; / HY 2017 = 0.86 and HY 2016 =

15 FINANCIAL STRUCTURE In million HY 2016 FY 2016 HY 2017 Financial debt Cash and marketable securities (80) (96) (169) Net financial debt Shareholders equity 1,078 1,139 1,136 Net debt / shareholders' equity 76% 67% 63% Net debt / EBITDA ratio Financial structure to be compared with: Leasing portfolio Leasing portfolio s default rate ~1% ~1% ~1% Rental future cash flows* Significant improvement of leverage ratio Debt fully covered by future leasing and rental cash flow Closing rates /$ HY 2017 = 1.17 and HY 2016 = 1.08 ; / HY 2017 = 0.89 and HY 2016 = 0.86 *estimate made by using a discount rate of 15% 15

16 DEBT MATURITY AT 31 JULY Bond 3.50% 2,50% (Private Placement) Bond 2.50% 3,50% (Private Placement) ODIRNANE 3,3750% % Schuldschein USPP USD 90 million USPP USD million Schuldschein and Revolving Credit Facility refinanced extended maturities No major refinancing deadline before

17 AGENDA HY 2017 HIGHLIGHTS HY 2017 FINANCIAL REVIEW HY 2017 BUSINESS REVIEW OUTLOOK 17

18 ENTERPRISE DIGITAL SOLUTIONS KEY ACHIEVEMENTS IN HY 2017 ENTERPRISE DIGITAL SOLUTIONS Birth of Quadient for an enhanced customer experience: Leverage GMC Software success to enter the Customer Experience market A unique solution combining Customer Communication Management and Data Quality Accelerates the transformation of Neopost Opening new vertical markets beyond Financial Services: Healthcare (Blue Cross Blue Shield) Utilities HY 2017 top line growth of 7%, not yet at expected level: Underperformance at icon Systemhaus and in licence sales in North America new type of customers (mainframe) and new verticals Strong growth in recurring revenues 18

19 ENTERPRISE DIGITAL SOLUTIONS Enhanced Correspondence Workflows for Pacific Life Situation A large US Insurer, with more than $140 billion of assets, Pacific Life wanted to migrate from an inflexible and outdated mainframe customer communications management (CCM) approach to a single, robust CCM platform that could transform workflow for on-demand correspondence; meet regulation requirement and reduced risks; enhance document control for improved branding, compliance and customer experience; and provide e-delivery capabilities. Neopost s Solutions After vetting potential solutions through an extensive RFP process, Pacific Life chose Quadient Software s Inspire. To earn Pacific Life s business, Quadient provided an indepth proof of concept to validate the robust features available. Quadient was chosen thanks to its ability to enable multichannel output, to give business users control over content Integration with multiple IT systems, and to provide greater control over content for regulatory compliance. Outcome Quadient streamlined processes and workflow automation: by reducing time to create Omnichannel communications by 25-50%; increasing cost savings by 25-50%; by increasing customer satisfaction with a net promoter index improved by 25-50%; and by increasing the volume of customer communications by 25-50%. Pacific Life saw a return on their investment in months 19

20 NEOPOST SHIPPING KEY ACHIEVEMENTS IN HY 2017 PACKCITY s deployment acceleration Japan: swift development thanks to successful partnership with Yamato France: continued deployment thanks to Auchan, Decathlon, Fnac and Darty As of 30 September 2017 Installed base Japan France # of Parcel Lockers 1, # of Boxes 26,000 36,000 CVP-500: 3 units sold during the first half o/w 2 repeat orders Business model still to be defined TEMANDO: significant steps forward Very promising first pilot in the UK on the Magento platform. To be followed by a pilot in the US to prepare for full-scale commercial launch Acquisition of remaining minority stake in August 2017 to be able to fully integrate Temando solution into Neopost Shipping global offer 20

21 TRANSFORMING INTO A UNIQUE END- TO-END SOLUTION PLATFORM Customers Retail, emerchants Our end-to-end solution platform Carriers & Logistics Fleets Neopost SME 21

22 Yamato Transport & Neopost shipping joint venture for Packcity deployment Situation Yamato Transport, is Japan's largest door-to-door delivery service company with 1,7bn parcels delivered per year representing a 47% market share. It needed to address three issues: e- commerce boom, workforce shortage, and high-density delivery locations. In addition, they committed with the Japanese Government to pollute less and to respect employee working hours. Neopost s Solutions Yamato decided to create a Joint- Venture with Neopost to deploy a parcel locker network of more than 5,000 lockers in Japan by They valued the capacity of Neopost to integrate other carriers and manage simultaneously multiple business models thus recognizing Neopost s leadership in the industry. This service is named PUDO in Japan. Outcome 1,000 parcel lockers or 26,000 boxes have been installed. Packcity Japan is now aiming to reach 3,000 PUDOs in HY These installations are partly subsidized by the Japanese Government and are now used by Yamato and Sagawa. Following these first successes, both partners are targeting other services: Parcel Shipments, Returns, Click & Collect, etc. 22

23 SME TRANSFORMATION UNDERWAY Resilience of Mail Solutions in a difficult market environment Market share gains in the United States More difficult context in Europe due to higher decline in mail volume Anticipated decline of Mail Solutions ranging between 4% to 6% going forward Ongoing CSS deployment Double digit growth excluding graphics, but still insufficient to compensate for MS decline Strong successes in digital solutions in France and shipping in the USA Next Challenge: export these successes to other geographies A sustainable transformation Evolution towards a SaaS business model for CSS SME margins improvement year-on-year Healthy business model based on recurring revenues 23

24 Hobart France partners with Neopost for its digital migration Situation Hobart is a leading manufacturer of food equipment products. In France, the company employs 340 people for a revenue of 54m in The company sends out 90,000 invoices per year. They wanted to digitize the delivery of their invoices to be compliant with the new French regulation and to optimize the invoice process in order to reduce their costs and their DSO (Days Sales Outstanding). Neopost s Solutions Hobart s team has been unsuccessfully looking for a solution for 2 years. Neopost was the only supplier able to offer a comprehensive multichannel solution enabling delivery of: physical mail, e-invoicing, government e-invoicing (Chorus portal), and e-registered mail for cash collection. The Neotouch solution met with 100% of their technical needs. Outcome Hobart is now sending 7,500 invoices per month (30% hybrid and 70% electronic). In the same period, their costs decreased by 56%. Thanks to its comprehensive multichannel offer Neotouch, Neopost was able to win a client from competition. Neopost is moving towards a business model based on SaaS solutions. 24

25 AGENDA HY 2017 HIGHLIGHTS HY 2017 FINANCIAL REVIEW HY 2017 BUSINESS REVIEW OUTLOOK 25

26 UNCHANGED MID-TERM OUTLOOK Return to positive organic growth Maintain a current operating margin level before acquisition-related expense above 18% throughout transformation Bring back the Group current operating margin before acquisition-related expense to minimum 20% Continued investments in innovation ~ 10m a year 26

27 APPENDICES 27

28 HY 2017 DETAILED PROFITABILITY BY DIVISION HY 2016 HY 2017 EDS Shipping SME solutions Elim. Innovation Total EDS Shipping SME solutions Elim. Innovation Total In million and in % of sales ENTERPRISE DIGITAL SOLUTIONS ENTERPRISE DIGITAL SOLUTIONS Total sales (10) (10) Current EBIT* 8 (4) (5) (6) (5) 101 Current EBIT* margin 13.9% (19.2)% 21.0% - n/a 18.0% 12.4% (22.6)% 21.8% - n/a 18.0% Excl. Temando: 8.2% Excl. Temando: 1.7% Web based platform and apps (3.3)m CVP-500 (2.1)m Web based platform and apps (4.0)m CVP-500 (1.5)m *Before acquisition-related expense Average rates /$ 2017 = 1.10 and 2016 = 1.12 ; / 2017 = 0.86 and 2016 =

29 CONSOLIDATED BALANCE SHEET (1/2) Assets (in millions) HY 2016 HY 2017 Goodwill 1,140 1,065 Intangible fixed assets Tangible fixed assets Non-current financial assets Leasing & financing receivables Other non-current receivables 2 2 Deferred tax assets Inventories Trade receivables Other current assets Current financial instruments 0 3 Financial securities TOTAL 2,809 2,781 29

30 CONSOLIDATED BALANCE SHEET (2/2) Liabilities (in millions) HY 2016 HY 2017 Shareholders equity 1,078 1,136 Non-current provisions Non-current financial debt Other non-current debt Current financial debt Deferred tax liabilities Non-current financial instruments 0 0 Prepaid income Current financial instruments 1 0 Other current liabilities TOTAL 2,809 2,781 30

31 COVENANTS US Private Placements Covenants Neopost level as at 31 July 2017 Leverage max Minimum equity of 525m 1,136m Revolving Credit Facility and the 3.50% bond Covenants on leasing operations Neopost level as at 31 July 2017 Maximum drawing: 90% of outstanding leasing portfolio Intercompany net leasing debt standing at 80% of outstanding leasing portfolio Covenants on non leasing operations Neopost level as at 31 July 2017 Maximum leverage of 3.0* excluding leasing entities 0.7 (EBITDA excl. leasing: 203m from 1/8/2016 to 31/7/2017) Minimum equity: 600m 1,136m Default Rate < 5% 1% Minimum interest cover**: All covenants easily met Increased debt flexility *Net debt excluding leasing/ EBITDA excluding leasing **EBITDA/ net cost of debt 31

32 ENTERPRISE DIGITAL SOLUTIONS COMPETITIVE LANSCAPE ENTERPRISE DIGITAL SOLUTIONS GMC Software named a leader for fourth consecutive time in Gartner magic quadrant 2015 Ranking 2017 Ranking 32

33 NEOPOST SHIPPING COMPETITIVE ENVIRONMENT Multiple local competitors in each business line Automated Packing solutions Multi-carrier shipping software Parcel lockers A niche market made of a few small players ( 5-15m revenue) delivering 1D reduction systems and CMC machinery ( 26m) as key competitor on 3D reduction 1D reduction Like Neopost Shipping, Metapack is operating in a few key markets (US, UK, FR, DE and ES) In Europe, there are multiple local players in key markets (US, UK, FR, DE). In the USA, there are ten s of competitors, the largest being Pitney Bowes, Stamps.com (incl. Endicia, shipstation and shipworks) and Kewill USA Interger/Inpost is the main global competitor of Packcity offering for implementing networks. Amazon is a new competitor for location and dedicated network. Locker manufacturers are Cleveron, TZ, SWIP BOX, By box. Allover the world there are multiple small local suppliers (Asia and East Europe) 3D reduction Europe 33

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