Ctt - Correios De Portugal Sa · EURONEXT:CTT
Ctt - Correios De Portugal Sa — CTT – Correios de Portugal — Shareholder Meeting (April 2023)
73 slides from Ctt - Correios De Portugal Sa's shareholder meeting presentation, Apr 20, 2023
Slide 1: Assembleia Geral de Acionistas – General Meeting, 20 April 2023
ASSEMBLEIA GERAL DE ACIONISTAS le ee GENERAL MEETING sa ite
Slide 2: Disclaimer
Disclaimer DISCLAIMER FORWARD-LOOKING STATEMENTS This document has been prepared by CTT – Correios de Portugal, S.A. (the “Company” or “CTT”) exclusively for use This presentation contains forward-looking statements. All the statements herein which are not historical facts, during the AGM23 presenta
Slide 3: Agenda
Brief review of the 2020-22 term Strategy Review B2B / Logistics Mail & Business Solutions Express & Parcels AGENDA B2C / Retail Financial Services & Retail Banco CTT ESG Financial Review Outlook 2023-25
Slide 4: Brief review of the 2020-22 term
Brief review of the 2020- 22 term 4
Slide 5: The 2020-22 term started with a number of very critical matters requiring resolution
The 2020-22 term office has started with a number of very critical matters requiring resolution End of the universal postal service concession contract Adversity of the postal law and derived regulatory framework Dire need to replace mail revenues by alternative new growth business Necessity of stop
Slide 6: Significant external events impacted CTT's businesses
Significant external events directly or indirectly impacted CTT’s businesses COVID-19 ECOMMERCE DE MINIMIS WA R I N U K R A I N E Significant impact throughout the Rise and slowdown of the global Regulation implemented by Strong impact in the European whole term: ecommerce markets1 the European Comm
Slide 7: Consumer confidence dented by C-19, war, inflation and rate hikes
Consumer confidence dented by C-19, war in Europe, inflation and successive rate hikes European Inflation European consumer confidence ECB Main Refinancing Rate 9.2% -7.2 2.5% 1.4% 0.0% 01/21 07/22 01/20 03/20 05/20 07/20 09/20 11/20 03/21 05/21 07/21 09/21 11/21 01/22 03/22 05/22 09/22 11/22 01/23
Slide 8: Demand trends throughout the term: Mail decline and irregular ecommerce evolution
Demand trends throughout the term: Mail decline and irregular ecommerce evolution Turnover and volume of sales in wholesale and retail trade (via mail order houses or via Internet) weight percentual point change vs. prior year Portugal postal traffic (index of volume 1Q20=100%) 100 100 70 63 60 47 4
Slide 9: Key landmark achievements at the end of the 2020-22 term
At the end of the 2020-22 term several key landmark achievements were accomplished New postal law in 2021 New universal postal service concession agreement for 2022-28 Spanish express & parcels operation early turnaround (positive EBITDA since 2021) Revenue growth and profitability in Banco CTT (pos
Slide 10: CTT in a transformation journey reshaping its business profile
CTT has been in a transformation journey consubstantiated in a deep reshape of its business profile enduring very strong mail decline CTT Group – Mail1 vs. Transformation2 Group Revenues Group Recurring EBIT 13% 67% 49% 37% 51% 57% 72% 87% 87% 51% 63% 33% 49% 43% 28% 13% 2019 … 2021 FY22 2019 … 2021
Slide 11: Transformational growth delivered while protecting profitability
Against a challenging external backdrop, we have delivered on transformational growth while protecting profitability Revenue evolution 2019-22 € millions Peers³ +22% +14% 13 63 907 107 740 57 37% 57% -74 63% 43% 2019 Legacy Mail Business Solutions Express & Parcels Financial Services Banco CTT 2022
Slide 12: CTT outperformed its peer group during the 2020-22 term
CTT clearly outperformed its peer group during the 2020-22 term of office Total Shareholder Return (TSR)1,2 % 80.8 71.2 53.8 PSI20 59 45.8 40.4 33.7 Ø 34 20.8 -15.6 -21.1 Singapore BPost Austrian Post PostNL Poste Italiane Japan Post IDS / DP-DHL CTT Post Royal Mail Source: Bloomberg; 1 Total Shareh
Slide 13: Strategy Review
Strategy Review ASSEMBLEIA GERAL DE ACIONISTAS Cc 2023 | SHAREHOLDERS GENERAL MEETING 13
Slide 14: Our positioning: a well diversified company exposed to sustained growth
Our positioning: a well diversified company, exposed to sustained growth FASTER, BETTER and GREENER For Companies (B2B) 1 For People (B2C) 1 Mail Business Parcel and Financial services Banco CTT and commerce ecommerce and retail services solutions business unit Strategy by Fast growing Our legacy bu
Slide 15: B2B / Logistics
B2B / Logistics Mail & Business Solutions Express & Parcels 15
Slide 16: Clear strategic priorities in logistics businesses
CTT has clear strategic priorities in its logistics businesses BUSINESS AND PARCEL AND MAIL COMMERCE SOLUTIONS ECOMMERCE SOLUTIONS 1. Improve pricing leveraging on new 1. Become the integrated 1. Leverage exposure to ecommerce concession contract one-stop-shop growth in Iberia Iberian player offerin
Slide 17: Improve pricing strategy and rollout digital services and integrated solutions
Improve pricing strategy and commercial proactivity and rollout more digital services and integrated solutions MAIL Price strategy Digital services Business solutions Price increases Significant growth Develop improve the of digital services ensures that new products sustainability CTT creates more
Slide 18: Complement Mail and E&P offering with business solutions
Complement the Mail and E&P offering by helping customers to improve efficiency and boost business, particularly in ecommerce BUSINESS SOLUTIONS SUPPORTING EMPOWERING the business the business For companies and public entities, we have tailor-made solutions Mail for Document Support Vertical Marketi
Slide 19: Largest and most integrated express network in the Iberian Peninsula
We are the largest and most integrated express network of operations in the Iberian Peninsula EXPRESS AND PARCELS Integration of mail and Integration in parcel operations in Iberia Portugal Centres that hourly order D+1 geographical serve both processing coverage in Iberia countries capacity Iberian
Slide 20: Iberia: large and growing market with potential to accelerate ecommerce penetration (1/2)
Iberia: a large and growing market, with a unique potential to accelerate ecommerce penetration (1/1) In Portugal, limited supply of Ecommerce-relevant parcel1 penetration, 2021 e-commerce appears to be the Number of parcels per capita per year main cause for low demand: • Portugal is typically an e
Slide 21: Iberia: large and growing market with potential to accelerate ecommerce penetration (2/2)
Iberia: a large and growing market, with a unique potential to accelerate ecommerce penetration (2/2) European ecommerce market €bn 2018 2021 2023 Change. total Change, % 72.5 131.2 159.1 +86.6 +119% 55.5 86.6 109.5 +54.0 +97% 33.1 55.6 66.6 +33.5 +101% 15.3 27.6 33.7 +18.4 +121% 13.9 25.3 29.8 +15.
Slide 22: B2B / Logistics – Mail & Business Solutions
B2B / Logistics Mail & Business Solutions 22
Slide 23: Clear steps towards the sustainability of Mail
Clear steps were taken towards the sustainability of Mail, in line with the strategic view New mail concession agreement Detailed next Optimization of mail creation through a web portal and the new e-Carta service was launched Launch of 2 new offers to develop the advertising segment: Media Digital
Slide 24: More initiatives planned to be rolled out in 2023
More initiatives are planned to be rolled out in 2023 Conserve the value of Mail services by growing digitally with new functionalities such as the revamp of viaCTT and enhanced information on deliveries to clients Creation of bundles to optimize the offering of services to the specific needs of SME
Slide 25: New mail concession agreement providing visibility and stability
New mail concession agreement to provide visibility and stability Price • 7-year contract: a transition period (2022) and two 3-year periods • In accordance with the new the postal legislation, new checks and Value drivers balances for pricing and quality of service parameters were defined ✓ Price:
Slide 26: Strong visibility on pricing
Strong visibility on pricing Price ∆ formula CPI - Volumes x( 1 - VC )- E + K Agreement Strong visibility signed with on 2023-25 ANACOM CPI Average of last 12m pricing criteria and GCD Δ Volumes y.o.y volume change, of last 12m (excluding bulk mail) Elements VC Variable costs factor (16%) E +0.5% ef
Slide 27: Mail volume decline slowed; better compensation by price mechanism
The mail volumes decline slowed down due to the post-pandemic opening-up. Moreover, there is a much better compensation by the price mechanism CTT addressed mail volumes evolution New concession contract Million items; CAGR (%) 2022 2023E 2001 Peak year in mail volumes 1,355 c.-66.2% 458 2001-2011 2
Slide 28: Mild decline in Mail volumes and revenues
Elections apart, Mail showed a mild decline in volumes and revenues Mail & Other revenues y.o.y revenues adjusted for elections € million; % change vs. prior year Addressed Unadressed Busines solutions Other Int. inbound Addressed mail 461 Addressed mail 444 weight (%) weight (%) -1.7%3 y.o.y, Regul
Slide 29: Mail profitability hindered by decline in inbound mail volumes
Mail profitability hindered by the decline in inbound mail volumes Mail & other - Revenues FY22 EBITDA 1 Recurring EBIT € million; % change vs. prior year € million € million Transactional €341.7m (-5.4%) Advertising €17.5m (-8.1%) -8.6% 56.5 Editorial €12.3m (-4.8%) 51.6 -39.6% Business solutions €
Slide 30: B2B / Logistics – Express & Parcels
B2B / Logistics Express & Parcels 30
Slide 31: 2022 E&P Portugal focus: pricing and differentiated offering
In 2022 focus of E&P Portugal initiatives was on strengthening pricing movements and further differentiate offering Initiate adjustments to pricing to improve profitability, including fuel surcharges Review Cargo pricing model in order to align with the costs of the new partner Santos & Vale Adapt S
Slide 32: 2023 focus on execution and pricing to improve profitability
In 2023, focus stands on execution and pricing movements targeted at improving profitability Continue to improve profitability by renegotiating meaningful deals (size and profitability) New Express functionalities: Safeplace and delivery estimated time Expand digital features: new APIs ecosystem to
Slide 33: 2022 a challenging year for Express & Parcels Portugal
As a result of external constraints, 2022 was a challenging year Express & Parcels Portugal Express & Parcels Portugal Express & Parcels Portugal CEP Volumes Revenues EBITDA 1 % change vs. prior year € million; % change vs. prior year € million; % change vs. prior year xx% FY22 yoy growth COVID-19 U
Slide 34: 2022 E&P Spain: price adjustments and business expansion
In 2022, focus of E&P Spain initiatives was on price adjustments and business expansion Initiate adjustments to pricing to improve profitability, including fuel surcharges New CRM tool to improve commercial activity New hub to boost and upgrade the operations of ecommerce from Asia (incl. customs cl
Slide 35: 2023 focus on broadening client relationships
In 2023, focus will be to broaden the relationship with clients Continue to improve profitability by renegotiating meaningful deals (size and profitability) New Express functionalities: Safeplace and delivery estimated time Launch PUDOs network in Spain Simplify offering and assure higher alignment
Slide 36: Investing to grow while focusing on quality and profitability
Investing to grow while focusing on quality of service and profitability Express & Parcels Spain Express & Parcels Spain Express & Parcels Spain CEP Volumes Revenues EBITDA1 and EBITDA margin million items; % change vs. prior year € million; % change vs. prior year € million; % change vs. prior year
Slide 37: Express & Parcels revenues, EBITDA and recurring EBIT
2022 profitability impacted by ecommerce slowdown and expansion for further growth Express & Parcels - Revenues FY22 EBITDA 1, 2 Recurring EBIT 2 Consolidated view; € million; % change vs. prior year € million € million -21.3% -44.4% Portugal €132.2m (-2.2%) 18.9 13.6 14.9 Portugal Parcels €118.9m (
Slide 38: B2C / Retail
B2C / Retail Financial Services & Retail Banco CTT 38
Slide 39: B2C / Retail – Financial Services & Retail
B2C / Retail Financial Services & Retail Banco CTT 39
Slide 40: Unique network capillarity across the country
We have a unique network capillarity across the country that we are refocusing on services Azores 569 branches spread across the country >1,800 agents that commercialize CTT products and services Madeira All 308 municipalities with a CTT store CTT branches 40
Slide 41: Ambition to reinforce proximity and become a one-stop-shop
Ambition to reinforce proximity and become a one-stop-shop for customer service needs Capillary network, associated with customer proximity, present with own shops in all municipalities Leveraging existing in-person traffic with 65k unique client visits / day, as well as increasingly available digit
Slide 42: Refocus of retail segment on services
Refocus of retail segment on Services Distribution of public debt Other financial and insurance services New public debt distribution agreement signed with • Insurance distribution agreement with Generali1 IGCP – Portuguese Treasury and Debt Management • Life (except financial) and Non-life insuranc
Slide 43: Public debt as an important revenue stream with growth potential
Public debt as an important revenue stream for CTT with potential to grow with self-service capabilities being developed We remain committed as the main retail provider of public debt Public debt placed by CTT has been growing steadily individual clients Yearly placements of public debt, €m +10% 8%
Slide 44: 2022 steps transforming stores towards savings and citizen services
In 2022 we took steps on transforming our stores towards the provision of comprehensive savings and citizen services Opening of another store with the 20|20 concept in Oeiras, focused on greater convenience through self-service spaces Expansion of the Lockers (513 Lockers, of which 70 are in CTT sho
Slide 45: More initiatives planned for 2023
More initiatives are planned to be rolled out in 2023 Implement a self-service solution for sending mail and parcels CTT stores’ area segmented by type of service Discontinuing of certain retail product sales, including scratch cards Further development of insurance products partnership with General
Slide 46: Public debt placements driving revenue performance
Public debt placements driving revenue performance and offering solid outlook Financial Services Retail products & services Financial Services revenues11 Retail revenues1 € million; % change vs. prior year % change vs. prior year +115.2% 15 13.4% 15.8 +40.6% 10.4% 10 10.7 8.4 7.7 7.6 7.4 7.7 7.6 5 1
Slide 47: Financial Services & Retail boosted by savings and retail dynamics
Financial Services & Retail boosted by savings and by the renewed commercial dynamics in retail Financial Services & Retail - Revenues FY22 EBITDA 1 Recurring EBIT € million; % change vs. prior year € million € million +41.3% +41.4% 31.0 Savings & insurance €34.2m (+42.7%) 1.0 30.9 35 30 Money order
Slide 48: B2C / Retail – Banco CTT
B2C / Retail Financial Services & Retail Banco CTT 48
Slide 49: In 2022 Banco CTT continued its growth path
In 2022, Banco CTT continued its growth path and took clear steps towards differentiating its offering Relationship with more than 800k individuals (700k in Banco CTT and 100k in 321Crédito) Expand relationship with clients with >30% growth in financial and card transactions, and logins Record year
Slide 50: 2023 Banco CTT focus on client relationships and bancassurance
In 2023, Banco CTT will focus on strengthening the relationship with its clients and grow in bancassurance Increase relationship and proximity with clients with our competitive offering Continue to grow auto loans and mortgage books Exit the Universo partnership with Sonae by year-end Implement the
Slide 51: Banco CTT strong performance driven by higher volumes
Banco CTT strong performance driven by higher volumes, while revenues and RoTE will benefit further from the interest rate outlook Banco CTT – Book volumes evolution Banco CTT – Key ratios € million, except otherwise indicated Auto loans 1;2 Mortgage loans 1 RoTE 3 Yield: 6.2% Yield: 0.9% +3.0 pp +1
Slide 52: Banco CTT continues its path of profitable growth
Banco CTT continues its path of profitable growth Banco CTT - Revenues FY22 EBITDA 1 Recurring EBIT € million; % change vs. prior year € million; % change vs. prior year € million; % change vs. prior year +27.4% 126.0 6.2 …by type: Other 5.0 +41.3% 98.9 Consumer credit 4.8 22.4 Other 3.8 45.5 Off-Ba
Slide 53: Strategic partnership between CTT, Banco CTT and Tranquilidade/Generali
Strategic partnership between CTT, Banco CTT and Tranquilidade/Generali Seguros Transaction description and rationale Long-term distribution agreements for the distribution by CTT and Banco CTT of Tranquilidade/General insurance products through their respective distribution channels, with exclusivi
Slide 54: Insurance distribution agreements overview
Insurance distribution agreements overview Key highlights Lines of business Life Non-life Motor Long-term agreements, with exclusivity renewable every 5 years Multi-risk Life protection Health Personal Recurrent commissions in line with market accidents standards Other non-life Additional fixed pric
Slide 55: Capital increase in Banco CTT ensures alignment of interests
Capital increase in Banco CTT ensures full alignment of interests between the parties Capital increase Shareholding structure 1 • The subscription by Generali of a €25m reserved capital increase for a stake of approximately 8.71% in Banco CTT implies a €262m pre-money valuation 91.29% 8.71% €25m cap
Slide 56: Termination of Universo credit card partnership reduces RWA
The termination of the Universo credit card partnership will reduce significantly the RWA Terms of the Partnership Agreement 2022 Key Performance Indicators - Termination • PBTI1 partnership: 8.0M€ • Partnership to be closed by 31 December 2023 • Revenues: 23.6M€² • Sonae will progressively assume r
Slide 57: Corporate development steps will strengthen capital position
These two corporate development steps – termination with Universo and launching with Generali – will further strengthen the capital position Banco CTT will gain strategic options in €371m reduction in RWA the management of its portfolio by releasing liquidity and capital that will strengthen its bal
Slide 58: ESG
ESG ASSEMBLEIA GERAL DE ACIONISTAS Cc 2023 | SHAREHOLDERS GENERAL MEETING 58
Slide 59: Clear vision and established targets across ESG dimensions
CTT has a clear vision and established targets across ESG dimensions Environmental commitment Social initiatives Governance as a key internal pillar People caring 59
Slide 60: Consistently raising our ESG commitments and achievements
Consistently raising our ESG commitments and achievements G E Accelerate the decarbonization path to become Net-Zero Implementing new code of ethics as from 2022, by 2030: and employee awareness and engagement • Reach 50% Last-Mile green vehicles by 2025, and 100% by 2030 Introduce monetary ESG ince
Slide 61: 2022 ESG initiatives developed
In 2022, several ESG initiatives were developed regarding the established objectives Alternative Fleet Recycling “To be Green” partnership “Solar Boroughs” ~500 mainly electric vehicles Recycled materials in packaging Transformation of used face masks Launch of a partnership with of 55% of Mail and
Slide 62: Significant progress in 2022 ESG goals
Significant progress has been reached in 2022 regarding ESG goals Number of vehicles Environmental Social Social Green vehicles in the last mile Investment in social impact initiatives % % of EBIT 216 483 +0.1pp 100% Gender parity of top and mid-management 1.0 1.0 +7.7 pp 50% % 0.9 7.6% 15.3% 45% 40
Slide 63: Financial Review
Financial Review ASSEMBLEIA GERAL DE ACIONISTAS Cc 2023 | SHAREHOLDERS GENERAL MEETING 63
Slide 64: Growth of revenues and recurring EBIT with strong FCF generation
Growth of revenues and recurring EBIT coupled with strong FCF generation Key financial indicators € million; % change vs. prior year Full Year 2021 2022 y.o.y Revenues 1 847.9 906.6 6.9% Operating costs - EBITDA 2 729.8 777.3 6.5% EBITDA 2 118.1 129.3 9.5% Depreciation & amortization 58.0 64.8 11.7%
Slide 65: Mail performance offset by growth in all other segments
Mail performance offset by growth in all other business segments Revenues ¹ Revenue ¹ breakdown € million; % change vs. prior year € million; % change vs. prior year; % of total +6.9% 906.6 13.9% Express & Parcels 27.1 259.0 (+1.3%) 6.7% 28.6% Mail & Other 2 11.8 847.9 3.3 16.5 906.6 460.9 (+3.7%) F
Slide 66: EBIT performance consistently improved throughout the year
EBIT performance consistently improved throughout the year, as guided Recurring EBIT 1 Recurring EBIT 1 € million; % change vs. prior year € million; % change vs. prior year; % of total 64.5 22.4% 13.2% Express & Parcels 60.1 +6.3 8.5 (-31.4%) -7.0 Mail & Other 2 +9.0 16.6% -3.9 64.5 10.7 (-39.6%) F
Slide 67: Strong cash flow leading to reduction in net debt
Strong cash flow generation leading to a reduction in consolidated net debt 2022 Cash flow 31 December 2022 Net financial debt ² € million; impact on cash flow vs. prior year € million EBITDA 129.3 (+11.2) Consolidated Non-cash items 1 -7.2 (+) Cash & cash equivalents 456.5 (+11.8) (-) Net Financial
Slide 68: Outlook 2023-25
Outlook 2023-25 2023 | SHAREHOLDERS GENERAL MEETING 68 ctt | ASSEMBLEIA GERAL DE ACIONISTAS
Slide 69: Aiming for sustained and meaningful growth until 2025
Recalling the CMD, we aim to achieve sustained and meaningful growth until 2025 Group Revenues Group Recurring EBIT € million € million 1,100-1,250 100-120 8.5% p.a. +16% 907 848 ~2/3 65 60 80-90% 51% 57% Growth business 72% (non-mail)1 87% 49% 43% ~1/3 Legacy mail2 28% 10-20% 13% 2021 2022 2025 202
Slide 70: Increasing dividend to €12.5ct per share
Increasing dividend to €12.5ct per share Shareholder remuneration Dividends principles1disclosed at the CMD2022 ✓ Dividend of €0.125 per share for the 2022 financial year to be Committed to improve shareholder remuneration while proposed and subject to approval in the AGM, payable in May 2023 mainta
Slide 71: Guided continued growth and transformation despite challenging environment
We have guided continued growth and transformation, notwithstanding a challenging environment Guidance Continued growth in recurring EBIT • Mid single-digit decline in mail volumes • Low-to-mid single-digit growth in Portugal CEP volumes with improved ≥ 10% revenue per item +7% +45% • Resume double-
Slide 72: Expecting a growth of recurring EBIT of at least 10%
Expecting a growth of recurring EBIT at least 10% Grabbing the full potential of ecommerce convergence in Portugal and Spain to resume growth, while focusing on prices and costs to improve profitability Improving structural mail profitability furthering operational efficiency measures Transforming t
Slide 73: Delivering the future by connecting people and businesses in a sustainable way
Delivering the future by connecting people and businesses in a sustainable way
CTT – Correios de Portugal — Shareholder Meeting (April 2023) on 6ix