Royal Kpn Nv · EURONEXT:KPN
Royal Kpn Nv — Koninklijke Kpn — Q4 2023 Earnings Presentation
29 slides from Royal Kpn Nv's earnings presentation, Jan 31, 2024
Slide 1: Q4 & FY results
Q4 & FY results 31 January 2024 kpn. The network of the Netherlands 1 Presentatie titel Vertrouwelijk
Slide 2: Safe harbor
Safe harbor Alternative performance measures and management estimates This financial report contains a number of alternative performance measures (non-GAAP figures) to provide readers with additional financial information that is regularly reviewed by management, such as EBITDA and Free Cash Flow (‘
Slide 3: Highlights: Delivered on FY 2023 outlook, with strong Q4 performance
Highlights: Delivered on FY 2023 outlook, with strong Q4 performance Continued Group service revenue growth in Q4 (+4.2% y-on-y) Strong B2C Mobile service revenue growth and further improvement in Fixed Continued B2C broadband base (+5k) growth in Q4; +30k in FY 2023 Sustainable Business service rev
Slide 4: Delivered on 2023 outlook
Delivered on 2023 outlook Outlook Achievements FY 2023 FY 2023 Adj. EBITDA AL ~€ 2,410m € 2,420m Capex € 1.2bn € 1,248m Free Cash Flow ~€ 870m € 886m € 15.0 cents Regular DPS € 15.0 cents1 +4.9% y-on-y Share buyback € 300m € 300m 4 Q4 & FY 2023 Results 1. KPN will pay a final dividend of € 9.8ct per
Slide 5: Strategy 2024-2027: a mission to Connect, Activate & Grow
Strategy 2024-2027: a mission to Connect, Activate & Grow Purpose We go all out to connect everyone in the Netherlands to a sustainable future Strategic Connect Activate Grow Missions Connect with our customers to Activate our best network, Grow KPN by modernizing deliver on their needs platforms, p
Slide 6: ESG fully embedded in strategy
ESG fully embedded in strategy Inclusive We provide services that are reliable We make it possible for everyone to and secure by design. We operate Security Diversity participate in, and benefit from, a with respect Reliability Social inclusion connected society Human rights Digital inclusion Energy
Slide 7: Connect, Activate & Grow
Connect, Activate & Grow Presentatie titel 74 Vertrouwelijk
Slide 8: Fiber engine at full speed
Fiber engine at full speed Continuously expanding fiber footprint (own) Leading fiber footprint homes passed (k) homes passed as a % of Dutch households +5491 4,260 ~80% +373 57% +428 3,710 3,337 35% 2,909 2020 2021 2022 2023 2020 2023 2026 KPN footprint Glaspoort footprint B2C broadband customer ba
Slide 9: B2C: Service revenues continue to improve driven by Fixed and Mobile
B2C: Service revenues continue to improve driven by Fixed and Mobile Key take-aways Service revenue trend +2.7% +4.0% +1.3% • Fixed service revenue trend continued to improve, supported by (€ m) accelerating Fiber broadband service revenue growth -0.3% -0.2% 455 464 465 • Strong execution driving Br
Slide 10: B2C: Base and ARPU growth drive solid performance
B2C: Base and ARPU growth drive solid performance Continued 1 positive broadband net adds Growing fixed ARPU Solid fixed service revenue trend (k) (y-on-y growth) +2.4% +17 +1.8% € 54 +14 +5 -0.4% -3 -7 -1.7% +2.6% y-on-y -2.3% Continued positive postpaid net adds Growing mobile ARPU Strong mobile s
Slide 11: B2B: Sustainable service revenue growth, mainly driven by SME
B2B: Sustainable service revenue growth, mainly driven by SME Key take-aways Service revenue trend & growth (€ m) • Continued strong growth in SME service revenues, driven by mobile, +3.0% +3.1% +4.5% +4.2% +4.4% broadband and Cloud & Workplace base growth and positive ARPU development 430 422 428 4
Slide 12: B2B: All segments contributing to service revenue growth
B2B: All segments contributing to service revenue growth SME (€ m) +8.9% +9.3% +11.7% +9.9% +7.5% 154 155 160 169 169 Total Business service revenues (€ m) +3.0% +3.1% +4.5% +4.2% +4.4% Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 430 428 434 449 422 LCE +0.4% +0.5% +0.5% +0.7% (€ m) -1.8% 197 193 193 19
Slide 13: Wholesale: Solid growth from open access portfolio
Wholesale: Solid growth from open access portfolio Key take-aways Service revenue trend (€ m) +3.8% +5.4% +3.2% • Wholesale service revenues increased, due to higher Broadband +1.9% +0.1% and Mobile service revenues 78 81 79 81 73 • Growing base, +29k postpaid SIMs and +29k1 broadband lines 53 52 53
Slide 14: Financial Performance
Financial Performance Presentatie CMD 2023 titel Vertrouwelijk
Slide 15: Summary: Q4 and FY 2023 results
Summary: Q4 and FY 2023 results Adjusted revenues Adj. net indirect opex AL Adjusted EBITDA AL Q4 adjusted revenues +4.3% y-on-y Q4 2023 FY 2023 Q4 2023 FY 2023 Q4 2023 FY 2023 • Growth driven by all segments € 1,421m +4.3% € 5,448m +2.5% € +34m € +102m € 611m +2.2% € 2,420m +0.6% • Service revenues
Slide 16: Accelerating Group service revenue growth
Accelerating Group service revenue growth Continued Group service revenue growth Growth driven by all segments (€ m) (€ m) Δ y-on-y +1.5% +1.2% +2.8% +3.8% +4.2% Δ y-on-y Q4 2022 1,244 1,277 1,296 1,244 1,227 1,245 181 173 167 167 177 +4.0% Consumer +26 430 434 449 422 428 +4.4% Business +19 Wholesa
Slide 17: Adjusted EBITDA AL slightly higher despite inflationary headwinds
Adjusted EBITDA AL slightly higher despite inflationary headwinds Adjusted EBITDA AL (€ m) +0.6% +133 -16 -13 -12 -37 2,420 -28 2,404 -12 FY 2022 Adjusted revenues Direct Personnel IT/TI expenses Energy Other Lease related exp. FY 2023 costs expenses opex 17 Q4 & FY 2023 Results
Slide 18: Operational FCF slightly lower due to higher total spend
Operational FCF slightly lower due to higher total spend Operational Free Cash Flow (€ m) -2.2% +148 -14 -16 1,199 -102 1,172 -42 FY 2022 Service revenues Non-service Direct Indirect Capex FY 2023 revenues & Other costs costs 18 Q4 & FY 2023 Results
Slide 19: FCF generation remains solid
FCF generation remains solid Contribution to Δ FCF y-on-y (€ m) Adj. EBITDA AL 2023 2,420 +16 2023 Free Cash Flow of € 886m, 2.7% higher y-on-y mainly due to: Capex -1,248 -42 − EBITDA growth − Working capital improvements Operational FCF 1,172 -27 Cash restructuring -28 +2 Cash & short-term investm
Slide 20: Steadily improving Return on Capital
Steadily improving Return on Capital ROCE1 (€ m) 260 234 199 14.1% NOPLAT 13.1% • Improving adjusted EBITDA AL • Lower depreciation for network equipment 11.0% 2021 2022 2023 (€ bn) 7.4 7.2 7.2 Capital Employed • Increasing due to network investments 2021 2022 2023 2021 2022 2023 20 Q4 & FY 2023 Res
Slide 21: Robust liquidity position, committed to investment-grade credit profile
Robust liquidity position, committed to investment-grade credit profile 11.0x 12.9x 11.2x 12.3x 10.5x Robust liquidity… (€ m) 2.4x 2.4x 1,000 1,802 2.3x 2.2x 2.3x (€ m) 6,400 6,384 5,935 6,106 5,820 802 5,815 5,739 5,582 5,435 5,275 Cash & short RCF Total liquidity end Q4 2023 term investments 540 5
Slide 22: ESG Dashboard
ESG Dashboard In kTon CO2e Base year1 Scope 1 – Direct emissions 59 • Gross emissions, relating to fuel consumption car fleet, heating of buildings, consumption of -83% LTM Q3 ’22 Scope 1 12 coolants, fuel consumption of emergency power generators -17% LTM Q3 ’23 10 • Ambition: 98% fossil fuel free
Slide 23: Outlook 2024 and ambitions 2027
Outlook 2024 and ambitions 2027 Achievements Outlook Ambitions FY 2023 FY 2024 FY 20271 Service revenues +3.0% ~3% ~3% CAGR Adj. EBITDA AL € 2,420m ~€ 2,480m ~3% CAGR Capex € 1,248m ~€ 1.2bn <€ 1.0bn Free Cash Flow € 886m ~€ 880m ~7% CAGR 23 Q4 & FY 2023 Results 1. CAGR compared to FY 2023
Slide 24: Continue attractive shareholder returns, return FCF to shareholders
Continue attractive shareholder returns, return FCF to shareholders Capital allocation aimed at long-term Shareholder remuneration policy value creation for all stakeholders Full Free Cash Flow returned to shareholders over Disciplined, value creating reinvestment. 2024-2027 period Capex at ~€ 1.2bn
Slide 25: Highlights: Delivered on FY 2023 outlook, with strong Q4 performance
Highlights: Delivered on FY 2023 outlook, with strong Q4 performance Continued Group service revenue growth in Q4 (+4.2% y-on-y) Strong B2C Mobile service revenue growth and further improvement in Fixed Continued B2C broadband base (+5k) growth in Q4; +30k in FY 2023 Sustainable Business service rev
Slide 26: Appendices
Appendices l Tax ll Debt portfolio Presentatie CMD 2023 titel Vertrouwelijk
Slide 27: I. Tax Q4 and FY 2023
I. Tax Q4 and FY 2023 P&L Cash flow P&L Cash flow Regions (€ m) Q4 2022 Q4 2023 Q4 2022 Q4 2023 FY 2022 FY 2023 FY 2022 FY 2023 The Netherlands -54 -55 -20 -41 -227 -245 -50 -110 Other - - - - - - - - Total reported tax -54 -55 -20 -41 -227 -245 -50 -110 Of which discontinued operations - - - - - -
Slide 28: II. Debt portfolio
II. Debt portfolio Nominal debt by type1 Nominal debt by currency1 Fixed vs. floating interest1 Debt redemption profile2 1.1 7% 1.0 15% 15% 0.8 5% 21% 0.7 0.7 0.6 0.6 7% 0.5 0.5 0.4 73% 72% 85% ’24 ’25 ’26 ’27 ’28 ’29 ’30 ’31 ’32 ’33 Eurobonds EUR Fixed EUR Global bonds GBP Floating GBP Loans & othe
Slide 29: KPN Investor Relations
KPN Investor Relations ir.kpn.com 29 Q4 & FY 2023 Results