Royal Kpn Nv · EURONEXT:KPN
Royal Kpn Nv — Koninklijke Kpn — Q2 2023 Earnings Presentation
29 slides from Royal Kpn Nv's earnings presentation, Jul 24, 2023
Slide 1: Q2 & H1 2023 results
Q2 & H1 2023 results 24 July 2023 kpn. The network of the Netherlands
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 Q2: Service revenue growth driven by commercial momentum
Highlights Q2: Service revenue growth driven by commercial momentum Sustainable Group service revenue growth (+2.8% y-on-y), driven by all segments Strong B2B service revenue growth (+4.5% y-on-y), with all segments contributing Consumer service revenues back to growth (+1.3% y-on-y), fueled by Mobi
Slide 4: Accelerate to grow supported by three key pillars
Accelerate to grow supported by three key pillars Three strategic pillars… …to support our ambition to 1. Leverage & expand superior networks • Covering the Netherlands through fiber • Low latency services via 5G and edge computing Connect the Netherlands to a sustainable future • Leading the Dutch
Slide 5: Expand Superior network
Expand Superior network
Slide 6: Expand superior fiber network
Expand superior fiber network Continuously expanding fiber footprint1 Leading position, jointly covering ~80% of NL by end 2026 homes passed, k homes passed, % of households +125 KPN footprint ~80% +85 +90 3,920 Glaspoort footprint 53% +87 3,796 3,710 35% 3,620 3,533 Q2 2022 Q3 2022 Q4 2022 Q1 2023
Slide 7: Expand superior network: Best mobile network for 6th time in a row
Expand superior network: Best mobile network for 6th time in a row #1 Excellent 5G position Differentiated 6 consecutive Ookla awards Best mobile network in the Netherlands 5G services Leading Best mobile network Highest download speed 5G ecosystem and Highest upload speed Leading in Security Fastes
Slide 8: Enhance Customer focus
Enhance Customer focus
Slide 9: B2C: Consumer service revenues reach growth inflection point
B2C: Consumer service revenues reach growth inflection point Key take-aways Service revenue trend (€ m) • Continued growth in mobile service revenues, driven by solid base +1.3% trends and growing ARPU -1.1% -0.8% -0.3% -0.2% • Fixed service revenues supported by growing broadband service revenues.
Slide 10: B2C: Strong commercial momentum
B2C: Strong commercial momentum Growing broadband net adds (k)1 +14 Slightly growing fixed ARPU Fixed service revenues bottomed out (y-on-y growth) € 52 +4 -3 -3 -0.4% -7 +1.2% y-on-y -2.2% -2.0% -2.3% -1.7% Continued positive postpaid net adds (k) Growing mobile ARPU Continued growth in mobile serv
Slide 11: B2B: Continued strong service revenue growth, mainly driven by SME
B2B: Continued strong service revenue growth, mainly driven by SME Key take-aways Service revenue trend (€ m) • Continued strong growth in SME service revenues, mainly driven by +3.4% +4.5% +3.0% +3.1% mobile base momentum and take-up unlimited bundles +1.9% • LCE service revenues grew slightly, mai
Slide 12: B2B: All segments contributing to service revenue growth
B2B: All segments contributing to service revenue growth SME (€ m) +9.3% +8.9% +7.5% +9.3% +7.7% 146 151 154 155 160 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Continued strong Business service revenue growth (€ m) +4.5% +3.4% +3.0% +3.1% LCE (€ m) -0.4% +0.4% +0.5% +0.5% +1.9% -3.1% 409 416 430 422 428 192 194
Slide 13: Wholesale: Sustainable growth from open access model
Wholesale: Sustainable growth from open access model Key take-aways Service revenue trend (€ m) • Wholesale service revenues increased, due to higher Mobile and +6.4% +3.8% Broadband service revenues +0.8% +1.9% +0.1% • Growing base, adding 17k postpaid and 10k broadband lines • Other service revenu
Slide 14: Solid progress on ESG ambitions
Solid progress on ESG ambitions In kTon CO2e Base year1 Scope 1 – Direct emissions 59 • Gross emissions, relating to fuel consumption car fleet, heating of buildings, -81% LTM Q1 ’22 Scope 1 13 -15% consumption of coolants, fuel consumption of emergency power generators 11 LTM Q1 ’23 • Ambition: 98%
Slide 15: Deliver Financial ambitions
Deliver Financial ambitions
Slide 16: Financial performance
Financial performance Adjusted revenues Adj. net indirect opex AL Adjusted EBITDA AL Q2 adjusted revenues +1.6% y-on-y Q2 2023 H1 2023 Q2 2023 H1 2023 Q2 2023 H1 2023 • Service revenue growth (+2.8% y-on-y) € 1,331m € 2,664m € +30m € +42m € 596m € 1,180m driven by all segments, partly offset by +1.6
Slide 17: Sustainable Group service revenue growth
Sustainable Group service revenue growth Continued Group service revenue growth (€ m) Growth driven by all segments (€ m) +1.3% +1.1% +1.5% +1.2% +2.8% Δ y-on-y Δ y-on-y Q2 2022 1,211 1,211 1,230 1,244 1,227 1,245 170 171 167 167 177 Wholesale +7 +3.8% 409 416 430 422 428 Business +18 +4.5% Consumer
Slide 18: Adjusted EBITDA AL slightly higher despite higher indirect cost base
Adjusted EBITDA AL slightly higher despite higher indirect cost base Adjusted EBITDA AL (€ m) +0.1% -14 10 -5 -4 34 -9 -9 595 596 -4 Q2 2022 Service Non- Direct Personnel IT/TI Energy Other Lease Q2 2023 revenues service costs expenses expenses opex related exp. revenues & other 18 Q2 & H1 2023 Resu
Slide 19: FCF generation impacted by intra-year phasing
FCF generation impacted by intra-year phasing Contribution to Δ FCF y-on-y (€ m) Adj. EBITDA AL H1 2023 1,180 -9 H1 Free Cash Flow of € 354m, 13% lower y-on-y mainly due to: Capex -602 -49 − Capex phasing − Higher taxes paid Operational FCF 578 -58 Cash restructuring -14 +5 Cash & short-term inve
Slide 20: Steadily improving Return on Capital
Steadily improving Return on Capital NOPLAT €m Improving adjusted EBITDA AL 247 214 Lower restructuring charges 187 ROCE1 Lower depreciation for network ROCEequipment 1 13.7% Q2 2021 Q2 2022 Q2 2023 12.0% 10.3% € bn Capital employed 7.3 7.1 7.3 H1 2021 H1 2022 H1 2023 Increasing due to netwo
Slide 21: Robust liquidity position, committed to investment-grade credit profile
Robust liquidity position, committed to investment-grade credit profile 12.1x 12.1x 12.9x 11.0x 11.2x Robust liquidity… €m 600 1,967 2.3x 2.3x 2.3x 2.4x 1,000 1,367 2.2x €m 367 6,010 5,382 5,993 5,566 5,935 5,435 5,815 5,275 6,106 5,739 Cash & RCF Total Bond issue Total short term liquidity settled
Slide 22: 2023 outlook reiterated
2023 outlook reiterated Achievements Outlook H1 2023 FY 2023 Adjusted EBITDA AL € 1,180m ~€ 2,410m Capex € 602m € 1.2bn Free Cash Flow € 354m ~€ 870m € 5.2 cents € 15.0 cents Regular DPS interim dividend +4.9% y-on-y Share buyback € 300m € 300m 22 Q2 & H1 2023 Results
Slide 23: Highlights Q2: Service revenue growth driven by commercial momentum
Highlights Q2: Service revenue growth driven by commercial momentum Sustainable Group service revenue growth (+2.8% y-on-y), driven by all segments Strong B2B service revenue growth (+4.5% y-on-y), with all segments contributing Consumer service revenues back to growth (+1.3% y-on-y), fueled by Mobi
Slide 24: Accelerate to grow
Accelerate to grow
Slide 25: Appendices
Appendices I Tax II Debt portfolio III ESG
Slide 26: I: Tax Q2 2023
I: Tax Q2 2023 P&L Cash flow P&L Cash flow Regions (€ m) Q2 2022 Q2 2023 Q2 2022 Q2 2023 H1 2022 H1 2023 H1 2022 H1 2023 The Netherlands -57 -64 -18 -16 -110 -121 -29 -42 Other Total reported tax -57 -64 -18 -16 -110 -121 -29 -42 Of which discontinued operations Reported tax from continuing operatio
Slide 27: II: Debt portfolio
II: Debt portfolio Nominal debt by type 1 Nominal debt by currency 1 Fixed vs. floating interest 1 Debt redemption profile (€ bn) 2 1.1 1.0 7% 15% 21% 0.8 0.7 22% 0.6 0.7 11% 0.6 0.5 0.5 0.4 7% 67% 71% 79% ’23 ’24 ’25 ’26 ’27 ’28 ’29 ’30 ’31 ’32 ’33 Eurobonds EUR Fixed EUR Global bonds GBP Floating
Slide 28: III: ESG milestones and ambitions
III: ESG milestones and ambitions Important milestones crossed… …and an ambitious agenda Carbon neutral Inflow of cars 45% reduction Management for own >33% women close to 100% scope 3 incentivized operations in sub top fossil fuel free emissions 1 2011 2015 2023 2025 2030 2011 2020 2025 203
Slide 29: KPN Investor Relations
KPN Investor Relations ir.kpn.com