Slide 1: Investor presentation Third quarter 2020
Investor presentation Third quarter 2020 November – December 2020
Slide 2: Contents, financial calendar and disclaimer
Investor presentation Third quarter 2020 Contents Financial Calendar Highlights & guidance 3Q20 results YTD20 results 08.12.2020 (10:30 CET) 3Q20 Highlights – 4 EBIT bridge – 39 EBIT bridge – 53 Strategy update and capital allocation Outlook 2020 – 5 Key financials – 40 Key financials – 54 Results b
Slide 3: Highlights 3Q20 and Guidance 2020
Highlights 3Q20 Guidance 2020
Slide 4: Highlights of 3Q20
Highlights of 3Q20 3Q20 Strong e-commerce driven performance in PaLo Eurasia and North America further accelerates the mix shift and drives 2020 outlook upgrade 2020 group Group operating Mail & Retail Parcels & Logistics Parcels & Logistics adjusted EBIT income Eurasia N. Am. at least € 270m € 972.
Slide 5: 2020 group EBIT outlook revised upwards
2020 group EBIT outlook revised upwards Outlook FY20 Group Dividend FY20 group adjusted EBIT can be revised upwards to at least € 270m, including The updated capital allocation framework, including new dividend policy, will be the estimated financial impact of the ransomware attack at Radial North c
Slide 6: bpost group
ior =) © oO) aoe) WN O ior ne) oO ce) c & D oO ran ion)
Slide 7: bpost group offers a strong investment rationale
bpost group offers a strong investment rationale at a glance – group bpost group aims at being a responsible company, delivering sustainable returns to its shareholders What? How? We continue to transform the mail and Multiple levers for Experienced Growth in A solid balance proximity business in th
Slide 8: We create value for shareholders
We create value for shareholders at a glance – group Capital allocation and dividend policy are under review with new policy to be communicated on Dec. 8th, 2020 Dividend Policy • IPO dividend policy until 2019: Minimum 85% of BGAAP net profit of the mother company bpost SA/NV (unconsolidated). This
Slide 9: A diversified mail operator with a footprint in e-commerce logistics
A diversified mail operator with a footprint in at a glance – group e-commerce logistics Revenues % of total € 3,837.2m1 € 310.8m Transactional mail € 748m 19% Mail & Retail Advertising mail € 236m 6% revenues 8.1% € 1,897m EBIT 49% Press € 344m 9% Proximity and convenience retail network € 465m 12%
Slide 10: Long-term vision & strategic aspirations
Long-term vision & strategic aspirations at a glance – group ”Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium” 1 2 3 Mail services to citizens and Drive profitable growth in Optimize Radial to deliver in State remain core and will Parcels BeNe and further the prom
Slide 11: Our experienced management team
Our experienced management team has at a glance – group responsibilities down to the bottom-line Jean-Paul Van Avermaet Luc Cloet Kathleen Van Beveren Henri de Romrée Group CEO CEO Mail & Retail CEO Parcels & Logistics Europe & Asia CEO Parcels & Logistics North America Mark Michiels Leen Geirnaerdt
Slide 12: Sustainability is at the heart of our activities
Sustainability is at the heart of our activities at a glance – group 3-pillar CSR strategy linked to United Nations People Proximity Planet Selected awards and recognition we care about our we are close to the we strive to reduce our employees and engage society impact on the • IPC EMMS Scorecard 20
Slide 13: Sustainability, the road to a resilient bpost group
Sustainability, the road to a resilient bpost group at a glance – group Committed member of the Belgian Alliance for Climate Action 12 October 2020 Science Based Bpost group Signing of the Targets Target setting Belgian SDG Public commitment program Charter to keep Global to set ambitious 2020 CEO e
Slide 14: Putting People, Planet & Proximity into ESG
Putting People, Planet & Proximity into ESG at a glance – group Environment Social Governance Carbon footprint reduction program COVID response management: ensuring Materiality assessment: involving our • LNG trucks & Double Deck Trailers our people are safe and protected in stakeholders in our sust
Slide 15: Mail & Retail at a glance
Mail & Retail at a glance – M&R at a glance Sub-segments Revenues 2019, €m Key facts & figures 748 Transactional mail ~7.1m letters handled daily 236 Advertising mail ~20.1k 344 operational FTEs Press 465 Servicing 5m Proximity and convenience retail network letter boxes Value added services 104 5 i
Slide 16: Key value drivers for Mail & Retail
Key value drivers for Mail & Retail at a glance – M&R Key value drivers From To Speed of mail volume decline -7.9% Between 9% - 11% in 2019 in 2020 (ex-COVID-19) Share of mail volume decline compensated 18-45% >50%1 through price increase over 2014-2017 Three contracts Extension Renegotiation/retend
Slide 17: Domestic mail volume decline expected to accelerate
Domestic mail volume decline expected to accelerate from at a glance – M&R -7.9% in 2019 up to ~-9% to -11% in 2020 (ex-COVID-19 impact) 2013 2014 2015 2016 2017 2018 20191 YTD20 Key drivers Underlying change -4.2% -4.4% in domestic mail volume -5.0% -5.0% -5.8% -5.8% -7.9% • E-substitution at large
Slide 18: Regulatory aspects
Regulatory aspects at a glance – M&R Designated provider of the 4 key contracts with the Postal law of 10 February 2018 Universal Service Obligation Belgian State provides stable & predictable until end 20231 mail pricing framework • Collection, sorting, transport and distribution of • Management co
Slide 19: New Postal Law
New Postal Law (Effective as of February 10, 2018) at a glance – M&R provides stable and predictable regulatory framework to increase prices in context of accelerating mail volume decline Drivers of the price cap formula Inflation Volume decline Efficiency gains Description Compensation for inflatio
Slide 20: Price increase and mix effects expected to compensate >50% of mail volume decline
Price increase and mix effects expected to compensate at a glance – M&R >50% of mail volume decline Volume and price/mix impact on revenue €m Key drivers Domestic mail volume Domestic mail price/mix % Share of volume effect compensated by price/mix • Accelerating domestic mail 72% 45% 30% 31% 18% >5
Slide 21: Management has developed an extended set of cost control options
Management has developed an at a glance – M&R extended set of cost control options Operating model Industrial Mail Collect & Distribution FTE Unit cost Centers Transport • Differentiated • Optimize mail • Align number of red • Introduce new • Further optimize FTE offering and sorting centers boxes t
Slide 22: A differentiated offering enables a new distribution model
A differentiated offering enables a new distribution at a glance – M&R model to accommodate changing customer needs Differentiated offering Alternating Distribution Model Optimizing drop density as of January 1st, 2019 as of mid-March 2020 Share of houses receiving mail on any given day, % ADM: D+1
Slide 23: Labor cost will benefit from decrease of mail related FTEs
Labor cost will benefit from decrease of mail at a glance – M&R related FTEs and optimized employee mix Operational FTE evolution1 Age pyramid Natural attrition Average FTEs and interims, ‘000 Headcount bpost SA/NV per age, 31/12/19 Average 18.8 19.3 20.0 20.1 9,633 9,739 natural attrition Non pay-s
Slide 24: Parcels & Logistics Europe and Asia
Parcels & Logistics Europe and Asia at a glance – PaLo Eurasia at a glance Sub-segments Revenues 2019 (€m) Key facts & figures • Last-mile B2C delivery in the Peak days of up to Parcels BeNe 381 Benelux 530k parcels during COVID-19 • Total of ~74m parcels in 2019 lockdown • Mostly fulfilment & trans
Slide 25: Key value drivers for Parcels & Logistics Europe & Asia
Key value drivers for Parcels & Logistics Europe & Asia at a glance – PaLo Eurasia Sub-segments Key value drivers From To Parcels BeNe Ability to capture profitable growth in a competitive environment Volume growth rate of 20-30% with price/mix effect up to -6% over Double-digit volume growth rate,
Slide 26: Four strategic initiatives for Parcels BeNe
Four strategic initiatives for Parcels BeNe at a glance – PaLo Eurasia Focus on 4 strategic initiatives Integrated Differentiate Attract key foreign Convenience BeNe offering pricing policy e-commerce players & Cost leadership • Dedicated, specialized • Strategic pricing initiatives • Partnerships w
Slide 27: Established position in the Belgian B2C/C2C parcels market
We have an established position in at a glance – PaLo Eurasia the Belgian B2C/C2C parcels market 2019 parcel market1: 100% = € 1.6bn Unique selling proposition Offer best last-mile and broadest delivery options, B2C supported by acquisitions and partnerships: B2B • Home delivery 7/7 & evening delive
Slide 28: Partnership with DHL Parcels NL covers the full BeNe region
Partnership with DHL Parcels NL allows to cover the full at a glance – PaLo Eurasia BeNe region and to capture important cross-border flows Launched in June 2018 Purchasing behavior • NL is the most important import country to BE (~30% of import flows) • BE consumers mainly buy from NL players such
Slide 29: The parcels operating model will be continuously optimized
The parcels operating model at a glance – PaLo Eurasia will be continuously optimized Optimize distribution cost Evolve towards dedicated Increase sorting capacity using drop density of mail parcel infrastructure to match rounds customer requirements • Maximize parcels in mail rounds • Nationwide Pa
Slide 30: Initial assets along the entire e-commerce logistics value chain
Supported by acquisitions, bpost group has initial assets at a glance – PaLo Eurasia along the entire value chain of e-commerce logistics 1 2 Order Fulfilment • Order management • Order reception in warehouses in the proximity of clients • Payment services, tax services and fraud prevention • Prepar
Slide 31: E-commerce logistics activities in Europe: strong footprint
E-commerce logistics activities in Europe can be at a glance – PaLo Eurasia developed thanks to an already strong European footprint 8 ~1,200 Commercial fulfilment FTEs centers / facilities The UK Netherlands Germany Poland Belgium Italy 5 ~€ 133m Countries 2019 revenue Cold chain facility Fulfilmen
Slide 32: Two complementary engines of growth: Radial Europe and Active Ants
E-commerce logistics in Europe has 2 complementary at a glance – PaLo Eurasia engines of growth i.e. Radial Europe and Active Ants 1 Type of clients E-tailers & click-and-mortar (omnichannel) Pure e-tailers Size of clients Medium/large Small/medium Level of automation Lower, depends on client High (
Slide 33: Parcels & Logistics North America at a glance
Parcels & Logistics North America at a glance – PaLo N. Am. at a glance Sub-segments Revenues 2019, €m US e-commerce logistics Capabilities to support Objectives provider fulfilling 72m mid-sized e-tailers to parcels p.a. with proven expand cross-border and • Growth engine for bpost E-commerce logis
Slide 34: Acquisition of US-based Radial on 16 November 2017
Acquisition of US-based Radial at a glance – PaLo N. Am. on 16 November 2017 Acquisition rationale Key acquisition data Radial Global Our growth • Enterprise Value: $ 820m • Integrated e-commerce logistics provides access to a larger and more • Sales 2017: $ 1,082m attractive profit pool • EBITDA 20
Slide 35: Radial North America offers multiple services across the value chain
Radial North America offers multiple services at a glance – PaLo N. Am. across the entire e-commerce logistics value chain Revenues Radial North share % America assets Description and key strengths Payment, Tax, Fraud Zero software Processing global payments, • 98.3% approval rate vs. 97.1% industry
Slide 36: Radial North America market dynamics and competitive landscape
Radial North America market dynamics at a glance – PaLo N. Am. and competitive landscape Addressable e-commerce logistics sector Online revenue e-tailers, US ~$ 680bn total Radial’s target $ 45-57bn $ 680bn1 expected US online retail revenue in 2020 US online Retail audience addressable e-commerce e
Slide 37: Positive commercial development at Radial and results in line
Positive commercial development at Radial at a glance – PaLo N. Am. and financial results in line with expectations Commercially heading in the right direction FY18 & FY19 results impacted, as expected, by: • We continue to reap benefits from our customer-focused • Churn (mostly in Fulfilment & Tran
Slide 38: 3Q20 Results
3Q20 Results
Slide 39: 3Q20 EBIT nearly doubles driven by PaLo growth
3Q20 EBIT nearly doubles driven by high growth in 3Q20 Parcels & Logistics Eurasia and North America € million 0.5 69.5 4.4 14.0 +31.2 19.4 38.3 4.0 -2.7 65.1 or € +21.1m when excluding 3Q19 € +1.7m contingent considerations reversal on Adjusted1 34.3 Dynagroup Reported EBIT Mail & PaLo PaLo Corpora
Slide 40: Key financials 3Q20
Key financials 3Q20 3Q20 € million Reported Adjusted1 1 Adjustment of € -0.6m at operating 3Q19 3Q20 3Q19 3Q20 %↑ income level related to the disposal of Alvadis on August 30, 2019 Total operating income 1 881.5 972.9 1 880.9 972.9 10.4% Operating expenses 783.0 840.1 783.0 840.1 7.3% EBITDA 98.5 13
Slide 41: Results by segment 3Q20
Results by segment 3Q20 3Q20 € million M&R PaLo Eurasia PaLo N. Am. Corp Eliminations Group External operating income 414.3 259.5 294.9 4.2 0.0 972.9 Intersegment operating income 49.4 3.6 1.0 86.2 -140.2 0.0 Total operating income 463.7 263.1 295.9 90.4 (140.2) 972.9 Operating expenses 405.8 228.2
Slide 42: Top-line decline driven by COVID-19 impact on retail and Alvadis
Top-line decline driven by COVID-19 impact on retail 3Q20 – M&R and by deconsolidation of Alvadis M&R external operating income, € million Domestic Mail Transactional Proximity and convenience Operating income decline at € -8.7m i.e. Good resistance of transactional mail retail network 3Q19 444.5 €
Slide 43: Limited M&R EBIT decline driven by parcel volumes
Limited M&R EBIT decline driven by stellar growth in parcel 3Q20 – M&R volumes handled through the mail network for PaLo Eurasia Key takeaways 3Q20 € million Mail & Retail 3Q19 3Q20 %↑ External operating income 444.5 414.3 -6.8% Transactional 168.8 168.3 -0.3% • Total operating income decline of € -
Slide 44: PaLo Eurasia revenue driven by thriving e-commerce
PaLo Eurasia revenue driven by thriving 3Q20 – PaLo Eurasia e-commerce both domestically and abroad PaLo Eurasia external operating income, € million Parcels BeNe E-commerce logistics Cross-border Parcels B2X1 revenues up 45.3% Revenue evolution mainly driven Strong revenue development 3Q19 195.1 dr
Slide 45: Stellar parcel growth drives steep EBIT margin improvement
Stellar growth in parcel volumes handled through the mail 3Q20 – PaLo Eurasia network drives steep EBIT margin improvement Key takeaways 3Q20 € million Parcels & Logistics Europe and Asia 3Q19 3Q20 %↑ External operating income 195.1 259.5 33.1% Parcels BeNe 94.4 125.6 33.1% • Total operating income
Slide 46: PaLo North America driven by strong e-commerce development
Parcels & Logistics North America driven by 3Q20 – PaLo N. Am. continued strong e-commerce development PaLo North America external operating income, € million E-commerce logistics International mail YoY increase of +25.2% (+31.6% at Revenues flat YoY (+5.1% at 3Q19 239.9 constant exchange rate). con
Slide 47: Sharp EBIT uplift driven by Radial North America
Sharp EBIT uplift driven by Radial North America 3Q20 – PaLo N. Am. Key takeaways 3Q20 € million Parcels & Logistics North America 3Q19 3Q20 %↑ External operating income 239.9 294.9 22.9% E-commerce logistics 218.4 273.4 25.2% • Total operating income increase of € +54.5m or +22.6% (+28.9% at Intern
Slide 48: Corporate EBIT slightly above last year
Corporate EBIT slightly above last year 3Q20 – Corporate driven by higher building sales Key takeaways 3Q20 € million Corporate 3Q19 3Q20 %↑ External operating income 2.2 4.2 92.9% Intersegment operating income 88.6 86.2 -2.7% • External revenues up by € +2.0m driven by higher building sales. Total
Slide 49: Increased FCF thanks to strong operating activities
Increased FCF1 thanks to strong operating activities 3Q20 Reported - € million 3Q19 3Q20 Delta + Cash flow from operating activities 31.8 28.4 -3.4 out of which CF from operating activities before ∆ in WC & provisions 85.6 93.6 8.0 + Cash flow from investing activities -47.5 -37.5 10.0 = Free cash f
Slide 50: Balance Sheet
Balance Sheet 3Q20 € million € million Assets Dec 31, 2019 Sep 30, 2020 Equity and Liabilities Dec 31, 2019 Sep 30, 2020 PPE 1,133.6 1,109.6 Total equity 682.6 765.5 Intangible assets 898.3 860.8 Interest-bearing loans & borrowings (incl.Bank overdraft) 1,449.9 1,453.6 Investments in associates and
Slide 51: Financing Structure & Liquidity
Financing Structure & Liquidity 3Q20 € million € million Available Liquidity Dec 31, 2019 Sep 30, 2020 External Funding Dec 31, 2019 Sep 30, 2020 Cash & cash equivalents 670.2 856.1 Long-ter m Cash in network 163.6 134.8 Long-term bond1 (1.25% - 07/2026) 650.0 650.0 Transit accounts 105.8 42.7 Bank
Slide 52: YTD20 Results
YTD20 Results
Slide 53: YTD20 EBIT impacted by COVID-19 mail volume decline
YTD20 EBIT impacted by significant COVID-19 related mail YTD20 volume decline, partly compensated by strong PaLo performance € million 241.6 15.0 -21.5 -12.2 220.1 32.5 13.7 -69.0 27.1 or € +7.7m when excluding 2Q19 € 19.9m gain on HQ disposal 226.6 or € +28.8m when 206.4 excluding 3Q19 € +1.7m cont
Slide 54: Key financials YTD20
Key financials YTD20 YTD20 € million Reported Adjusted1 1 Adjustment of € -0.6m at operating YTD19 YTD20 YTD19 YTD20 %↑ income level related to the disposal of Alvadis Total operating income 1 2,724.0 2,960.2 1 2,723.4 2,960.2 8.7% Operating expenses 2,312.7 2,554.5 2,312.7 2,554.5 10.5% EBITDA 411.
Slide 55: Results by segment YTD20
Results by segment YTD20 YTD20 € million M&R PaLo Eurasia PaLo N. Am. Corp Eliminations Group External operating income 1,279.6 762.1 906.7 11.8 0.0 2,960.2 Intersegment operating income 152.3 9.5 4.4 262.1 -428.2 0.0 Total operating income 1,431.8 771.5 911.1 273.9 (428.2) 2,960.2 Operating expense
Slide 56: Positive evolution of FCF driven by payables and lower tax
Positive evolution of FCF1 mainly driven by payment terms YTD20 in payables and lower tax related cash flows Reported - € million YTD19 YTD20 Delta + Cash flow from operating activities 206.7 370.3 163.7 out of which CF from operating activities before ∆ in WC & provisions 299.5 366.5 67.1 + Cash fl
Slide 57: Additional info
Additional /j a L &
Slide 58: Key financials FY19
Key financials FY19 FY19 € million Reported Adjusted1 1 Adjustment of € -0.6m at operating FY18 FY19 FY18 FY19 %↑ FY19 IFRS16 income level related to the disposal of Alvadis Total operating income 3,850.2 1 3,837.8 3,850.2 1 3,837.2 -0.3% Operating expenses 3,279.1 3,300.2 3,279.1 3,300.2 0.6% +107.
Slide 59: Results by segment FY19
Results by segment FY19 FY19 € million M&R PaLo Eurasia PaLo N. Am. Corp Eliminations Group External operating income 1,897.1 813.2 1,097.5 30.1 0.0 3,837.8 Intersegment operating income 174.7 17.8 6.8 372.0 -571.2 Total operating income 2,071.7 830.9 1,104.2 402.1 (571.2) 3,837.8 Operating expenses
Slide 60: bpost group's long-term relationship with the Belgian State
bpost group’s long-term relationship with Belgian State the Belgian State State as a long-term bpost group provides SGEIs1 State as important customer shareholder on behalf of the State • State is a key commercial client to bpost group • Belgian State has 51% shares 2016-2020 • Several other agreeme
Slide 61: Sixth management contract and press concessions renegotiation
Sixth management contract and press USO & SGEI concessions will be renegotiated before 2022 Scope Universal Service 6th Management Contract Press concessions Obligation (USO) Services not typically associated with mail operators • Also part of SGEIs (SGEI), e.g., • Newspaper early delivery 6x/week •
Slide 62: A relatively resilient mail market vs. other European operators
A relatively resilient mail market European mail market vs. other European operators Addressed mail volume per capita 2019 2008-19 CAGR for addressed mail volumes operator level* as reported by major incumbent European postal operators, percent 1 5 CH 210 -2.2% DE 5 1 DE 189 -3.5% CH 11 AU 175 -3.5%
Slide 63: Key contact
Key contact Saskia Dheedene Head of Investor Relations Email: saskia.dheedene@bpost.be Direct: +32 (0) 2 276 76 43 Mobile: +32 (0) 477 92 23 43 Address: bpost group, Centre Monnaie, 1000 Brussels, Belgium 63 3Q20 Roadshow presentation
Slide 64: Questions
Questions