Ctt - Correios De Portugal Sa · EURONEXT:CTT
Ctt - Correios De Portugal Sa — CTT – Correios de Portugal — Investor Day (2022)
169 slides from Ctt - Correios De Portugal Sa's investor day presentation, 2022
Slide 1: Capital Markets Day 2022
pe.ctt Capital 2 Markets |
Slide 2: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 3: Disclaimer
3 Disclaimer DISCLAIMER FORWARD-LOOKING STATEMENTS This document has been prepared by CTT – Correios de Portugal, S.A. (the “Company” or “CTT”) exclusively for This presentation contains forward-looking statements. All the statements herein which are not historical facts, use during the presentation
Slide 4: Capital Markets Day
pe.ctt Capital 2 Markets |
Slide 5: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 6: Welcome Session
Welcome Session
Slide 7: Committed to deliver better faster greener e-commerce in Iberia
Committed to deliver better faster greener e-commerce in Iberia and growth in our retail services platform in Portugal 7
Slide 8: CTT's transformational journey
Under this vision, CTT has been on a truly transformational journey Revenues Recurring EBIT Recurring EBIT mix 2021 . p.a Growth business1 .2% +6 848 72% 28% Legacy Mail2 708 Total recurring EBIT 51% 64 60 33% 67% 49% 43 -4 2018 2021 2018 2021 1. Express & Parcels, Financial Services & Retail, Banco
Slide 9: The sector is deeply changing with digitalization and changing consumer habits
The sector is deeply changing in the backdrop of digitalization and changing consumer habits and expectations 1. Digitalization and 5. Businesses looking e-commerce growth for “one-stop-shops” driving change in mix for digitalization 2. New supply chain dynamics, 6. Slowdown in brick-and-mortar chai
Slide 10: Digitalization and e-commerce driving a shift in volume mix
1. Digitalization of communication and e-commerce driving a significant shift in volume mix for postal incumbents Global trend mail-to-parcel volume ratio, >15:1 8:1 4:1 2:1 1:1 items 6 10 11 10 Overall market 5 growth, parcel 2 and mail, 2000-25 CAGR, % -2 -4 -4 -5 Parcels Mail 2000-05 2005-10 2010
Slide 11: Likewise in Portugal
1. Likewise In Portugal Trend mail-to-parcel volume ratio, >30:1 >15:1 8:1 3:1 items 11 8 9 Market growth, parcel and mail, 1 2005-25 -3 CAGR, % -7 -8 -10 Parcels Mail 2005-10 2010-15 2015-20 2020-25 11
Slide 12: Decentralization of supply chains reinforces local/regional players
2. Decentralization of supply chains reinforce the opportunity for local/regional players 60% of cross-border e-commerce flows come from Global players intercontinental orders Top 5 trade lanes building networks of fulfillment centers to increase resiliency 16 2 21 3 5 North North Europe2 Asia- 6 Re
Slide 13: Consumers demanding increased convenience and speed of delivery
3. Consumers demanding increased convenience and speed of delivery Clients value proximity, flexibility, … while expecting their parcels no later than next day and sustainability of delivery points… 30% 34% 30% growth of points of convenience (next 3 years) abandoned a shopping cart due to shipping
Slide 14: Technological evolution driving efficiency and customer service
4. Technological evolution driving efficiency and customer service Turbo-charge customer convenience and expand portfolio Potential impact e-grocery solutions Customer experience tools: Same-day live tracking, expected delivery and cold chain logistics time of arrival and new communication channels
Slide 15: Businesses searching for one-stop-shop for digitalization
5. Businesses – large and small – searching “one-stop-shop” for digitalization CTT current footprint CTT potential footprint Advertising Webshop VAS Inbound Fulfillment Advertisement Web shops / Login & ID Checkout / payment Order mgmt. Inventory mgmt. Inbound/ restocking Fulfilment marketplace Line
Slide 16: Postal networks' social and economic role
6. Postal networks play an increasingly important social and economic role, given the brick-and-mortar slowdown CTT has a capillary and stable network While there is a closure of brick-and-mortar services Number of branches evolution in Europe, ‘000 190 -33% Azores 570 170 Post Offices 1,800 Postal
Slide 17: Ambitious but well targeted ESG strategy
Ambitious but well targeted ESG strategy and plan: becoming fundamental to underpin business objectives and engage stakeholders Regulatory requirements Investors According to EU 2020/852 sustainability 10-20% valuation uplift includes: possible for companies with • Socially contribution to environme
Slide 18: CTT is already seizing these transformation opportunities
The sector is deeply changing in the backdrop of digitalization and changing consumer habits and expectations 1. Digitalization and 5. Businesses looking CTT is already seizing these transformation opportunities e-commerce growth driving change in mix for “one-stop-shops” for digitalization 2. New s
Slide 19: Diversified, sustained and profitable growth
Having been able to achieve diversified, sustained and profitable growth Revenue evolution 2018-21 €m 65 848 We have converted 107 8 708 19 declining mail revenues into higher diversified 51% -60 growth business revenues 49% Express & Parcels was the main contributor to revenue growth with FS&R and
Slide 20: 3 key landmark achievements
3 key landmark achievements shaped our way in 2019/20/21 1 Spain turnaround 2 Bank breakthrough 3 Concession contract 20
Slide 21: Key landmark achievement 1: Spain turnaround
Key landmark achievement 1: Spain turnaround CTT Express EBITDA1 €m Strategic switch to own operating model Healthier growth Sustained Handling of legacy/ capacity constraints growth and scale 2 Significant market share gains enabled EBITDA breakeven, ahead -4 of plan -8 -9 Scale and higher efficien
Slide 22: Key landmark achievement 2: Bank breakthrough
Key landmark achievement 2: Bank breakthrough Sizable and high potential >570k customer base, in just 5 current accounts years of activity Banco CTT: a proven >€1.000m Establishment of a meaningful consumer finance business, business model and a clear strategy consumer based on high potential credit
Slide 23: Key landmark achievement 3: concession contract
Key landmark achievement 3: New postal law provides checks and balances for pricing and quality concession contract parameters 7-year contract: 2022, a transition year followed by two 3-year terms Value levers Price Criteria based on historical data to be defined by agreement between CTT, ANACOM and
Slide 24: A better, faster, and greener CTT
Going forward we envision a better, faster, and greener CTT Better Greener Faster 24
Slide 25: A well diversified company, exposed to sustained growth
A well diversified company, exposed to sustained growth B2B B2C Mail Business Parcel and Financial services Banco CTT & commerce e-commerce & retail services solutions Our legacy The integrated The first growth Crucial profitability Fast growing business and main one-stop-shop engine of the Group dr
Slide 26: A well diversified company, exposed to sustained growth
A well diversified company, exposed to sustained growth Mail Business Parcel and Financial services Banco CTT & commerce e-commerce & retail services solutions Our legacy The integrated The first growth Crucial profitability Fast growing business and main one-stop-shop engine of the Group driver and
Slide 27: The strategy for Mail business follows three pillars
The strategy for Mail business Pricing strategy follows three pillars Digital services Business solutions 27
Slide 28: A well diversified company, exposed to sustained growth
A well diversified company, exposed to sustained growth Mail Business Parcel and Financial services Banco CTT & commerce e-commerce & retail services solutions Our legacy The integrated The first growth Crucial profitability Fast growing business and main one-stop-shop engine of the Group driver and
Slide 29: Iberia: large and growing e-commerce market
Iberia: a large and growing market, with a unique potential to accelerate e-commerce penetration E-commerce-relevant parcel1 Iberia is the 4th largest European market after the UK, Germany and penetration, 2021 France, and is predicted to be the fastest growing e-commerce market Number of parcels pe
Slide 30: CTT is the CEP player with the best-integrated operations in Iberia
CTT is the CEP player with the best-integrated operations in Iberia Integration Integration of mail across and parcel operations Iberia in Portugal 17 94k 100% depots parcels/hour D+1 serving both sorting geographic countries capacity coverage in Iberia Iberian 46% 36% 29% 50% flows are relevant cli
Slide 31: Iberian focus is decisive for our growth ambition
Iberian focus is decisive for our growth 43 % ambition Overall weight in Contribution revenues to growth1 €m % 848 29% 708 44% 61% 14% 8% 71% 86% 92% 56% 39% 2018 2021 2025E 2018-21 2021-25E 1. Delta of Spanish growth / Delta of total group growth 31
Slide 32: A well diversified company, exposed to sustained growth
A well diversified company, exposed to sustained growth Mail Business Parcel and Financial services Banco CTT & commerce e-commerce & retail services solutions Our legacy The integrated The first growth Crucial profitability Fast growing business and main one-stop-shop engine of the Group driver and
Slide 33: Retail emerging as a unique proximity platform
Retail Unique capillary network, associated with customer proximity emerging as a unique proximity Excel in public debt placement and platform become a leading distribution network of non-life insurance for provision of Leverage existing in-person traffic and convenience services increasingly availa
Slide 34: A well diversified company, exposed to sustained growth
A well diversified company, exposed to sustained growth Mail Business Parcel and Financial services Banco CTT & commerce e-commerce & retail services solutions Our legacy business The integrated The first growth Crucial profitability Fast growing provides important one-stop-shop engine of the Group
Slide 35: Bank fast forward growth based on 3 axis
Bank fast forward growth based on 3 axis Monetize Excel in Grow consumer customer base, life savings, lending, deepening leveraging CTT legacy as aiming to become a reference banking relationships long-term savings platform player in Portugal 35
Slide 36: ESG: consistently raising our commitments and achievements
ESG: consistently raising our commitments and achievements The world needs to be decarbonized, embrace …and CTT is an active part of this mission diversity, and enhance business ethics … Gender ~100% parity Green vehicles in in the top and mid- internal last-mile fleet management by 2025 by 2030, 50
Slide 37: Committed to deliver better faster greener
Committed to deliver Ready! better faster greener e-commerce in Iberia and growth in our retail services platform in Portugal 37 37
Slide 38: Capital Markets Day
e.ctt _ Capital Markets
Slide 39: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 40: Mail
Mail
Slide 41: Mail weight in group decreasing over time
Business under transformation with mail weight in group decreasing over time The contribution of mail out of total While the total revenue revenues has decreased in the last years has consistently increased -18pp. +6%p.a. (2018-21) (2018-21) 848 740 745 437 33% 38% 45% 708 51% 236 279 338 67% 472 46
Slide 42: CTT mail business with strong EBIT margin
CTT mail business with strong EBIT margin leveraging strong competitive factors EBIT recurring margin 2018-21 24% 23% 17% 16% 01 … through a more EBIT margin 12% efficient and modern excluding central operational structure… structure cost 2018 2019 2020 2021 14% 12% 02 4% 4% … leveraging the new EBI
Slide 43: Mail creates opportunity to address a large customer base
Mail is an asset and creates the opportunity to address a large customer base of Corporate and SMEs, with extended services offer Mail Strong brand Strengthen the relationship with the clients Large customer base / relationship with all Mail creates the companies in Portugal Corporate and opportunit
Slide 44: Three pillars of the Mail strategy
The strategy for Mail business will follow these three pillars Price strategy Digital services Business solutions Price increases Significant growth Develop improving the of digital services ensuring new products sustainability that CTT creates more and solutions of Mail business value and be a refe
Slide 45: Digitalization roadmap and Via CTT
Building the digitalization roadmap to connect businesses with people, enhancing the use of Via CTT to promote security in mail deliveries Activation of Via CTT Subscription Reception >1.8Mn Clients already use the security mail Users activate their PO at stores, giving a proof Select the entities f
Slide 46: Digital and safe solutions for SMEs and corporates
CTT promotes the digitalisation providing digital and safe solutions for SMEs and corporates E-carta The solution of E-carta creates a secure environment to send mail without (e-letter) printing, or manually packaging, generating a normalization of the documentation and controlling the mail volume w
Slide 47: Business solutions complement mail value offering
Business solutions complement mail value offering, helping B2B customers drive their business across the value chain Business management Revenues for Business offers different services Solutions Allows CTT to provide its clients with integrated solutions bringing more Index; 2019=100 >x3.5 efficienc
Slide 48: NewSpring reinforces Business Solutions' offering
NewSpring reinforces Business Solutions’ offering allowing to expand services provided in Mail value chain, moving to VAS and managing client relationship NewSpring serving an … bringing an opportunity to Transformation of Mail Revenues attractive market with increase penetration in customer in in o
Slide 49: Extended service offer for large customers and public entities
Extended service offer, targeting specific needs of large customers and public entities with tailored solutions Support Empower For corporates and public the business the business entities, we have tailored solutions, based on the client’s needs Mail for Document Support Mgmt Marketing business mgmt
Slide 50: Increased product mix for SMEs
Increased product mix by developing transversal and turnkey offers that can address SMEs’ needs, from e-carta to contact centers and self-service advertising tools Support Empower For corporates and public the business the business entities, we have tailored solutions, based on the client’s needs Ma
Slide 51: Multi-channel presence with innovative sales channels
CTT developing its multi-channel presence with innovative sales channels such as inside sales and outbound capabilities From… Single channel Face-to-face Business & Parcel and Mail commerce e-commerce solutions solutions To… Multi-channel • >300 Key account managers (KAM) and Sales representatives •
Slide 52: Leveraging existing sales channels across customer segments
CTT leveraging existing sales channels to serve all customer segments Existing channel Potential channel Centralized channels Distribution channel Key account Sales Inside Inbound / Digital Indirect CTT managers representatives sales Outbound channel channel stores Large companies Medium companies S
Slide 53: Transforming our GTM strategy by sales channel
We are transforming our GTM strategy through key initiatives and main objectives per sales channel Centralized channels Distribution channel Key account Sales Inside Inbound / Digital Indirect CTT managers representatives sales Outbound channel channel stores Developing customized Use of the decisio
Slide 54: Mail highlights
Mail highlights New USO contract providing stability and sustainability to post business ‘Hook’ to bring extended offer to large corporate and SME customer base Wide range of tailored business solutions for corporate and public entities and standardized services for SMEs CTT with a multi-channel pre
Slide 55: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 56: Parcel & e-Commerce Solutions
Parcel & e-Commerce Solutions
Slide 57: CTT as the preferred e-commerce player in Iberia
CTT as the preferred e-commerce player in Iberia by customers 01 02 03 Unique One-stop Superior Iberian shop along multichannel setup the value chain customer experience 57
Slide 58: CTT as the preferred e-commerce player in Iberia
CTT as the preferred e-commerce player in Iberia by customers 01 02 03 Unique One-stop Superior Iberian shop along multichannel setup the value chain customer experience 58
Slide 59: Initiatives to deploy a unique E&P network across Iberia
CTT has launched several initiatives to deploy a unique E&P network across Iberia 17 94k depots serving parcels / hour both countries sorting capacity 24 hours 100% >300 D+1 geographic Key account coverage in Iberia managers 59
Slide 60: Cross-border Iberian flows and converging EBIT margin
Through cross-border Iberian flows with room to grow, converging EBIT margin Operating revenues, % PT-PT SP-SP SP-PT PT-SP % Cross-border weight 13% 11% 15% 19% Operating revenues, €m Strong Iberian footprint with a differentiated offer (e.g., D+1 within the full territory) 39% Fulfilment offer to b
Slide 61: Iberian coordination on operations, know-how and product offering
Iberian coordination started focusing on the Operations stream and commercial know-how and product offering being addressed OPERATIONS / COMMERCIAL PRODUCT QUALITY OF SERVICE KNOW-HOW OFFERING • Operational stream to • Product, commercial • Product catalog and VAS guarantee practices and client alig
Slide 62: Portugal: maintain #1 market leadership
Total Operating Market share revenues E&P 2021 total CEP €m +14% p.a. CTT FY211 25% (2018-21) 135 Player 2 15-17% 118 98 Player 3 14-16% 91 Maintain market Player 4 10-12% position by reinforcing best in class customer service with extensive Player 5 4-6% capillarity helping the market grow and cons
Slide 63: The strategy in Portugal follows three phases
The strategy in Portugal follows three phases 01 Have the widest offer in the market 02 Benefit from the growth of e-commerce in Portugal 03 Help the market grow and consolidate leadership Key last-mile offers Facilitate digitalization process, with • Next Day and 2 days delivery >50% full range of
Slide 64: Spain: market share and operating revenues
Total Operating Market share revenues E&P 2021 total CEP €m Player 1 16-18% +28% p.a. (2018-21) Player 2 10-12% 117 Player 3 9-11% 72 Outgrowing 56 52 Player 4 7-9% the market, gaining market CTT share, building on Express 4% recent operations FY211 turnaround to reach a high single 2018 2019 2020 2
Slide 65: The growth plan in Spain goes through three stages
The growth plan in Spain goes through three stages 01 Implementation of new operating model 02 Gain the largest e- commerce players in Spain to guarantee 03 Implement a new commercial model and extend the service volumes and scale offering On-going Managing own operations, that guarantees a better s
Slide 66: Gaining market in Spain while consolidating leadership in Portugal
CTT aspires to gain significant market in Spain while consolidating its leadership position in Portugal E-commerce growth 2021-25, % CAGR Portugal Spain 20% 15% 14% 9% Growth ambition to ensure increased Market CTT Market CTT presence in growth growth growth growth cross-border and Spanish market So
Slide 67: CTT as the preferred e-commerce player in Iberia
CTT as the preferred e-commerce player in Iberia by customers 01 02 03 Unique One-stop Superior Iberian shop along multichannel setup the value chain customer experience 67
Slide 68: One-stop integrated player across the e-commerce value chain
CTT aims to be the one-stop integrated player in Iberia offering e-commerce solutions across the whole value chain for Iberia E-commerce offer Presales Sales Post sales Value Marketing / Customer Online sale Payments Logistics Dispatch Reception Returns Chain Advertising support Advertising Digital
Slide 69: Early stage of the fulfilment market offers growth opportunities
The early stage Growth of the fulfilment E-commerce will continue to be the growth lever for logistics and transport, as B2B is a mature segment market offers ample growth Fit opportunities B2C delivery has the strongest fit to CTT’s E-commerce killer features mandate for strong fulfillment in
Slide 70: Payments solutions as an e-commerce enabler
Payments’ solutions is an important enabler for CTT´s ability to cover business e-commerce needs The increase of e-commerce changed the payment ecosystem, leading to an ambitious strategic plan of new capabilities and payment offers at CTT Group, trying to capture the potential market From tradition
Slide 71: Full range of CTT's commerce services
The full range of CTT’s commerce services can help companies manage their business in different needs Support Empower Deliver the business the business the business Support processes Online sales Logistics • Call center • Online shops creation • Traditional • Business support processes • E-Fulfillme
Slide 72: CTT as the preferred e-commerce player in Iberia
CTT as the preferred e-commerce player in Iberia by customers 01 02 03 Unique One-stop Superior Iberian shop along multichannel setup the value chain customer experience 72
Slide 73: Client experience and out-of-home network
Positioning client experience at the center of its value proposition, improving customer convenience and out-of-home network CTT is enhancing customer Using different ways With the aim to be the largest experience by growing the to achieve ambition PUDO network in Portugal, and lockers and PUDOs net
Slide 74: Building the largest locker network in Portugal
Building the largest locker network in Portugal to improve customer experience and drive operational efficiency “ >350 lockers 100% local made, with advanced high-tech “ at a lower cost Current locations Types of lockers Goals Installed in residential • Public: all online consumers, deposited • Expa
Slide 75: Customer centric digital touchpoints
Our vision is to have a customer centric positioning, simplifying and improving the digital touchpoints for both B2B and B2C clients From a product To a customer centric CTT is currently developing centric focus (<2021) vision (2024-25) a solution for these customer experience solutions 2 digital to
Slide 76: Parcel and e-Commerce Solutions highlights
Parcel and e-Commerce Solutions highlights Unique position to capture the significant growth potential of the Iberian e-commerce market Grab share in Spain, support market growth from a leadership position in Portugal One-stop-shop in e-commerce (including fulfillment) across Iberia Superior custome
Slide 77: Capital Markets Day
e.ctt _ Capital Markets
Slide 78: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 79: Operations
Operations
Slide 80: Overcoming challenges to accelerate the CEP turnaround in Iberia
CTT has overcome significant challenges in both markets to accelerate the CEP turnaround in Iberia Two separated networks, posing clear synergy opportunities Operations turnaround Efficiency challenge and ambition E&P EBIT MARGIN1 EVOLUTION, % E&P EBIT MARGIN EVOLUTION, % • Sub-scale operation… • …
Slide 81: Best-integrated network in Iberia
BUILDING ON ITS UNIQUE FOOTPRINT A N D O P E R AT I N G M O D E L , CTT is the CEP player with the best-integrated network in Iberia Integration Integration of across Iberia mail and parcel operations in Portugal 81
Slide 82: Accelerated integration across Portugal and Spain
CTT has accelerated the integration across Portugal and Spain, to build a true Iberian platform INTEGRATED VISION FOR TO KEEP PROVIDING A RELIABLE CUSTOMER EXPERIENCE IBERIA QoS evolution Promote process alignment 01 to provide a seamless experience for Iberian e- sellers and e-buyers 02 Align IT ar
Slide 83: New CTT technical architecture under implementation
2. New CTT technical architecture under implementation Vision for CTT technical Foundation elements of the Now deploying architecture and Iberian architecture now in transformational pieces transition roadmap is place addressing the top now established business priorities On-going Converging to a si
Slide 84: CTT deployed a unique E&P network across Iberia
4. CTT deployed a unique E&P network across Iberia Consolidating Redesigned Accelerating linehaul design to sortation network Iberia coverage establish a unique to deploy D+1 in network and drive the entire down unit cost peninsula Geographic Coverage in Iberia (D+1) % of zip codes 24 HOURS 97% 100%
Slide 85: Expanded capacity along the logistic chain
Expanded capacity along the logistic chain to support e-commerce growth and leverage economies of scale Portugal Spain S OR T IN G F U L F IL L ME N T L A S T-MIL E Increased parcel sorting capacity in Strong bet for CTT position in Opened new distribution centers Portugal and Spain through the e-co
Slide 86: Expanded Iberian footprint as competitive advantage
Expanded Iberian footprint is becoming a competitive advantage High capacity sorter Medium capacity sorter 24h delivery across Iberia Low capacity sorter Small parcels sorter Later cut-off times for clients: on site pickups or fulfilment operation Increased flexibility to cope with demand peaks Smoo
Slide 87: Focus on cost control for the turnaround
Focus on cost control is key for the ongoing turnaround… Implemented ü Underway BI apps for unit cost control across the logistic chain Revised contract structure with last mile providers Technology deployment to P A R C E L drive efficiency – e.g. route ü H A S A R R I V E D optimization, Drivers’
Slide 88: Last-mile unit cost yielding results
…and is yielding results Last-mile unit cost per object1 € Unit cost 2019=100 -2% p.a. 100 100 103 97 100 96 93 95 2019 2020 2021 1Q22 1. last mile account for ~2/3 of CEP direct costs 88
Slide 89: Best-integrated network in Iberia
BUILDING ON ITS UNIQUE FOOTPRINT A N D O P E R AT I N G M O D E L , CTT is the CEP player with the best-integrated network in Iberia Integration Integration of across Iberia mail and parcel operations in Portugal 89
Slide 90: Integrating parcel and mail networks in Portugal
CTT is accelerating the integration of parcel and mail networks in Portugal DAILY NUMBER OF PARCELS DELIVERED PER MAILPERSON +60% Integrated management for linehaul networks and last-mile 16 10 Best-in-class parcel integration 2 0 1 8 2 0 2 1 strategy into mail network enabled Daily parcels distribu
Slide 91: Decision server enables parcel integration strategy
“Decision server” enables a state-of-the-art parcel integration strategy in mail network Decision server: intelligent layer external to the sorter that implements a more + Packets more suited to be granular decision tree to route delivered by fixed mail routes parcels through a Postal or SORTING are
Slide 92: Shamrock model for distribution transformation
Accelerated distribution transformation, leveraging “shamrock” model to improve productivity and increase parcel distribution capacity Results delivering productivity gains SHAMROCK MODEL and increased packet distribution capacity Route 1 Route 2 Route 3 Route 4 STATUS AS OF APRIL 2022 X/Y Model Sha
Slide 93: Initiatives to drive efficiencies in mail network
Several initiatives in the pipeline to keep driving efficiencies in mail network DYNAMIC E L E M E N TA R Y 4 - D AY- W E E K O R G A N I Z AT I O N S SEGMENTS Route 1 Route 2 Route 3 Route 4 Three organization setups to allow Route divided into 10-15 segments hub to cope with demand volatility Rout
Slide 94: Operations transformation sustained by lean working model
Operations transformation sustained by lean working model 1 Shopfloor optimization and visual management 2 Structured management routines to engage frontline 3 Vehicle for cultural transformation with positive impact in teams’ productivity and morale 4 Establishing short-term incentives for mailmen
Slide 95: Upgrading the customer care layer
CTT is upgrading its customer care layer to enhance customer experience Broader customer care reach Selfcare tools and Automation Improved delivery experience 28% 51% Web form (AI) to Chat bots Predict 1 hour Live automate written on WhatsApp, delivery window on delivery Facebook Instagram LinkedIn
Slide 96: Operations highlights
Operations highlights Best integrated CEP network in Iberia Expanded capacity to support growth and attain economies of scale State-of-the art parcel integration strategy into the mail network Priorities going forward: -integration into a single Iberian platform -efficiency -customer experience 96
Slide 97: Q&A and Coffee Break
(> Q&A and Coffee Break
Slide 98: Capital Markets Day
e.ctt _ Capital Markets
Slide 99: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 100: Financial Services & Retail
& Financial Services & Retail
Slide 101: Financial Services & Retail as a large EBIT contributor
Financial Services & Retail is a large EBIT contributor for CTT Group and will continue to drive growth through Financial its two lines of business Services Financial Services & Retail EBIT Recurring. €m Capitalizing on a strong track record and clear identity in financial services primarily public
Slide 102: Maintain public debt sales and lead non-life insurance distribution
In Financial Services, the ambition is to maintain public debt sales and become a leading distribution network of non-life insurance products Increasing Doubling down Servicing Enabled penetration in on new/ enhanced of small/ micro- by multi-channel customer base product suite business needs strate
Slide 103: Conversion of financial products in customers to reach >15%
Conversion of financial products in customers set to increase and reach >15% by 2025 2021 2025 vs. 8% in 2021 Customers’ conversion of financial products1 8% >15% Customer data Scale-up In-store sales management of lead generation effectiveness Through CRM and other Taking advantage of cross- Thanks
Slide 104: Public debt as an important revenue stream
Public debt as an important revenue stream for CTT with potential to grow with self-service capabilities being developed Public debt issued by CTT has been growing steadily Remaining committed as the main retail provider of Public debt Yearly issued public debt, €m individual clients go to a CTT bra
Slide 105: New and enhanced financial product suite
New and enhanced product suite to help CTT grow financial services business Non-life Money transfer Payment insurance services Services Health & Appliance New Money Order Tax Payments Protection international corridors Auto & home Aerial Transport Subsidy insurance New Western Union direct-to-bank c
Slide 106: Financial solutions for small and micro businesses
Financial solutions for small and micro- businesses enable business diversification, moving our positioning in retail also to the corporate segment Money transfer products Health plans SME insurance bundles New Western Union Money Health plans for municipalities Mandatory insurance for companies tra
Slide 107: Retail: reinforce proximity and become a one-stop-shop
In Retail, ambition to reinforce proximity and become a one-stop-shop for customer service needs Capillary network, associated with customer proximity, present in all municipalities Leveraging existing in-person traffic with 65k unique client visits/day, as well as increasingly available digital / s
Slide 108: Explore unique network capillarity across the country
Explore unique network capillarity Azores across the country 570 branches spread across the country >1,800 Madeira agents that commercialize CTT products and services All 308 municipalities with a CTT store Number of CTT branches 108
Slide 109: Leverage high in-person traffic with digital functionalities
Leverage high in-person traffic combined with available digital/ self-service functionalities unique client of active clients1 visit retail network >65k visits/day >70% at least once per month Reasons customers go to stores: parcels gaining relevance 64% 57% 49% 11% 10% 9% 9% 8% Send Send Receive Pa
Slide 110: New concept store with proven results
New concept store with proven results and potential to be expanded across Portugal 20211 vs. 2020 NPS 2021 Self-service 24/7 New Total +7% Revenue 83 concept stores 30% 29% of packages of customers who use are picked up when our vending, use it when the store is closed the store is closed Public deb
Slide 111: Solve for customers' convenience
Current focus • Subsidies • Tax payments • Documentation Solve for renewal customers’ convenience Potential and daily service opportunities requirements • Other citizenship services • Energy & and eliminating telco contracts pain-points 111
Slide 112: Financial Services and Retail highlights
Financial Services and Retail highlights Well established financial services franchise Operating other third-party contracts: Government, bank and insurance – with the ambition to become a leading distributor of non-life insurance Proximity network with 65k of unique daily visits An important platfo
Slide 113: Capital Markets Day
e.ctt _ Capital Markets
Slide 114: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 115: Banco CTT
Banco CTT
Slide 116: Launched in 2016 with a unique value proposition
Launched in 2016 with a unique and difficult to replicate value proposition Simple and low-cost product offer, that is easy to understand and operate Ecosystem with seamless integration for partners, providing platform to offer best in class third party products Always nearby, combining efficient ph
Slide 117: Sizable and profitable franchise with young digital profile
Sizable and profitable franchise, with urban, young and digital profile Our client base Thousands From Zero of to bank accounts >570,000 bank accounts 30 - 45 years Core age (vs. >50 years average for the sector) 573 517 465 >65% Urban clients (vs. ~60% 350 average for the sector) 227 >50% 76 Active
Slide 118: Strong growth across all business lines
Strong growth across all business lines €m Client’s total resources Consumer credit book1 Mortgage book Off-balance On-balance 2,829 709 70% from 1,060 910 current accounts 26 2,120 405 600 884 0 2018 2021 2018 2021 2018 2021 1. Includes partnership book with Cetelem Source: Banco CTT Business Plan
Slide 119: 2021 net income reached €16m
In 2021 net income reached €16m, €3m excluding specific items (mostly related to sovereign bond sales) Strong profitability improvement on 16 the back of: Net income, €m i Organic growth, with revenues 3 growing over 27% p.a and costs 0 only 9% p.a. (improving CIR to 79%) and CoR of 1.0% ROTE: 2% -8
Slide 120: Business growth based on 3 levers
Going forward, business growth based on 3 levers Monetize Excel in Grow consumer customer base, life savings, lending, deepening leveraging CTT legacy as aiming to become a reference banking relationships long-term savings platform player in Portugal Aiming at ROTE of 11% to 13% (2025) 120
Slide 121: Monetization through deeper client relationships
Monetization will take place through deeper client relationships and more favorable monetary context Average yearly commissions per account (€) Room to preserve Deeper relationships, Favorable price-attacker stance with enhanced value monetary context Bank accounts, k# Main Banking relationships 12
Slide 122: Excel in bancassurance
Excel in bancassurance, leveraging customer franchise, top of mind awareness and digital processes Recent performance and ambition Positive track-record under adverse AuM, €m monetary context, placing both guaranteed and non-guaranteed off-balance products +21% p.a. 1,500 +41% p.a. 709 Current partn
Slide 123: Grow consumer lending
Grow consumer lending to turn BCTT into a reference player in the Portuguese market Consumer credit book. 2021 (€bn) +11% p.a. Increasing footprint and Auto share of wallet in the distribution network of 321 (net loans, €m) 1,000 Crédito to maintain 560 649 momentum Deepening the partnership 1.7 wit
Slide 124: Profitability aspirations for 2025 at double-digit ROTE
Profitability aspirations for 2025 at double-digit ROTE Return on Tangible Equity (ROTE) Projected double digit ROTE, excluding specific items above market average (9-10% Bloomberg implied forecast for 2024) +4 a 5 pp 1 Revenue growth driven by current 2 3 business dynamic + monetization +12 a 14 p
Slide 125: Banco CTT highlights
Banco CTT highlights Banco CTT has already a proven track record: A new Bank with a unique and difficult to replicate value proposition A sizable and profitable retail franchise: over 570k customers with a young, urban and digital profile … and has a clear growth strategy: Continue to grow its
Slide 126: Capital Markets Day
e.ctt _ Capital Markets
Slide 127: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 128: ESG
ESG
Slide 129: CTT has a strong position across ESG dimensions
CTT has a strong position across ESG dimensions Environmental commitment Social initiatives People caring Governance as a key internal pillar 129
Slide 130: Environmental commitment
CTT A strong position across ESG dimensions Environmental particularly in environmental performance commitment 100% green electricity Leadership A- @ CDP rating on Climate Change #2 in Portugal #3 across post peers globally 20% emissions reduction from 2013 #4 in sustainability performance @ IPC Reu
Slide 131: People caring
CTT A strong position across ESG dimensions People caring promoting employees development and well-being A top health and safety logistic employer • promoting the well-being of employees and • outstanding performance in road safety 33.3% women in the Board of Directors and Supervisory bodies “Vitóri
Slide 132: Social initiatives
CTT A strong position across ESG dimensions Social initiatives creating a positive impact on communities Increasing capillarity in Portugal: +33 additional stores 100% of municipalities Digitalization of critical local commerce during COVID19 0.8% of EBIT invested on social initiatives “A Tree for t
Slide 133: Governance as a key internal pillar
CTT A strong position across ESG dimensions connecting people and Governance as a companies key internal pillar Regular engagements with stakeholders New in 2022: Code of Conduct, involving the Ethics Committee Human Right Code Anti-bribery and Corruption Code 1.International Post Corporation´s Sust
Slide 134: 10 initiatives: ESG ambition
CTT has the vision to be on the forefront of environmental commitment, while caring on CTT’s people and local community Environmental (E) Linked with SGDS Net-zero by 2030 with 100% of green vehicles in the last mile, and 50% of green vehicles by 2025 Caring people and diversity experience Gender pa
Slide 135: CTT Environmental initiatives
CTT Environmental initiatives three key areas Decarbonization Green products Circular by 2030 and services economy 100% Last-Mile vehicles by Reach 100% by Reach 100% of recycled 01 02 03 2030 and 50% by 2025 2030, and 30% by 2025 and/or reusable packaging “green mail” (carbon by 2030, and 80% by 20
Slide 136: Accelerate decarbonization to be carbon neutral by 2030
We aim to accelerate the decarbonization path to become carbon neutral by 2030 Strong commitment in the Further acceleration last years with CO2 reduction of fleet renewal Net zero by 2030 Carbon neutral with -20% -50% 100% of green vehicles for internal last-mile 82 CO2 net emissions CO2 net emissi
Slide 137: Top employer in Portugal
CTT Top employer in Portugal three key areas Diversity Employee experience Health and and inclusion and talent management safety measures Reinforce recruiting plan for Improve the employee experience to Maintain high standard measures 04 05 06 disabled people to hire up to 50 new increase retention
Slide 138: Social objectives
CTT Social objectives positive impact in local communities Impact to Social and local community cultural integration 07 08 Total capillarity across 100% Actively enhance participation municipalities and rural areas and investment in social impact projects from 0.8% of EBIT to 1% Proximity service to
Slide 139: ESG incentives and engagement
CTT ESG incentives and engagement enhancing applicability Code of ESG conduct incentives 09 10 New code of conduct implementation Set monetary ESG incentives to during 2022 50% of top and mid-management positions by 2025, including the executive committee 100% employee awareness Setup monitoring m
Slide 140: ESG highlights
ESG highlights Solid starting position, particularly on the environmental axis Ambition to be on the forefront on environmental, social and governance practices Accelerate the decarbonization path to become carbon neutral by 2030 Become a top employer in Portugal and promote a positive social im
Slide 141: Capital Markets Day
e.ctt _ Capital Markets
Slide 142: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 143: Financial Ambition and Guidance
Financial Ambition and Guidance
Slide 144: Transformation journey reshaping the business profile
CTT has been in a transformation journey consubstantiated in a deep reshape of its business profile Group revenues Group recurring EBIT +6.2% p.a. Growth business 1 (2018-21) Total recurring EBIT (non-mail) 848 64 60 2 Legacy Mail 708 51% 33% 67% 49% 43 -4 2018 2021 2018 2021 1. Express & Parcels, F
Slide 145: Sustained and profitable growth while diversifying operations
We have been able to achieve sustained and profitable growth while diversifying operations Revenue evolution 2018-21 €m 8 65 848 708 107 19 Key drivers 51% -60 Reduced mail operations offset by gains across other areas contributing to revenues and 49% EBIT uplift between 2018-21 Increased E&P activi
Slide 146: Now exposed to sustained growth
With this transformation we are now exposed to sustained growth Leveraging on Iberian e-commerce 51% Through a broad offering and a joint Iberian approach Elevating Growth business1 Accelerating consumer credit, our ESG savings & insurances commitments 49% Through a new Monetize customer base, excel
Slide 147: Sustained and meaningful growth until 2025
And we aim to achieve sustained and meaningful growth until 2025 Group revenues Group recurring EBIT +7-10% p.a. (2021-25) +14-19% p.a. (2021-25) 1,100-1,250 100-120 848 ~2/3 51% 60 80-90% 72% Growth business 49% ~1/3 (non-mail)1 28% 10-20% Legacy mail2 2021 2025 2021 2025 1.Express & Parcels, Finan
Slide 148: Main KPIs per business segment
Main KPIs per business segment 2021 2025 2021 2025 % of Business 90% 98% Mail & Other Solutions revenues 7% 22% QoS2 of Mail & Others (parcels) 95% 98% 92% 98% Market Share 25%3 Maintain leadership Express EBIT margin1 9.3% >11% Operations & Parcels Sorting capacity Market Share High single 94 130-1
Slide 149: Continuing to invest strongly in our business
To support our growth, we are committed to continue investing strongly in our business Annual average Capex €m Transformational Key areas of investment Baseline +8% p.a. (2018-22) Cumulative Capex, €m 160-180 Increasing sorting capacity across Iberia 146 40-45 36 Develop lockers network in Portugal
Slide 150: Base case is a growth trajectory despite recession risk
Although a recession scenario likelihood has been increasing, we still believe that the base case is a growth trajectory Base macroeconomic Timeline of revisions for 2023 scenario 2022 2023 2024 2025 March April May June June 4.3 2.9 2.8 2.0 2.9 3.3 3.4 2.2 2.8 GDP evolution YoY, % 5.4 2.3 2.2 2.2 2
Slide 151: Tools to ensure flexibility in a recession scenario
If a scenario of recession materializes, we have several tools to ensure the necessary flexibility to surpass it Growth Capex adjustments Postponing non-committed Capex which can represent up to ~50% of total investment over the next 4 years Resilient Resilient Portfolio Outsourcing costs reduction
Slide 152: Additional efficiency benefits across the cost base
Nevertheless, we are already working on additional efficiency benefits across the entire cost base Recurring annual opex benefits €m 15-20 ITC Facilities Fleet Other Costs 4-6 6-7 2-3 3-4 1. Based on average impact of savings per initiative (between minimum and maximum scenario) 152
Slide 153: Two thirds of benefits realized by 2023
Two thirds of these benefits will be realized as early as 2023, including quick-wins of €5-6m still in 2022 Evolution of recurring benefits €m 100% Ramp up (% of savings in 2025) 1.4-1.7 Investment required 66% 5.5 33% 1.1 15-20 10-15 5-6 2022 2023 2024 Total: €15-20m 153
Slide 154: Achieving recurring EBIT above €65m in 2022
Recent trajectory and cost initiatives should enable us to achieve recurring EBIT above €65m in 2022 2Q22 Dynamics EBIT Recurring delta YoY, €m ● Mail: Positive impact of the price increase 1H22 2H22 E&P: April 21 still positively affected by lockdowns +13 to 17 >65 60 -8 ● FS&R: Longer maturities s
Slide 155: Financial Framework
We remain committed to grow and consolidate our business model while Financial Framework improving shareholder remuneration <2.5x 1 Net Debt / EBITDA with Banco Key principles Enable CTT to continue to pursue its objectives of CTT under Equity Method investing in business growth and to be a referenc
Slide 156: Balancing uses of cash
Balancing uses of cash in investing in organic growth and commitment to shareholder return A. Banco CTT § Cash flow to benefit from revenue growth and Strategic Partner operating leverage – namely in E&P § No additional commitments to Banco CTT envisaged § Capex leans towards transformation and grow
Slide 157: Strategic partnership offers for Banco CTT
A. CTT has received several offers for a strategic partnership to accelerate the growth potential of Banco CTT Strategic Insurance Disclaimer 1 Partnership in Banco CTT 2 Distribution Agreement CTT has received several offers of interest to establish the strategic partnership and continues to make p
Slide 158: Dual strategy for real estate portfolio optimization
B. Pursuing a dual strategy for the optimization of the real estate portfolio Yield generating assets Development Assets Portfolio optimization Asset by Asset optimization • c. 400 assets, representing €110m of book value • Up to 10 assets, representing €24m of book value • Stable rental income • De
Slide 159: Exclusive negotiations to create a real estate vehicle
B. Started exclusive negotiations to create a vehicle to be invested New by institutional partners Investor(s) Majority Minority Incorporating c. 400 assets, both retail shareholding shareholding and operations, crystalizing its value ~75% ~25% Asset PropCo Manager Optimizing return of unused and va
Slide 160: Targeted M&A in e-fulfilment and last-mile
C. Value accretive targeted M&A to improve our Iberian competitive footprint in e-fulfilment and last-mile activities Share of European eCommerce logistics revenue pool 2023, % M&A potential for CTT Enabling Payment E-fulfillment Linehaul International Sorting Last mile Returns webservices domestic
Slide 161: Financial highlights
Financial highlights CTT is poised for growth: we ambition to reach in 2025 a recurring EBIT of €100-120m up from €60m in 2021 (+67% to +100% vs 2021) CTT will be able to monetize and crystallize its asset pool, namely BCTT and its Real Estate assets, enabling significant financial flexibility Finan
Slide 162: Capital Markets Day
e.ctt _ Capital Markets
Slide 163: Agenda
Agenda Financial Services Welcome session and Retail Mail Banco CTT Parcel and ESG e-Commerce Solutions Financial ambition Operations and guidance Q&A and Wrap-up and Q&A Coffee-break
Slide 164: Wrap-up And Q&A
Wrap-up And Q&A
Slide 165: CTT ready and geared for growth
CTT ready and geared for growth The sector changed and remains moving through digitalization and changing consumer habits and expectations… … CTT seized that as an opportunity and deeply transformed itself … … 3 key achievements: Spain turnaround, bank breakthrough and new concession contract… … goi
Slide 166: CTT ready and geared for growth
CTT ready and geared for growth … capturing the Iberian e-commerce opportunity with an integrated one-stop-shop offering… … leveraging proximity and trust to cater to B2C customers’ financial and retail needs through multiple channels… … with increased focus on productivity, efficiency and customer
Slide 167: CTT ready and geared for growth: strategic assets
CTT ready and geared for … leveraging our growth strategic assets… Unique Iberian sales force, 01 underpinned by ubiquitous access to B2B clients and an exceptional retail network Strong and 02 trusted brand for individuals and businesses alike Unmatched last mile 03 distribution network, increasing
Slide 168: CTT ready and geared for growth
CTT ready and geared for … and beyond those growth strategic assets… … equipped with a wide and rich product and service offer … and capitalizing on a very experienced leadership team 168
Slide 169: Our Commitments
Our Commitments €1,100-1,250m €100-120m 2025 revenues 2025 EBIT 7-10% annual growth 14-19% annual growth for 2021–25 for 2021–25 Fastest Better growing Maximize e-commerce logistics Share of wallet of player in Iberia business and commerce services of mail clients 11%-13% Retail arm A top Faster ret