Postnl Nv · EURONEXT:PNL
Postnl Nv — Q2 2017 Earnings Presentation
39 slides from Postnl Nv's earnings presentation, Aug 7, 2017
Slide 1: Q2 & HY 2017 Results
Q2 & HY 2017 Results The Hague, 7 August 2017
Slide 2: Q2 & HY 2017 Results
Q2 & HY 2017 Results Key takeaways Business review Financial review Conclusion Q&A 2
Slide 3: Strong e-commerce growth continues, accelerated impact earlier ACM measures
Strong e-commerce growth continues, accelerated impact earlier ACM measures Revenue Underlying cash Key takeaways operating income • Q2 results in line with last year Q2 2017 €836m €46m • Result Mail in the Netherlands impacted by accelerated impact earlier ACM measures (that support other postal op
Slide 4: Q2 & HY 2017 Results
Q2 & HY 2017 Results Key takeaways Business review Financial review Conclusion Q&A 4
Slide 5: Our strategy
Our strategy 2020 one Unlock value through accelerating transformation > > > We aim to be the Postal & Logistic solutions provider in the Benelux Mail Connect senders and Deliver sustainable cash flow in the Netherlands receivers through our people and innovative postal networks Parcels Be the logis
Slide 6: Unlock value through accelerating transformation
Unlock value through accelerating transformation Capturing e-commerce growth Progress development % of revenue related to e-commerce Market developments Trends in e-commerce markets and changes in consumer behaviour translate into, amongst others, volume growth and extension of services HY 2016: 32%
Slide 7: Mail in the Netherlands
Mail in the Netherlands Volume decline, accelerated impact earlier ACM measures and strong cost savings Revenue Underlying cash Total cost savings Addressed mail operating income volume decline Q2 2017 €434m €17m €16m 8.8%* of which €14m in Mail in the YTD: 9.2% Netherlands Q2 2016 €453m €29m Key ta
Slide 8: Regulation (1)
Regulation (1) Decision Significant Market Power • PostNL has significant market power in 24-hours bulk mail segment • PostNL must grant postal operators in this segment access to its network (Article 9 of the Postal Act, previously requiring PostNL to allowing third parties access to its network, h
Slide 9: Regulation (2)
Regulation (2) Main conclusions Analysis future of Dutch postal market (including evaluation USO) by Ministry of Economic Affairs • Postal market is in structural decline: market expected to shrink 30% between 2016 and 2025 • Demonstrates that regulation aimed at increasing competition does not ackn
Slide 10: €16m cost savings realised in Q2 2017
€16m cost savings realised in Q2 2017 On track to realise target cost savings of €55m - €75m for 2017 Cost savings Implementation costs and restructuring cash out (in € millions) expected to be higher in HY2 due to further adjustments in sorting process (in € millions) 70 - 80 64 55 - 75 66 34 34 30
Slide 11: Accelerating transformation
Market developments Accelerating transformation Customer interaction Connect senders and receivers through our people and innovative postal networks Operational networks 2013–2016 2017–2020 Progress 2017 Centralise network 260 54 20 • Migration of 7 depots Number of depots Automatic • Sorting ma
Slide 12: Parcels
Parcels Strong performance driven by volume growth Revenue Underlying cash Volume growth operating income Q2 2017 €266m €32m 17% Q2 2016 €235m €27m Revenue mix Key takeaways Q2 2017 Logistics & other Benelux • Strong increase in volume, driven by domestic parcels (non-volume related) • Revenue growt
Slide 13: Growth e-commerce driver for parcel volumes
Market developments Growth e-commerce driver for parcel volumes Customer interaction Contributes to accelerating transformation Operational networks Growth Dutch online spending expected to continue Volume growth Parcels +21% 2013-2016 CAGR 10.6% HY 2017 actual Growth >15% forecast 13 14 15 16 17 So
Slide 14: Delivery options to stimulate market growth
Market developments Delivery options to stimulate market growth Customer interaction PostNL’s added services remove barriers in e-commerce process Operational networks ‘Convenient delivery is a key priority, alongside flexibility around > > > Easy return process Consumer friendly return solutions st
Slide 15: Engines for transformation: E-fact #1 Change delivery
Engines for transformation Expand services to meet consumers’ wishes E-fact #1 Change delivery • Using PostNL app or track & trace • Change delivery time and location before first delivery attempt • Next step in more control for consumers
Slide 16: Strategic value of consumer preference
Marketing developments Strategic value of consumer preference Customer interaction Shift to online customer contact Operational networks Frequent shoppers prefer specific operator Online consumer interaction steadily increased % online consumer accounts Shop once 36% 14% 2017 prefer specific very li
Slide 17: Accelerating transformation
Marketing developments Accelerating transformation Customer interaction Be the logistic solutions provider that makes our customers’ lives easier Operational networks 2013–2016 2017–2020 Progress HY 2017 Services & products • Sunday • Same day • Rerouting before delivery • Change delivery before fir
Slide 18: Engines for transformation: E-fact #2 Pilot Autostore
Engines for transformation Convenient e-commerce services to support our customers E-fact #2 Pilot Autostore Houten • E-fulfilment accounts for around 10% of logistic services in the Netherlands • Robotised order picking in our warehouse increases capacity and efficiency • Supports customers by fast
Slide 19: International
International Step-by-step improvement, with revenue development in 2017 behind expectations Revenue Underlying cash Spring & other operating income • Lower revenue, mainly due to effect stricter rules for dangerous goods, visible since second half of 2016 Q2 2017 €247m €1m • Expected to capturing g
Slide 20: Engines for transformation: E-fact #3 Tag & trace
Engines for transformation Fuelling revenue growth in Spring E-fact #3 Tag & trace • Innovation based on RFID technology • Adding RFID tags to labels provides tracking events to customers • Value added service on top of other solutions • Strengthens our ‘Gateway to Europe’ proposition Draft vs1 – st
Slide 21: Q2 & HY 2017 Results
Q2 & HY 2017 Results Key takeaways Business review Financial review Conclusion Q&A 21
Slide 22: Financial highlights Q2 & HY 2017
Financial highlights Q2 & HY 2017 Underlying cash operating income in line with last year (in € millions) Q2 2017 Q2 2016 HY 2017 HY 2016 Reported revenue 836 824 1,706 1,688 Reported operating income 52 50 118 120 Restructuring related charges 8 5 8 12 Project costs and other 1 8 3 10 Underlying op
Slide 23: Underlying (cash) operating income
Underlying (cash) operating income In line with last year, supported by some incidentals (in € millions) 9 6 0 2 63 16 61 7 (3) 47 (17) (13) (2) 46 (6) Underlying changes changes Underlying volume / autonomous cost Parcels Inter- pension other Underlying changes changes Underlying cash in in operati
Slide 24: Results by segment
Results by segment Strong growth in Parcels Underlying Underlying cash Revenue operating income operating income (in € millions) Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Mail in the Netherlands 434 453 32 41 17 29 Parcels 266 235 33 27 32 27 International 247 247 1 1 1 0 PostNL Other 19 45 (5
Slide 25: Statement of income
Statement of income Lower financial expense contributed to improvement normalised profit for the period (in € millions) Q2 2017 Q2 2016 HY 2017 HY 2016 Revenue 836 824 1,706 1,688 Operating income 52 50 118 120 Net financial expenses* (11) 127 (21) 110 Results from investments in associates and join
Slide 26: Net cash from operating and investing activities
Net cash from operating and investing activities Higher capex and acquisitions; seasonal pattern and phasing in working capital (in € millions) Q2 2017 Q2 2016 HY 2017 HY 2016 Cash generated from operations (14) 37 45 86 Interest paid (2) (1) (3) (2) Income taxes paid (3) (2) (63) (67) Net cash (use
Slide 27: Coverage ratio pension fund further improved to 108.4%
Coverage ratio pension fund further improved to 108.4% Positive impact of pensions on equity €9m Coverage ratio pension fund (in € millions) Q2 2017 Return on plan assets in excess of interest income (38) 107.0% 108.4% Defined benefit obligation 293 103.6% Asset ceiling (243) Minimum funding require
Slide 28: Consolidated statement of financial position
Consolidated statement of financial position Consolidated equity position improved and is on track to turn positive in 2017 (in € millions) 1 Jul 2017 1 Jul 2017 Intangible fixed assets 238 Consolidated equity (17) Property, plant and equipment 511 Non-controlling interests 3 Financial fixed assets
Slide 29: Outlook 2017: UCOI between €220m and €260m
Outlook 2017: UCOI between €220m and €260m FY 2017 result expected to end towards lower end of range Revenue UCOI / margin (in € millions) 2016 outlook 2017 2016 outlook 2017 Mail in the Netherlands 1,877 - low single digit 160 (8.5%) 6.5%-8.5% Parcels 967 + low teens 106 (11.0%) 10%-12% from + high
Slide 30: Outlook 2017
Outlook 2017 Drivers development underlying cash operating income (in € millions) B D ~10 ~15 55 - 75 245 ~(15) 220 - 260 C (50) - (70) ~(20) A UCOI 2016 Volume/ Autonomous Cost savings Parcels International Other Estimated UCOI Price/Mix cost increases 2017 A. Taking into account accelerated impact
Slide 31: Aim for progressive dividend
Aim for progressive dividend Interim dividend 2017 set at €0.06 per share Progressive dividend 2017 and onwards Dividend estimate: 75% of UNCI Solid business performance will generate sufficient profit and cash flow 245 Interim 2017 dividend: €0.06 per share To be paid in cash or in shares, at the e
Slide 32: Q2 & HY 2017 Results
Q2 & HY 2017 Results Key takeaways Business review Financial review Conclusion Q&A 32
Slide 33: Strong e-commerce growth continues, accelerated impact earlier ACM measures
Strong e-commerce growth continues, accelerated impact earlier ACM measures Progress accelerating transformation towards Key takeaways 45% of revenue related to e-commerce in 2020 • Q2 results in line with last year • Result Mail in the Netherlands impacted by accelerated impact earlier ACM measures
Slide 34: Q2 & HY 2017 Results
Q2 & HY 2017 Results Key takeaways Business review Financial review Conclusion Q&A 34
Slide 35: Appendix
Q2 & HY 2017 Results Appendix • Results by segment YTD • Underlying (cash) operating income YTD 2017 • Breakdown pension cash contribution and expenses 35
Slide 36: Results by segment YTD
Results by segment YTD Underlying Underlying cash Revenue operating income operating income (in € millions) HY 2017 HY 2016 HY 2017 HY 2016 HY 2017 HY 2016 Mail in the Netherlands 884 925 73 92 45 67 Parcels 515 469 61 56 60 55 International 532 513 7 4 6 3 PostNL Other 37 89 (12) (10) (15) (17) Int
Slide 37: Underlying (cash) operating income YTD 2017
Underlying (cash) operating income YTD 2017 (in € millions) 22 142 5 3 2 12 31 (5) 129 108 (37) (28) (5) 96 (12) Underlying changes changes Underlying volume / autonomous cost Parcels Inter- pension other Underlying changes changes Underlying cash in in operating price / costs savings national expen
Slide 38: Breakdown pension cash contribution and expenses
Breakdown pension cash contribution and expenses Q2 2017 Q2 2016 (in € millions) Expenses Cash Expenses Cash Business segments 26 30 26 32 IFRS difference 2 (1) PostNL 28 30 25 32 Interest 2 3 Total 30 28 38
Slide 39: Published by: PostNL NV
Published by: PostNL NV Prinses Beatrixlaan 23 2595 AK The Hague The Netherlands Additional information is available at postnl.nl Warning about forward-looking statements: Some statements in this presentation are ’forward-looking statements‘. By their nature, forward-looking statements involve risk