Postnl Nv · EURONEXT:PNL
Postnl Nv — Q4 2012 Earnings Presentation
61 slides from Postnl Nv's earnings presentation, Feb 25, 2013
Slide 1: Q4 & FY 2012 Results
Q4 & FY 2012 Results Update 2015 Sustainable delivery 25 February 2013 Herna Verhagen, CEO Jan Bos, CFO
Slide 2: Business highlights Q4 2012
Business highlights Q4 2012 Herna Verhagen Sustainable delivery Break Financials Q4/FY 2012 Jan Bos Solid financial position Q&A
Slide 3: FY 2012 performance in line with updated outlook
FY 2012 performance in line with updated outlook Underlying cash operating income / Underlying revenues margin € million Outlook* 2012 Outlook* 2012 Mail in NL - mid single digit - 5.1% 0 to 2% 0.8% Parcels + high single digit +20.1% 13 to 15% 13.7% International + mid single digit + 7.0% 1 to 2% 1.
Slide 4: Q4: Mail in the Netherlands
Q4: Mail in the Netherlands Quality improved (€ million, %) 2012 2011 • Service quality 94.2% (FY 2012: 93.9%) 658 695 • Approval CLA agreement and extension Underlying revenues social plan FY: 2,305 FY: 2,429 • PostNL, unions and pension funds in talks Underlying cash 40 88 on new pension arrangeme
Slide 5: Regulatory developments
Regulatory developments Decisions Monday delivery and net cost compensation expected in 2013 Development profitability USO USO • Decision expected in 2013 to cancel Monday delivery • Decision expected in 2013 by OPTA on net cost compensation 2008 2009 2010 2011 2012 Proposed SMP legislation • PostNL
Slide 6: Q4: Parcels – strong like-for-like volume growth
Q4: Parcels – strong like-for-like volume growth New logistical infrastructure drives lower cost per item (€ million, %) 2012 2011 • Further improvement efficiency / high quality Q4 Underlying revenues 208 166 • Opening of innovative ‘parcel locker’ in Almere, FY: 730 FY: 608 pilot extended to 1 Apr
Slide 7: Q4: International
Q4: International Continuation of improvement in results (€ million) 2012 2011 Underlying revenues 419 382 FY: 1,570 FY: 1,467 Underlying cash 10 4 operating income FY: 27 FY: 5 UK Germany Italy • Good overall growth, 11% • Positive effect of resizing on • Continued strong growth higher addressed vo
Slide 8: Sustainable delivery
Sustainable delivery Mail in NL Smart and flexible mail company & Sustainable delivery of cash Solid financial position Strict cash management Parcels Well financed Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International Enhance cash profitability 8
Slide 9: Outlook 2015 – Sustainable delivery of cash towards 2015
Outlook 2015 – ambitious and achievable Sustainable delivery of cash towards 2015 Underlying cash operating income (€ million) 2015 Contribution International 300 - 370 Contribution Parcels Reduced pension contributions 2012 130 • • Price increases New roll out reorganisation • More efficient overhe
Slide 10: Sustainable delivery
Sustainable delivery Mail in NL Sustainable delivery of cash Solid financial position Strict cash management Well financed & Parcels Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International Enhance cash profitability 10
Slide 11: Successful developments in mail
Successful developments in mail New opportunities developed on existing assets Mobility MKB online • New roll out leads to fewer redundancies • Around 600 webshops / 5,000 websites amongst postal workers • Easy and affordable tool for small companies • 2006: restructuring impacts to start webshops 1
Slide 12: Stronger volume decline
Stronger volume decline Volume decline (%) Trends 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 0 100 • Acceleration decline due to economic -2 90 situation -4 80 -6 70 • Increased autonomous decline SME segment -8 60 -10 50 Annual - Cumulative • Bottoming out decline expected as from 2017 Old o
Slide 13: Mail in NL – substantial price increases
Mail in NL – substantial price increases Sustainable profitability of mail products Pricing 2013 - 2015 • Bulk mail Well above inflation Price increases • Domestic single piece items: stamped mail, franking Well above inflation machines, inbound NL • Early morning delivery (Increased) charges for •
Slide 14: Increased cost savings from €330 to €400 million
Increased cost savings from €330 to €400 million Limited additional expenses Cost savings (€ million) 2001 … 2010 2011 2012 2013 2014 2015 2016 2017 ~565 ~330 330 + 70 110 290 40 – 60 ¾ ~230 – 250 ¼ Previous outlook Realised New outlook € million 2011 – 2017 2011 - 2012 2011 – 2017 Restructuring cas
Slide 15: New roll out production reduces impact on employees
New roll out production reduces impact on employees Forced redundancies reduced: 450 – 650 FTE (previously 2,800) FTE impact until 2015 Operations 450 - 650 FTE forced redundancies (strongly reduced versus the • Roll out restructuring to fewer locations ~60% earlier expected 2,800) • Leverage synerg
Slide 16: Previous roll out restructuring did not work out as expected
Previous roll out restructuring did not work out as expected Lessons learnt fully taken into account in new roll out • Complex cohesion in logistical chain What went wrong • Underestimated learning curve and inexperienced new personnel • Piloting not done thoroughly enough • Many process changes to
Slide 17: Operations: less disruptive and smaller scale centralisation
Operations: less disruptive and smaller scale centralisation Delivering necessary cost savings Current situation Towards 2015 • Phased centralisation • Based on existing processes • Improved efficiency in preparation and delivery • Balance between experienced and new employees • New roll out 2012 20
Slide 18: Confident in success roll out and achieving cost savings
Confident in success roll out and achieving cost savings Solid foundation for new roll out Successful pilot Alkmaar 9 Thoroughly and successfully piloted in Alkmaar • Delivery quality above target • Operating costs new Maintain experienced employees: better mix 9 with new personnel structure reduced
Slide 19: Savings driven by a more integrated backbone
Savings driven by a more integrated backbone Leveraging synergies between Mail in NL and Parcels Registered Mail • Operationally under Parcels • All outlets completely integrated for mail Retail and parcels • Strong growth in parcel transactions Flexible delivery • Pilot in rural area to deliver bot
Slide 20: More efficient organisational structure
More efficient organisational structure Increased cost savings in all areas FTE impact until 2015 Operations 450 - 650 FTE forced redundancies (strongly reduced versus the earlier expected 2,800) • Roll out restructuring to fewer locations ~60% • Leverage synergies between Mail in NL and Parcels 1,0
Slide 21: Focus on lowering pension cash contributions and risks
Focus on lowering pension cash contributions and risks Joint proposal sustainable pensions • Agreement with unions; joint proposal Key determinants cash contributions sent to pension fund • Reduction in pension contributions • Remaining top-up payment of €64 million likely to be paid in Q1 2013 • Re
Slide 22: Sustainable delivery
Sustainable delivery Mail in NL Sustainable delivery of cash Solid financial position Strict cash management Well financed & Parcels Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International • Contribution Enhance cash profitability Parcels 22
Slide 23: Parcels – commitments achieved
Parcels – commitments achieved Strong position expanded with new opportunities E-commerce Chain integration Shop logistics B2B Fulfilment Pharma Cargo Value added B2C services Extra@Home C2C Secure delivery Standard • Contribution Parcels services Parcels Larger and bulky items 23
Slide 24: Extra@Home and Mikropakket examples of successful expansion
Extra@Home and Mikropakket examples of successful expansion Extra@Home Mikropakket • New opportunities: Gamma and Karwei • Continued strong growth in niche markets • Fast growing segment for white-goods such as jewellery and telecom shops and large electronics bought via internet • High quality and
Slide 25: Parcels – further build on strong position
Parcels – further build on strong position Clear opportunities for profitable growth outperforming market • B2C: market growth expected of around 9% • development of new consumer services • B2B: market growth of around GDP +1% • expand services and competences • Expand in new areas • Where needed sm
Slide 26: New logistical infrastructure ensures lower cost per item
New logistical infrastructure ensures lower cost per item Roll out ensures further improvement • Better use of new structure expands capacity to Rationale 170 million items • Lower cost per item to maintain and increase profitability • Higher quality because of fewer process steps • Enables new busi
Slide 27: Sustainable delivery
Sustainable delivery Mail in NL Sustainable delivery of cash Solid financial position Strict cash management Well financed & Parcels Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International • Contribution Enhance cash profitability International 27
Slide 28: International – commitments achieved
International – commitments achieved Turnaround 2010 – 2012 (€ million) 2012 2010 International Revenues 1,570 1,294 Underlying cash 27 (24) operating income • Cash positive • Market share 52% in downstream access, main challenger UK 699 550 • Large growth in packages (tripled from 2011 to 2012) • E
Slide 29: International – enhance cash profitability
International – enhance cash profitability • Further growth expected in market share DSA ▪ market with price pressure ▪ continues to be managed for operational cost efficiency and positive cash UK contribution • E2E pilot very successful (efficiency, quality, customer satisfaction) ▪ full roll out w
Slide 30: Sustainable delivery
Sustainable delivery Mail in NL Sustainable delivery of cash Solid financial position Strict cash management Well financed & Parcels Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International Enhance cash profitability 30
Slide 31: Outlook 2015 ambitious and achievable
Outlook 2015 ambitious and achievable Better balanced projects underpinning outlook Sustainable delivery Underlying cash operating income / Revenues margin € million Adjusted 2012 Underlying 2015 2012 2015 Mail in NL 2,2701 - low single digit 0.9%1 8 to 10% Parcels 730 + mid single digit 13.7% 13 to
Slide 32: PostNL future perspective
PostNL future perspective Efficient and reliable parcel and mail company Smaller mail and bigger parcel company • Based on our core competence of running efficient and high quality mail and parcel networks • Based on motivated workforce • High performance culture Predictable and solid business • Fur
Slide 33: Business highlights Q4 2012
Business highlights Q4 2012 Herna Verhagen Sustainable delivery Break Financials Q4/FY 2012 Jan Bos Solid financial position Q&A
Slide 34: Business highlights Q4 2012
Business highlights Q4 2012 Herna Verhagen Sustainable delivery Break Financials Q4/FY 2012 Jan Bos Solid financial position Q&A
Slide 35: Financial highlights
Financial highlights € million Q4 2012 Q4 2011 Change FY 2012 FY 2011 Change Reported revenues 1,201 1,170 2.6% 4,330 4,297 0.8% Reported operating income 219 133 64.7% 291 417 -30.2% Foreign currency (1) (1) Restructuring related charges (41) 7 (27) 7 Rebranding costs 2 2 12 9 TNT Express (49) 134
Slide 36: Q4 underlying cash operating income in line with expectations
Q4 underlying cash operating income in line with expectations € million Decrease of €19 million in underlying operating income 99 (44) 67 24 (15) 2 (5) 6 Underlying Mail in NL Parcels International PostNL Other Change in Change in Underlying cash operating pension provisions cash operating income Q4
Slide 37: Underlying results per segment
Underlying results per segment Underlying Underlying cash Underlying revenues operating income operating income € million Q4 Q4 Q4 Q4 Q4 Q4 Change Change Change 2012 2011 2012 2011 2012 2011 Mail in the Netherlands 658 695 -5.3% 65 109 -40.4% 40 88 -54.5% Parcels 208 166 25.3% 20 25 -20.0% 22 27 -18
Slide 38: Lower performance Mail in NL
Lower performance Mail in NL Driven by volume decline and cost increases € million Decrease of €44 million in underlying operating income 88 16 4 (20) 1 (17) 40 (3) (1) (28) Underlying Volumes / Autonomous Master plan Master plan Underlying Other Change in Change in Underlying cash operating price /
Slide 39: Solid operational performance Parcels
Solid operational performance Parcels € million Decrease of €5 million in underlying operating income 27 2 (4) (2) 22 (1) Underlying cash Volumes / trans-o-flex NLI implementation Other Underlying cash operating income price/mix and costs operating income Q4 2011 efficiencies Q4 2012 39
Slide 40: Statement of income
Statement of income Good profit for the period € million Q4 2012 Q4 2011 FY 2012 FY 2011 Revenues 1,201 1,170 4,330 4,297 Operating income 219 133 291 417 Net financial expenses (26) (22) (104) (101) Results from investments in associates (25) 1 (25) Reversal of / (Impairments) of investments in ass
Slide 41: Net cash from operating and investing activities
Net cash from operating and investing activities Strong Q4 performance excluding €83 million top-up payments € million Q4 2012 Q4 2011 FY 2012 FY 2011 Cash generated from operations 117 188 83 321 Interest paid (36) (37) (99) (101) Income taxes received / (paid) (20) (23) (40) (98) Net cash from ope
Slide 42: Continued focus on cash
Continued focus on cash 2012 updated € million Q4 2012 FY 2012 outlook Savings 19 39 25-40 Master Restructuring cash out 16 72 70-90 plans Implementation costs 20 67 60-80 2012 updated € million Q4 2012 FY 2012 outlook Base capex 24 77 New logistical infrastructure Parcels 26 64 Capex Master plan 7
Slide 43: Consolidated statement of financial position
Consolidated statement of financial position Net debt increased by €222 million compared to 2011 € million 31 Dec 2012 31 Dec 2012 Intangible assets 168 Distributable equity 1,025 Property, plant and equipment 536 Non-distributable equity 44 Financial fixed assets 33 Total equity 1,069 Pension asset
Slide 44: Pension developments
Pension developments Coverage ratio up despite impact new longevity tables Coverage ratio main pension fund Coverage ratio Q4: 102.5% 108% 107% • Impact new longevity tables 102% 103% around -1% 100% 100% 97% • Calculated including €147 million top-up invoices (€83 million paid in Q4) 2009 2010 2011
Slide 45: Pensions: top-up invoices and IAS 19R
Pensions: top-up invoices and IAS 19R Top-up invoices IAS 19R • Verdict disputes committee: of • Impact unrecognised actuarial losses €147 million unconditional invoices €83 million paid in Q4 2012 € million Dec 2012 Sep 2012 • No further appeal • At year end 2012 unconditional invoices Gross 1,829
Slide 46: Outlook 2013
Outlook 2013 Positive results in challenging environment Addressed mail volume decline 8 to 10% Underlying cash operating income / Revenues margin € million Adjusted 2012 Underlying 2013 2012 2013 Mail in NL 2,2701 - mid single digit 0.9%1 -2 to 0% Parcels 730 + high single digit 13.7% 11 to 13% Int
Slide 47: Outlook 2013
Outlook 2013 € million 130 ~25 25-45 5-25 20-60 40-60 Underlying Volume / Autonomous Contribution Other Cost savings Pension Cash out from Cost savings Underlying cash operating price effect cost increases Parcels contributions provisions implementation cash operating income 2012 and costs income 20
Slide 48: 2013 outlook - other indicators
2013 outlook - other indicators 2013 2012 (based on IAS 19R) Volume decline addressed mail 9.0% 8 – 10% Cost savings €39 million €40 – 60 million Implementation costs €67 million €40 – 60 million Cash outflow from provisions €86 million Around €110 – €130 million Of which related to cost savings €72
Slide 49: Sustainable delivery
Sustainable delivery Mail in NL Sustainable delivery of cash Solid financial position Strict cash management Well financed & Parcels Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International Enhance cash profitability 49
Slide 50: Strict cash management
Strict cash management Mitigate high restructuring related and pension related cash outs Previous outlook New outlook • Cash performance strictly monitored € million 2011 – 2015 2011 - 2015 • Besides underlying cash operating 2 – 3% <2% income focus on: Base capex of revenues per year of revenues pe
Slide 51: Well financed with bonds redemptions covered
Well financed with bonds redemptions covered No need for rights issue € million 640 570 568 400 Outstanding debt 0 0 RCF (undrawn) 2013 2014 2015 2016 2017 2018 Maturity date Description Amount Interest 2015 1 June 2015 Eurobond €400 million 3⅞ % 2016 1 June 2016 Undrawn revolving credit facilit
Slide 52: Expected development debt / credit rating
Expected development debt / credit rating Certainty of BBB+ credit rating expected in 2016* Indicative Cash position Minimum cash position Gross debt Net debt 2012 2013 2014 2015 2016 2017 Financial metrics: • Strict cash • Debt / EBITDA (S&P’s and Moody’s) management BBB+ / Baa1 • FFO / debt (S&P’s
Slide 53: Stake TNT Express to be sold in medium term
Stake TNT Express to be sold in medium term Create better value for our shareholders Expect to monetise stake over the medium term to create better value for shareholders, after we have seen stability return to TNT Express Changes to Relationship Agreement • Relaxation of certain conditions and rest
Slide 54: Positive consolidated equity expected in 2016
Equity gap due to IAS 19R and cancelled deal UPS / TNT Express Positive consolidated equity expected in 2016* Consolidated equity Indicative Many options explored 9 • Pensions 9 • Rights issue 1,069 (1,370) • Conversion revaluation reserves to increase distributable corporate equity • Real estate (4
Slide 55: Resuming cash dividend as soon as possible
Resuming cash dividend as soon as possible Cash – funding – equity managed towards resuming cash dividend Current circumstances do Interim dividend (August 2012) not allow dividend €0.181 per share • €0.181 per share Subject to approval by • Certainty of credit rating BBB+/Baa1 • Paid fully in share
Slide 56: Outlook 2015 ambitious and achievable
Outlook 2015 ambitious and achievable Balanced ambitions underpinning outlook Addressed mail volume decline 8 to 10% Revenues Underlying cash operating income / margin Adjusted Underlying Underlying € million 2012 2013 2015 2012 2013 2015 - mid single - low single Mail in NL 2,2701 0.9%1 -2 to 0% 8
Slide 57: Outlook 2015 – Sustainable delivery of cash towards 2015
Outlook 2015 – ambitious and achievable Sustainable delivery of cash towards 2015 Underlying cash operating income (€ million) 2015 Contribution International 300 - 370 Contribution Parcels Reduced pension contributions 2012 130 • • Price increases New roll out reorganisation • More efficient overhe
Slide 58: Summary: Sustainable delivery
Sustainable delivery Summary Mail in NL Sustainable delivery of cash Solid financial position Strict cash management Well financed & Parcels Build up equity Further profitable growth Clear dividend strategy Outlook 2015 & International Enhance cash profitability 58
Slide 59: PostNL future perspective
PostNL future perspective Efficient and reliable parcel and mail company Mail in NL: better balanced projects Smaller mail and bigger parcel company • Well piloted roll out with strong • Based on our core competence of running implementation organisation efficient and high quality mail and parcel •
Slide 60: Business highlights Q4 2012
Business highlights Q4 2012 Herna Verhagen Sustainable delivery Break Financials Q4/FY 2012 Jan Bos Solid financial position Q&A
Slide 61: Slide 61