Ctt - Correios De Portugal Sa · EURONEXT:CTT
Ctt - Correios De Portugal Sa — CTT - Correios de Portugal — Value Spain (March 2024)
67 slides from Ctt - Correios De Portugal Sa's conference presentation, Mar 15, 2024
Slide 1: Value Spain
Value Spain Madrid, March 15, 2024
Slide 2: Disclaimer
Disclaimer DISCLAIMER This documenthas been prepared by CTT ~ Correios de Portugal, S.A. (the “Company” or "CTT") exclusively for use during Value Spain investor meeting. As a consequence thereof, this document may not be disclosed or Published, nor used by any other person or entity, for any other
Slide 3: Equity story in brief
Equity story in brief
Slide 4: With declining mail volumes, diversifying was the only choice
With declining mail volumes, diversifying was the only choice 1,355 in 2001 430 in 9M23 LTM (-68% vs 2001) Successful diversification implemented
Slide 5: Our positioning: a well diversified company, exposed to sustained growth
Our positioning: a well diversified company, exposed to sustained growth Leveraging strategic assets •Strong and trusted brand •Unique Iberian sales force universal access to B2B •Unique last-mile distribution network •Unparalleled retail network For companies (B2B)1 For people (B2C)1 Mail Business
Slide 6: Portfolio transformed to embrace growth, with increasing e-commerce exposure
Portfolio transformed to embrace growth, with increasing e-commerce exposure Spain Portugal +7% 959 301 E&P (+17.0%) 7-year contract 438 Mail & Other (-6.9%) Provision of services 76 FS&R (+43.7%) 637k client accounts Business volumes of € 5.3 bn 144 Banco CTT (+23.4%) 9M22, LTM 9M23, LTM
Slide 7: Leading logistic player in Iberia with exposure to fast growth e-commerce
Leading logistic player in Iberia with exposure to fast growth e-commerce Serbia >86m items per year >409k items daily Romania Portugal (9M23LTM) (3Q23) Czech Republic Greece average Poland of top 5 exc. China Lithuania 17 Italy Slovenia centres Spain serving both France countries Ireland Denmark Be
Slide 8: Strong cash flow generation and flexible and solid balance sheet
Strong cash flow generation and flexible and solid balance sheet 100 60 1.72 1.60 1.64 0.69 1.34 0.50 67 40 0.23 45 24 22 -0.14 14 2020 2021 2022 3Q23, LTM 2020 2021 2022 3Q23, LTM 1 From 2022 onwards the numbers are proforma due to Payshop transaction
Slide 9: Clear and attractive shareholder remuneration that enables investment in growth
Clear and attractive shareholder remuneration that enables investment in growth 1. enable investment in business growth 2. implement an attractive shareholder remuneration 3. combine recurrent, dividend-based, with opportunistic SBB pay out between 35% and 50% of net profit 1Based on individual acco
Slide 10: Sustainability is a key priority
Sustainability is a key priority • • • Alternative Fleet Recycling “Solar Boroughs” ~630 electric vehicles Recycled materials in packaging Launch of a partnership with ~8.5m km last-mile green deliveries already1 above 2025 target EDP Comercial in >40 locations Volunteering Reutilisation Work-life-f
Slide 11: Walk through the investment case
Walk through the investment case
Slide 12: CTT at a glance
CTT at a glance Revenues 9M23 Rec. EBIT 9M23 (€ 715 m) (€ 68 m) Banco CTT Mail & Others 15.1% 7.2% Banco CTT Financial Services & Retail 26.7% Express & Parcels 7.7% 17.8% Mail 40.2% Express & Parcels 32.1% Business & Commerce services Financial Services & Retail 5.0% 48.3% Business diversified betw
Slide 13: Execution, transformation and a solid balance sheet that enhances optionality
Execution, transformation and a solid balance sheet that enhances optionality • • • • • • • • • • • • • •
Slide 14: Iberia is a large and growing market
Iberia is a large and growing market European ecommerce market
Slide 15: The Iberian market has a unique potential to accelerate e-commerce penetration
The Iberian market has a unique potential to accelerate e-commerce penetration 80.0 40.0 40.5 average of top 5 exc. China 31.3 26.4 27.4 2.2 x 21.9 22.1 20.3 6.4 x 17.7 14.5 15.4 8.7 9.2 5.5 5.5 5.5 6.6 4.0 4.8 4.9 Serbia Romania Portugal Czech Greece Poland Lithuania Italy Slovenia Spain France Ire
Slide 16: The most integrated express operation in Iberia
The most integrated express operation in Iberia EXPRESS AND PARCELS Iberian flows are relevant for most customers Integration in Integration of mail and parcel Iberia operations in Portugal 17 109k 100% centres that serve both hourly order D+1 geographical countries processing capacity coverage in I
Slide 17: E&P in Portugal delivers resilient growth as e-commerce adoption increases
E&P in Portugal delivers resilient growth as e-commerce adoption increases Diversified pool of clients across sectors
Slide 18: E&P in Portugal with a robust margin expansion
E&P in Portugal with a robust margin expansion Operational leverage delivering sustainable high margins
Slide 19: E&P in Spain maintaining high rates of growth
E&P in Spain maintaining high rates of growth High growth fueled by all client segments, with the smaller clients outperforming and improving diversification
Slide 20: Growth and operational leverage enabling margin expansion in E&P in Spain
Growth and operational leverage enabling margin expansion in E&P in Spain Swift capacity upgrades to protect quality at much higher volumes
Slide 21: Continued growth in E&P
Continued growth in E&P ctt Express & Parcels - Revenues 9M23 EBITDA!2 Recurring EBIT23 Consolidated view; € million; % change vs. prior year €million €million 428.8% Portugal 106.2 (+12.6%) 14.5 +63.1% Parcels 96.4 (+14.4%) S "3 92 € Cargo 3.0 (-19.5%) S 57 | | a Banking network 3.2 (+1.1%) Logisti
Slide 22: New mail concession agreement providing visibility and stability
New mail concession agreement providing visibility and stability ✓ ✓ ✓ ✓ ∆
Slide 23: Softer volume decline coupled with higher price increase offer improved outlook
Softer volume decline coupled with higher price increase offer improved outlook
Slide 24: Softer mail volumes penalised by steeper digitalisation trends
Softer mail volumes penalised by steeper digitalisation trends Average revenue per item increasing, on the back of higher prices, but not fully compensating volume declines
Slide 25: Continued focus on profitability, including pricing and cost measures
Continued focus on profitability, including pricing and cost measures, to cope with softer volume trends Key profitability drivers are volumes and pricing in a context where staff reduction will deliver results in 2024
Slide 26: Supporting customers in improving efficiency and boost business, particularly in ecommerce
Supporting customers in improving efficiency and boost business, particularly in ecommerce
Slide 27: Softer volumes offsetting price increase
Softer volumes offsetting price increase
Slide 28: We have a unique network capillarity across the country that we are refocusing on
We have a unique network capillarity across the country that we are refocusing on services across the country CTT products and services
Slide 29: Ambition to reinforce proximity and become a one-stop-shop for customer service needs
Ambition to reinforce proximity and become a one-stop-shop for customer service needs Capillary network increasingly available digital / self-service functionalities customers’ convenience daily service requirements eliminating pain-points
Slide 30: Focus on transforming CTT's retail network in a powerhouse of services to the citizen
Focus on transforming CTT’s retail network in a powerhouse of services to the citizen
Slide 31: Less attractive rates and stringent cap impacted placements and thus profitability
Less attractive rates and stringent cap impacted placements and thus profitability
Slide 32: Strict ceilings on debt placements are restricting placements
Strict ceilings on debt placements are restricting placements
Slide 33: Banco CTT plan for 2023-25: business segments and performance enablers
Banco CTT plan for 2023-25: business segments and performance enablers
Slide 34: Steady growth towards medium-term targets
Steady growth towards medium-term targets
Slide 35: Combined healthy growth in loans and deposits
Combined healthy growth in loans and deposits Banco CTT strategic focus is on customer deposits
Slide 36: Continued revenue growth driving profitability
Continued revenue growth driving profitability
Slide 37: Strategic partnership between CTT, Banco CTT and Tranquilidade/Generali Seguros
Strategic partnership between CTT, Banco CTT and Tranquilidade/Generali Seguros Long-term distribution agreements Tranquilidade/General value proposition life and non-life insurance products €25m reserved capital increase approximately 8.71% (implied valuation of 1.1x P/BV 1H22) development of Banco
Slide 38: Insurance distribution agreements overview
Insurance distribution agreements overview Key highlights Lines of business Long-term agreements commissions market standards €1m to CTT and €9m to Banco CTT performance-based mechanisms
Slide 39: Capital increase vs. shares sale ensures full alignment of interests
Capital increase vs. shares sale ensures full alignment of interests Capital increase Shareholding structure 1• 91.29% 8.71% €262m pre-money valuation 2• 1.1x P/BV multiple a significant premium sell-side analysts’ valuation P/BV multiple 100% 3• 1.1x development of Banco CTT and reinforce its capit
Slide 40: The termination of the Universo partnership significantly reduces the RWA
The termination of the Universo partnership significantly reduces the RWA Terms of the Partnership Agreement 2022 Key Performance Indicators - Termination • • • ² • • • • • • • •
Slide 41: These two corporate development steps will further strengthen the 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 the management of its portfolio by releasing liquidity and capital that will strengthen its balance sheet and profitab
Slide 42: Delivering strong growth
Delivering strong growth Banco CTT - Revenues 9M23 € million; % change vs. prior year EBITDA! €milli 1, % change vs. prior year ctt Recurring EBIT2 € million; % change vs. prior year 120.1%) 108.1 by type: 7 90.0 Other +58.0% Other Consumer credit 24.3 Off-balance Fees & commissions sheet savings in
Slide 43: Strong cash-flow generation
Strong cash-flow generation +61.2% +43.9% -29.0%
Slide 44: Prudent balance sheet enabling strategic and financial flexibility
Prudent balance sheet enabling strategic and financial flexiblity
Slide 45: Strong revenue growth and improved profitability fuelled by E&P and Banco CTT
Strong revenue growth and improved profitability in a deteriorating macro-economic environment, fuelled by E&P and Banco CTT
Slide 46: ESG performance review
ESG performance review
Slide 47: CTT has a 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
Slide 48: Consistently raising our ESG commitments and achievements
Consistently raising our ESG commitments and achievements decarbonisation path to become Net-Zero code of ethics by 2030 • Reach 50% Last-Mile green vehicles by 2025 Introduce monetary ESG incentives • Engage the outsourced by 2025 fleet Regular engagement with stakeholders Expand Green offer 80% of
Slide 49: In 2022, several ESG initiatives were developed regarding the established objectives
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 50: Significant progress has been reached in 2022 regarding ESG goals
Significant progress has been reached in 2022 regarding ESG goals Environmental Social Social
Slide 51: Guidance & Outlook
Guidance & Outlook
Slide 52: Continued growth since the pandemic and a growth outlook towards the 2025 guidance
Continued growth since the pandemic and a growth outlook again in 2023 towards the 2025 guidance +16% .. +23% 100 .. 120 +7% .. +11% ≥ +31.8% 1,100 .. 1,250 +6.9% ≥ 85 +13.8% +44.8% +7.4% 907 848 65 745 60 11 461 41 9 31 259 61 126 14 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2025 Guidance M
Slide 53: To support our growth, we are committed to continue investing strongly in our business
To support our growth, we are committed to continue investing strongly in our business Key areas of investment 146 160-180 +18% sorting capacity 40-45 36 lockers network 65% 54% Investing in IT 46% 35% 2018-21 2022-25 quality of service
Slide 54: Main KPIs per business segment
Main KPIs per business segment
Slide 55: FY22 Financial Statements
FY22 Financial Statements
Slide 56: FY22 Consolidated Income statement
FY22 Consolidated Income statement
Slide 57: FY22 Consolidated Balance sheet
FY22 Consolidated Balance sheet
Slide 58: FY22 Consolidated Cash flow statement
FY22 Consolidated Cash flow statement ∆ ∆
Slide 59: 9M23 Financial Statements
9M23 Financial Statements
Slide 60: Consolidated Income statement
Consolidated Income statement
Slide 61: Consolidated Balance sheet
Consolidated Balance sheet ctt Balance sheet € million Reported With Banco CTT under equity method! 31-Dec-22 30-Sep-23 31-Dec-22 30-Sep-23 Non-current assets. 2,253.3 2,323.2 683.2 686.3 Current assets 1,804.2 2,004.2 577.9 451.6 Assets 4,057.5 4,327.4 1,261.0 1,137.9 Equity 224.9 238.4 225.2 238.6
Slide 62: Consolidated Cash flow statement
Consolidated Cash flow statement ∆ ∆
Slide 63: CTT at a glance
CTT at a glance
Slide 64: Growth driven by transformation
Growth driven by transformation
Slide 65: Wide presence through retail and logistic networks
Wide presence through retail and logistic networks
Slide 66: Diversified products and business segments driving growth
Diversified products and business segments driving growth
Slide 67: Investor Relations
Investor Relations Phone: +351210 471087 E-mail: investors@ctt.pt ctt.pt
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