65
November - December 2019 Investor presentation Third quarter 2019
November - December 2019
Investor presentationThird quarter 2019
2
Investor presentation third quarter 2019
Financial CalendarHighlights & guidance
3Q19 Highlights – 4Outlook 2019 – 5
bpost at a glance
Investment rationale – 7Dividend policy – 8Overview – 9Vision & strategy – 10 & 11Management – 12Sustainability – 13Mail & Retail – 14-22Parcels & Logistics Eurasia – 23-31Parcels & Logistics N. America – 32-37
Current trading 3Q19
EBIT bridge – 39Key financials – 40Results by segment – 41Mail & Retail – 42 & 43Parcels & Logistics Eur & Asia – 44 & 45Parcels & Logistics N. America – 46 & 47
Corporate – 48Cash flow – 49Balance sheet – 50
Current trading YTD19
EBIT bridge – 52Key financials – 53Results by segment – 54Cash flow – 55
Additional Info
Key financials FY18 - 57IFRS16 – 58-60Relationship with State – 61USO & SGEI – 62European mail market – 63Key contacts – 64
Contents
1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995
DisclaimerThis presentation is based on information published by bpost in its Third Quarter 2019 Interim Financial Report, made available on November, 6th2019 at 5.45pm CET, and in its 2018Annual Report and Capital Markets Day presentation of June, 21st 2018 available on corporate.bpost.be/investors. This information forms regulated information as defined in the RoyalDecree of 14 November 2007. The information in this document may include forward-looking statements1, which are based on current expectations and projections of managementabout future events. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and otherfactors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results,performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-lookingstatements will prove to have been correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statementscontained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This material is not intended as and does not constitute an offer to sellany securities or a solicitation of any offer to purchase any securities.
More on corporate.bpost.be/investors
02.12.2019(17:45 CET)Interim dividend 2019 announcement
09.12.2019Payment date of the interim dividend
17.03.2020(17:45 CET)Annual results FY19
04.05.2020(17:45 CET)1Q20 results
Highlights 3Q19Guidance 2019
43Q19
Highlights of 3Q19
Mail & Retail• Total operating income at € 486.0m (-1.6%) as mail volume decline was partly
compensated by pricing.• Underlying mail volume decline at -7.8% driven mostly by Transactional mail due to
e-substitution.• EBIT impact (-26.4%) from mail volume decline and wage drift.
Parcels & Logistics Europe & Asia• Total operating income at € 198.3m (+6.1%) with Parcels BeNe up 18.8% and organic
growth in E-commerce logistics.• Parcels BeNe volume growth at +20.3% resulted from e-commerce growth and good
volume development at Dynalogic.• Solid EBIT margin improvement thanks to the run-off of non-performing businesses and
€ 1.7m DynaGroup earn-out reversal.
Group normalized EBIT
3Q19 in line with our expectations, on track for FY outlook
Parcels & Logistics North America• As anticipated, total operating income at € 241.4m (-0.1%) impacted by Radial customer
churn and repricing compensated by new business and a positive FX evolution.• EBIT mainly impacted by top-line development in line with expectations.
Group normalized operating income € 880.9m
€ 38.4m7.9% EBIT margin
€ 38.3m4.3% EBIT margin
€ 10.4m5.2% EBIT margin
€ -5.3m-2.2% EBIT margin
5Outlook FY19
2019 outlook reiterated: On track to realize group normalized EBIT > € 300m
Parcels & Logistics North America
Group
Dividend
Mail & Retail
• Low single-digit % decline in total operating income• Underlying Domestic Mail volume decline up to -9%• Average price increase of +4.4% in Domestic Mail• % Normalized EBIT margin between 11-13%
Parcels & Logistics Europe & Asia
• Mid-single-digit % growth in total operating income• % Normalized EBIT margin towards the high end of the 6-8% range
• Low single-digit % decline in total operating income mainly explained by the FY impact of the 2018 client churn and repricing at Radial
• Slightly below break-even at Normalized EBIT level, driven by higher commercial success than anticipated at Radial which advanced onboarding costs for new clients from 2020 to this year
• Radial North America on track for 2022 guidance as presented at the CMD
• Stable total operating income incl. proceeds from building sales• Normalized EBIT above € 300m1
• Gross capex between € 150m and € 185m
• At least 85% of 2019 BGAAP net profit of bpost SA/NV
1 Corporate normalized EBIT is expected to be high single-digit negative driven by lower building sales and higher project-related costs.
bpost at a glance
7
bpost offers a strong investment rationale
bpost at a glance
We develop sustainable activities in the high growth e-commerce logistics & parcelsbusiness in our Be-Ne home market and key geographies in Europe and North America
We continue to transform the mail and proximity business in the home market to sustainsolid cashflows
Multiple levers for transformation of the legacy business: natural attrition, alternating delivery model, stable and predictable regulation, network optimization,…
Experienced management team with embedded financial discipline and a strong business transformation track record
High growth in e-commerce logistics & parcels: aspired sizeable share of revenues by 2022
A solid balance sheet with single 'A' credit rating
bpost aims at being a responsible company, delivering returns to its shareholders
What?
How?
8
We create value for shareholders
bpost at a glance
Dividend Policy
Annual dividend of at least 85% of BGAAP net profit (unconsolidated)
Interim in December of financial year based on 10-month results
Final in May of year following financial year
Constrained by the net results of a given year + distributable reserves
Distributable reserves (€ 173m end 2018) built gradually as from 2013, primarily to neutralize the non-recurring impact of exceptional costs
0.93 1.04 1.05 1.06 1.06 1.06
0.200.22 0.25 0.25 0.25
201820162013 20152014
0.24
2017
1.131.26 1.29 1.31 1.31 1.31
Interim gross DPS (€)Final gross DPS (€)
91%Pay-out ratio 85% 90% 85% 90% 100%
9
A diversified mail operator with a footprint in e-commerce logistics
bpost at a glance
2018 figures (normalized)1 50.7% Mail & Retail, 19.7% Parcels & Logistics Europe & Asia, 28.7% Parcels & Logistics North America and 1.0% Corporate revenue
€ 3,850.2m1revenues
€ 571.1m14.8%EBITDA
€ 424.3m11.0%EBIT
€ 290.4mnet profit
36,109average # FTE & interims
Mail & Retail
€ 1,952m51%
Transactional mail € 772m 20%
Parcels & Logistics
North America€ 1,105m
29%
Parcels & Logistics Europe &
Asia€ 757m
20%
Advertising mail € 244m 6%
Press € 354m 9%
E-commerce logistics € 1,018m 26%
International mail € 87m 2%
Cross-border € 290m 8%
Parcels BeNe € 346m 9%
Revenues % of total
E-commerce logistics € 121m 3%
Proximity and convenience retail network € 476m 12%
Value added services € 105m 3%
10
Long-term Vision
bpost at a glance
Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium”
Efficient provider
of mail universal, retail & public services
EBIT
Progressive profit generation
Sizeable share of revenues generated in parcels & logistics
11
bpost will deliver on 3 strategic aspirations…
bpost at a glance
Mail services to citizens and State remain core and will continue to generate profit with a more adapted distribution model
1 Drive profitable growth in parcels in BeNe and further develop e-commerce logistics in Europe
2
CASH GENERATION& DIVIDENDS
3 Optimize Radial to deliver on the investment thesis in the promising North American e-commercemarket
12
… supported by an experienced management team with responsibilities down to the bottom-line
bpost at a glance
Mark MichielsCHRO
Nico CoolsCIO
Dirk TirezCLO
Pierre WinandCEO Parcels & Logistics North America
Luc CloetCEO Parcels & Logistics Europe & Asia
Henri de RomréeCEO Mail & Retail
Leen GeirnaerdtCFO
Koen Van GervenGroup CEO
13
Sustainability is at the heart of our activities
bpost at a glance
Selected awards and recognition
Aggressive CO2 reduction targets
3-pillar CSR strategy linked to United Nations
Peoplewe care
about our employees and engage
them
Proximitywe are close
to the society
Planetwe strive to reduce our impact on
the environment
Shared Value
Creation
• Employee health & safety• Employee training and
talent development• Ethics & diversity• Social dialogue
• Green fleet• Green buildings• Waste management
• To our community• To our suppliers• To our customers
through our services
• Continuity of our business
• Employee satisfaction and engagement
• Customer satisfaction
• Since 2007 bpost has cut its CO2 emissions by almost 40%
• Target of reducing CO2 emissions from activities by at least 20% by 2030
• By 2030, at least 50% of bpost vehicles will be fully electric
• IPC EMMS Scorecard 2018 (sector index): #1 (Sixth Year)
• EcoVadis (clients index): Gold rating• Ethibel Indexes: reconfirmed as a constituent of the
Ethibel Sustainability Index (ESI) Excellence Europe since 19/03/2018
• Sustainalytics: score 79% (2/133)• MSCI: Score A• ISS: Governance Score: 4, Environment Score: 1,
Social Score: 3
IPC Environmental Ranking
1st
14
Mail & Retail at a glance
bpost at a glance –Mail & Retail
772
1,952
244
354
476
105
Transactional mail
Advertising mail
Press1
Proximity and convenience retail network2
Value added services3
Total
Sub-segments
~7.7m letters handled daily
Servicing 5.6m letter boxes
5 industrial sorting centers
Key facts & figuresRevenue2018, €m
~2.3k points of presence in Belgium
~19.0k operational FTEs
1 Includes Ubiway press distribution revenue (AMP) 2 Includes Banking & Financial, Retail & Other MRS and Ubiway convenience distribution 3 Value Added Services (the part attributed to the previous MRS operating segment)
15
Key value drivers for the Mail & Retail business
bpost at a glance –Mail & Retail
To From Key value drivers
>50% over 2018-20221
18-45% over 2014-2017
Share of mail volume decline compensated through price increase
Successful extension / renewal
Three contracts until end 2020; compensation contractually set
Renegotiation/retendering of future 6thManagement contract and press concessions
Flexible, differentiated offering (prior vs. non-prior)
Fixed D+1 based model (everywhere, everyday)
Evolution of operating model (mail collect and distribution)
Up to ~-9% in 2019-5.8% in 2018Speed of mail volume decline
1 70% in 2018
16
Domestic mail volume decline expected to accelerate from -5.8% in 2018 up to ~-9% in 2019
bpost at a glance –Mail & Retail
-8.8%-5.8%
-4.2% -5.0%-4.4% -5.0% -5.8%
Key drivers
• E-substitutionat large corporates and SMEs
• Intensifying competition in advertising media
• Shift to digital for newspapers & magazines
• Renewal of press concessions
• Service level elasticity
-5.0%-3.7%
-8.1%-5.3% -5.9% -5.7%
-9.9%
2013 2014 2015 2016 2017 2018
-3.0%
-9.1%
-3.0%-4.9%
1.5%
-7.2% -6.6%
-2.8%-2.8%-3.0% -2.8% -3.8%-3.7%-6.7%
9M191
Underlying change in domestic mail volume
Transactional mail
Advertising mail
Press
Impacted by alternative operating model
2019-22
1 As of start FY19 Transactional Mail excludes outbound and Press includes Ubiway press distribution
17
Regulatory aspects
bpost at a glance –Mail & Retail
• Collection, sorting, transport and distribution of postal items up to 2kg and single piece postal packages up to 10kg
• Collect and deliver 5x per week• Cover full territory of Belgium for collection and delivery of items belonging to universal service• Apply uniform tariffs and an identical service across the territory
Designated provider of the Universal Service Obligation until end 20231
4 key contracts with the Belgian State
Postal law of 10 February 2018 provides stable & predictable mail pricing framework
• Management contract for the provision of the USO (2019-2023)• 6th Management Contract (2016-2020): for the provision of certain SGEIs, i.e. maintenance of
retail network, cash at counter, cash payment of pensions at home
• 2 press concessions (2016-2020): (1) for distribution of periodicals and (2) for distribution of newspapers
• Single piece mail & USO parcels falling within “small user basket” are subject to a price cap• Price cap2 = inflation - (volume evolution + cost reduction factor x efficiency gains sharing factor)
• Volume and operational discounts allowed for other USO products (bulk)• Price increases done in practice on a yearly basis: +4.4% on average in 2019 on all domestic mail
items; +5.1% on average for 2020
1 Refer to slide 62 for more details2 Exact formula: Price cap = health index April n-1/ health index April n-2 * (1 – [expected volume decline/(expected volume decline +1)] – 2.8%*33% ) – 1
18
New Postal Law provides stable and predictable regulatory framework to increase prices in context of accelerating mail volume decline
bpost at a glance –Mail & Retail
Illustrative example assuming 2% inflation and -6% average volume decline:
[V/(V+1)] with V as the expected negative volume trend on the Small User
Basket
Fixed by the law at 0.9% (i.e., 1/3 of 2.8%
efficiency gains target)
Ratio of the health index as measured in April of the n-1 and n-2 years
Calculation logic
Correlation to price cap
Larger mail volume decline results in larger allowed price increase
Constant and fixed by lawHigher inflation results in larger allowed price
increase
DescriptionCompensation for mail
volume declineMechanism to share 1/3 of the efficiency gains target
with consumers
Compensation for inflation
Drivers of the price cap formula
Inflation Volume decline Efficiency gains
102%Price cap1: 7.6% 106.4% 0.9%
1 Detailed formula: Price cap = (1 + inflation) * ( 1 - [V/(V+1)] – 0.9% ) – 1 ,giving for the above example the following calculation (1+2%) * (1 – [-6%/(-6%+1)] – 0.9%) - 1 = 7.6%
x
Effective as of February 10, 2018
19
Price increase and mix effects expected to compensate >50% of mail volume decline over 2018-22
bpost at a glance –Mail & Retail
57 6067 68
71
42
2720 21
13
2018-22116152013 14 17
Domestic mail volume Domestic mail price/mix
Volume and price/mix impact on revenue€m
72% 45% 18%30% 31% >50%
Building on the New Postal Law for price regulated products
Price increase on small user basket rejected by regulator
x% Share of volume effect compensated by price/mixKey drivers
• Acceleratingdomestic mail volume decline
• New price cap mechanism of Postal Law defining max price increase for small user basket, and serving as guideline for price increase on non-price capped products
• Price increase partly offset by shift to less expensive mail products
1 2018 was at 70%
20
Management has developed an extended set of cost control options
bpost at a glance –Mail & Retail
Examples of cost control options
FTE Unit cost
Distribution
Collect & Transport
Industrial Mail Centers
Operating model
• Further optimize FTE mix
• Introduce new generation of Georoute and time potential management• Simplify process for selected transactions• Enhance customer experience and productivity through digital (e.g., consumer
preferences)
• Align number of red boxes to mail volume decline• Stop collect on Saturday and increase flexibility of pick-up, delivery and
dispatch timing constraints
• Transport optimization (fill-in rate and routes)
• Optimize mail sorting centers footprint• Pursue continuous improvement
• Evolve towards a differentiated offering and alternating distribution model• Take measures to address absenteeism
21
bpost evolves towards a differentiated offering to accommodate changing customer needs
bpost at a glance –Mail & Retail
Within D+3
Differentiated offering as of Jan 1st 2019
Operating model evolution:Alternating Distribution Model
D+1 Mail
Newspapers
• Same day delivery
• Adjusted “day certain” distribution frequency: in a given street, mail will be distributed on selective days of the week
• D+1 delivery will remain available as a separate product (“Prior”)
Parcels
• D+1 offering No change
Available to consumers who need D+1 delivery
Service level agreement (SLA) “within 3 days”
Acceptance for D+3-41
Optimizing drop density
2004 2018 2022 2022
~70~55
22
Operational FTE evolution1
Average FTEs and interims, ‘000
Labor cost will benefit from decrease of mail related FTEs and optimized employee mix
bpost at a glance –Mail & Retail
Operational FTE mix evolution1
Age pyramid1
Operational headcount per age, 31/12/18
1 bpost SA/NV scope, excluding retail network
2013 1714 18
15-20%
15 16
Allocated tomail
Allocated toparcels
19.8 19.0 18.5 18.6 18.6 19.0
80-85%
51% 47% 43% 39% 35%
25% 28% 32% 37% 41%
19% 19% 18% 18% 17%
16
Other 7%7%
Contractual
5%
172014
6%
15
7%
18
Auxiliarypostman
Civil servant
0-39 50+40-49
7,702
5,451
6,965
Pay-scale contractualsNon pay-scale contractuals
Civil servants
Natural attrition
Average natural attrition is expected to range from 1,200 to 1,300 FTEs/yearover 2019-22
Contractual ~95
Auxiliarypostman ~74
Civil servant 100
Average cost per contract type1
Indexed
23
Parcels & Logistics Europe and Asia at a glance
bpost at a glance –PaLo Eurasia
Sub-segments Key facts & figuresRevenue2018, €m
Parcels BeNe1
e-Commerce Logistics²
Cross-border imail & parcels
Total
Fulfilment footprint covers seven locations across seven countries in Europe
Peak days of >400k parcels in December
Three main Cross Border activity centres i.e.Brussels brucargo, Heathrow UK and Hong Kong
• Last-mile B2C delivery in the Benelux
• Total of ~62m parcels in 2018
• Mostly fulfilment & transport activities in Europe spread over 10 locations
• Activities include Radial EU, Active Ants and DynaFix
• Majority of cross-border volume is inbound mail and parcels from Europe and Asia
346
757
290
121
1 Includes domestic parcels excluding inbound flow, as well as DynaLogic Benelux, Citydepot & Eurosprinters2 Includes Leen Menken
24
Key value drivers for Parcels & Logistics Europe and Asia
bpost at a glance –PaLo Eurasia
Parcels BeNe (last-mile)
Sub-segments To From Key value drivers
Cross-border
Natural business evolution
Developing international parcel flows driven by growing e-commerce activity
• Develop international cross-border parcels, also across continents
• Ability to maintain international mail volume
E-commerce logistics
E-commerce logistics in PL, NL & BE and “DynaFix”
Increase scale & skills by leveraging capabilities of Radial US and Active Ants
• Ability to organically capture market growth of ~10% p.a. (vs. insourcing, pan-European players)
Focus on Belgium (sales force, contracts, DHL partnership)
BeNe-wide approach• BeNe-wide offering addressing customer requirements
Volume growth rate of 20-30% with price/ mix effect up to -6% over 2016-2018
Double-digit volume growth rate, address price/mix
Parcel hubs where enough density
Flexible parcels distribution footprint in close collaboration with Mail & Retail
• Optimized last-mile operations based on parcels characteristics and in line with delivery requirements
• Ability to capture profitable growth in a competitive environment
25
Four strategic initiatives for Parcels BeNe
bpost at a glance –PaLo Eurasia
Convenience&
Costleadership
Differentiate pricing policy
IntegratedBeNe offering
Attract key foreign
e-commerce players
4strategicinitiatives
• Increased conveniencethrough improved receiver journey and additional pick-up drop-off lockers (KPI: Net Promoter Score)
• Flexible distribution footprint in close collaboration with Mail & Retail
• Increase sorting capacity
• Fulfilment infrastructure
• Transport optimization
• Digital excellence
• Strategic pricing initiatives
• Partnerships with e-commerce players
• E2E service offering (“gateway to Europe”)
• Dedicated, specialized sales force • Integrated commercial offers• Partnership with DHL Parcels
26
We have an established position in the Belgian B2C/C2C parcels market
bpost at a glance –PaLo Eurasia
Unique selling proposition
Offer best last mile and broadest delivery options, supported by acquisitions and partnerships:
• Home delivery 7/7 & evening delivery, including high-end deliveries (2-man)
• ~2,300 pick-up & drop-off points
• 219 parcel lockers in Belgium (234 by year end)
• Click & Collect
• Non-exclusive partnerships with DPDHL for B2C parcel delivery into Belgium (from Germany/France & Benelux)
CAGR 2018-20, %
B2C
B2B
C2C
~15%
~5%
0-4%C2C
B2C
B2B
2018 parcel market1100% = € 1.4bn
1 Source: Effigy
27
Partnership with DHL Parcels NL allows to cover the full BeNeregion and to capture important cross-border flows
bpost at a glance –PaLo Eurasia
Competitive offering
• Very competitive & dynamic region with many large players such as PostNL, DHL, DPD, FedEx
Large NL-based e-commerce players
• Looking for a BeNe wide offering with regards to last mile
• Benchmarking prices on a BeNe level
Purchasing behavior
• NL is the most important import country to BE (~20% of import flows)
• BE consumers mainly buy from NL players such as Bol.com and Coolblue
Launched in June 2018
28
The parcels operating model will be continuously optimized
bpost at a glance –PaLo Eurasia
Increase sorting capacity
Optimize distribution cost using drop density of mail rounds
Evolve towards dedicated parcel infrastructure to match customer requirements
• Increase sorting capacity in the existing centers of Brussels, Ghent & Antwerp to cope with increasing volume (optimizing sorting footprint mail & parcels)
• Use technology (e.g. address recognition)
• Maximize parcels in mail rounds
• Cost advantage due to higher drop density leading to lower unit costs
• Nationwide Parcel distribution footprint to accommodate distribution of parcels that are not in mail rounds
• Benefits for customer proximity and special services e.g. late-in services, “large scale” evening distribution or same day distribution
29
Supported by acquisitions, bpost has initial assets along the entire value chain of e-commerce logistics
bpost at a glance –PaLo Eurasia
Fulfilment
Realtime technology
3
2
1
4
Customer care
Order
Delivery
• Phone, email, social media & chat support
• Advanced analytics
• Order management• Payment services,
tax services and fraud prevention
• Order reception in warehouses in the proximity of clients
• Preparation for shipment
• Hybrid transport network for high-end and urgent delivery
• Last mile delivery
30
e-Commerce Logistics activities in Europe can be developed thanks to an already strong European footprint
bpost at a glance –PaLo Eurasia
~€ 128m 2018 revenue
10 fulfilment centers / facilities1
>800 employees
6 countries
1 Including Leen Menken and Active Ants, excluding bpost sorting centers
Poland
Germany
UK
TheNetherlands
Belgium
Cold chain facility Fulfilment sites Personalized logistics
Italy
31
e-Commerce Logistics in Europe has two complementary engines of growth i.e. Radial Europe and Active Ants
bpost at a glance –PaLo Eurasia
Type of clients
Size of clients
Level of automation
E-tailers & click-and-mortar (omnichannel)
Medium/large
Lower, depends on client
Level of Customization High, product and price tailored by client
Pure e-tailers
Small/medium
High (AutoStore + automated packaging)
Very low
Current locations UK, Germany, Belgium, The Netherlands, Italy
and Poland
The Netherlands
1
1 Including Landmark Global and Belgium fulfilment
Leveraging knowledgeand experience from
Radial US
Leveraging NL successstory in other European
countries
32
Parcels & Logistics North America at a glance
bpost at a glance –PaLo North America
Total
E-commerce logistics1
Interna-tional Mail2
Growth engine for bpost, to be a leading e-commerce logisticsplayer in US with ~$ 100-120m EBITDA potential
Grow with cross-border commerce
One of the last international mail providers to deliver profit through infrastructure optimization
US e-commerce logisticsprovider fulfilling 72m parcels p.a. with provenclient base, IT infrastructure and capabilities along theE2E value chain
Capabilities to support mid-sized e-tailers to expand cross-border and last mile distribution in Canada and Australia
International mail solutions and catalogue fulfilment through US companies
Sub-segments ObjectiveRevenue2018, €m
1,105
87
1,018
1 Radial North America, Landmark Global, Apple Express and FDM2 MSI, Imex, Mail Inc.
33
Acquisition of US-based on 16 November 2017
bpost at a glance –PaLo North America
Key data Radial Global
• Sales 2018: € 888m • Normalized EBITDA 2018: € 25.7m (2.9% margin)
• 100% acquisition of the shares• Enterprise Value: $ 820m• Financed through a € 650m 8-year bond issue
carrying a coupon of 1.25% (issued 4 July 2018)
• Sales CAGR 2019-2022: +7 to 9% p.a.• EBITDA 2022e: $ 100-120m (high single digit margin)• Capex: maintenance capex of $ 25-30m + growth
capex for capacity expansion & automation• ~8,150 FTEs & interims (average 2018)• 24 fulfillment centers (mainly US)
Key indicators for Radial North America
Acquisition rationaleOur growth
• Integrated e-commerce logistics provides access to a larger and more attractive profit pool
• Radial as growth engine and key profit contributor
Presence in the US and Europe
• Strengthen US position building on presence with Landmark Global
• Scale bpost’s e-commerce logistics capabilities in the Benelux and Europe
Strong growth of e-commerce
• e-commerce is growing rapidly with US being an attractive and advanced space (+15% p.a. growth of online retail over 2004-2022e)
• Transatlantic e-commerce is growing at >25% p.a. with 20% of European parcels coming from the US
Knowledge and experience
• Knowledge and experience of the e-commerce logistics chain increase exponentially with the acquisition of an experienced player
34
Radial North America offers multiple services across the entire e-commerce logistics value chain
bpost at a glance –PaLo North America
10%
Tech
no
log
yO
per
atio
ns
Radial North America assets
Processing global payments, maximizing successful authorization and reconciling tax districts and global duties 99.1% approval rate vs. 97.1% industry average 2.1% manual review rate vs. 25% industry average
Payment, Tax, and Fraud Prevention
Omnichannel Technology2
22,000Stores with fulfilment26,000
Dropship suppliers
Optimizing efficiency of order management, ship-from-store and in-store pick up Ability to handle complex orders < 10 weeks to deployment vs. competition 1-2
years Scalability of technology
Warehousing & Fulfilment
24Fulfilment sites in
North America
Adapting warehouse management and parcels preparation to e-commerce with pragmatic automation 80%+ orders shipped day 0 ~100% US coverage Experience of scaling up to ~20k peak capacity
3,400+Seats across 5 sites
Customer Care
Having a single view of customer’s history and profile combined with leading self-service tech #1 Email & Chat and #2 Phone
(StellaService ranks) Advanced data analytics
Description and key strengths
Freight Management
100%asset light
Managing a large network of carriers for a seamless customer experience Rates 5-15% cheaper than in-sourcing for mid-
sized players Clients reached in 2.4 days on avg
1
3
5
4
Revenues share%
-
-
Fraud Zero software
72%
18%
35
Radial North America market dynamics and competitivelandscape
bpost at a glance –PaLo North America
Independent e-commerce logistics providers
Online revenue e-tailers, US Addressable e-commerce logistics sector
$ 20m
$ 2,000m
$ 620bn1 expected US online retail revenue in 2019
Radial’s target audience ($ 20m – 2bn revenues)• Mid-market
segment ($ 20-200m online revenue)
• Enterprise segment ($ 200-600m)
• Some selected key accounts ($ 600m-$ 2bn)
$ 27-37bnaddressable e-commerce logistics
Radial’s target audience e-commerce revenue $ 150-155bn
~$ 620bn total US online Retaile-commerce
1 Source: Forrester Data, Online Retail Forecast, 2019
36
Positive commercial development at Radial and financial results in line with expectations
bpost at a glance –PaLo North America
Commercially heading in the right direction
• We observe that the new customer-focused approach launched early 2018 starts to bear fruits with progressive NPS improvement. Customers gave a very positive 4Q18 peak feedback.
• After the poor renewal performance of 2017 and 1Q18, positive contract renewal cycle for existing clients, as from 2Q18.
• New contracts signed had a TCV of $ 217m for FY18, which was above target and above the previous 2 years ($ 150m in 2016 and 2017).
• Good start to 2019 with high TCV signed in 1H19 already above $ 300m FY19 target, mainly in Fulfilment. Pipeline still looking strong for the rest of the year also in other services.
Results in line with expectations
• Good end of year 2018 peak management, with productivity gains partly offset by higher costs related to maintaining a sufficient labor pool within a tight US labor market.
FY18 & YTD19 results impacted, as expected, by:
• Churn (mostly in Fulfilment & Transport) and repricing, with revenue growth from new and existing customers (also impacted by some repricing) not compensating revenue loss from clients terminating with Radial.
• Webstore business phase-out, impacting FY18 EBITDA by $ -21.2m and a tail in FY19 (until 3Q19).
37
Radial action plan will result in $ 80-100m potential EBITDA improvement by 2022
bpost at a glance –PaLo North America
50Grow & Retain
2018
10-20Productivity
Supportingfunctions
and IT20-30
2022e 100-120
+80-100
1
2
3
• Fuel top-line growth via new leads, increased conversion rate and optimized pricing
• Increase satisfaction and retain clients by installing true client philosophy (e.g. pursue renewals, improve client qualification, …)
• Continue to implement productivity improvement programs, e.g.‒ Lean warehousing metrics ‒ Improved allocation of clients to distribution centers based on client
specifics
• Implement identified improvement levers in support functions(e.g. IT, medical costs, …)
$ million
Current Trading3Q19
39
6.1
6.6 3.9
40.6
EBIT3Q18
0.5-13.8
Mail & Retail
PaLo Eurasia
38.3
PaLo N. America
-1.8
Corporate
34.3
EBIT3Q19
46.7
-8.4
3Q19 EBIT in line with expectations, with mail volume decline and wage drift partly compensated by a solid PaLo Eurasia performance
3Q19
€ million
Normalization1
Reported
Including € 1.7m earn-out reversal Dynagroup
1 Normalization excludes items that are non-recurring in nature and significant (> € 20m). All profits or losses on disposal of activities are normalized whatever the amount they represent, as well as the amortization on the intangible assets recognized throughout the Purchase Price Allocation (PPA) of the acquisitions
40
IFRS163Q18 3Q19 3Q18 3Q19 % ∆ impact
Total operating income 873.7 881.5 873.7 880.9 0.8%Operating expenses 794.8 783.0 794.8 783.0 -1.5% 27.5EBITDA 78.9 98.5 78.9 97.9 24.0% 27.5Depreciation & Amortization 38.3 64.2 32.2 59.6 -27.9EBIT 40.6 34.3 46.7 38.3 -18.1% (0.3)Margin (%) 4.7% 3.9% 5.3% 4.3%Financial result (6.1) (12.4) (6.1) (12.4) (2.6)Profit before tax 39.9 27.1 46.0 31.1 -32.4% (2.9)Income tax expense 12.7 13.8 13.4 14.0 0.9Net profit 27.2 13.4 32.6 17.0 -47.7% (2.1)FCF (53.3) (15.8) (45.7) (9.7) 37.7bpost S.A./N.V. net profit (BGAAP) 29.3 18.0 29.3 18.0 -38.5%Net Debt at 30 September1 354.1 751.3 354.1 751.3 428.4
Average # FTEs and interims 35,523 34,976 35,523 34,976
Reported Normalized1
Key financials 3Q19
3Q19
€ million
1 Unaudited figures
Amortization of intangibles
recognized during PPA is normalized, leading to increase in EBIT (€ +4.6m)
and income tax expense (€ +0.3m)
Normalized FCF excludes the cash Radial receives on
behalf of its customers for
performing billing services
Normalization of € -0.6m at
operating income level related to the disposal of Alvadis
41
PaLo PaLoM&R Eurasia N. Am. Corp Eliminations Group
External operating income 444.5 195.1 239.9 2.2 - 881.5Intersegment operating income 41.6 3.2 1.5 88.6 (134.9) -Total operating income 486.0 198.3 241.4 90.8 (134.9) 881.5Operating expenses 426.9 183.5 229.7 77.8 (134.9) 783.0EBITDA 59.1 14.8 11.6 13.0 98.5Depreciation & Amortization 20.7 5.1 20.2 18.2 64.2Reported EBIT 38.5 9.7 (8.6) (5.2) 34.3Margin (%) 7.9% 4.9% -3.6% -5.7% 3.9%Normalized EBIT 38.4 10.4 (5.3) (5.2) 38.3Margin (%) 7.9% 5.2% -2.2% -5.7% 4.3%
Results by segment 3Q19
3Q19
€ million
42
M&R operating income reduction caused by mail volume decline
3Q19 – M&R
M&R external operating income, € million
Proximity andconvenience
retail network
-3.7
3Q18
-4.3
Transactional
Advertising
-2.7Press
-1.6
0.2
456.5
Value addedservices
3Q19 444.5
-12.0
Deconsolidation of Alvadis (€ -1.8m) since September 2019.
Mainly additional revenues from fines management partly offset by decline on other solutions.
Domestic Mail operating income decline of € -10.6m:i.e. € +1.2m working days impact, € -20.4m volume (-7.8% underlying volume decline), € -2.1m elections and € +10.7m price/mix.• Transactional Mail: -9.2% underlying volume decline resulting
from continued e-substitution by big senders and SMEs as well as digitization of C2B communication through smartphone apps.
• Advertising Mail: -6.5% underlying volume decline explained by positive development in Unaddressed resulting from dedicated sales efforts and phasing effects between quarters negatively impacting Direct Mail in 3Q19.
• Press: -3.4% underlying volume decline benefiting from an easier comparable base. Overall continuation of e-substitution trend.
43
M&R EBIT impacted by mail volume decline and wage drift
3Q19 – M&R
Key takeaways 3Q19
• Total reported operating income decline of € -7.8m (€ -8.4m normalized) primarily driven by domestic mail volume decline, partly compensated by pricing.
• Operating expenses excluding IFRS 16 impact increased by € -5.7m mainly driven by higher payroll (2019-20 CLA and salary indexation) despite (1) a favorable evolution of the FTE mix and (2) the deconsolidation of Alvadis since September (EBIT impact neutral).
• Normalized D&A excluding IFRS 16 impact decreased by € +0.1m.
• IFRS 16 impact of € +10.5m on operating expenses and € -10.2m on D&A.
• As a result, normalized EBIT declined by € -13.8m.
1 As of 1Q19 Transactional Mail excludes outbound and Press includes Ubiway press distribution: 3Q18 operating income is restated, but not all comparable KPIs for 3Q18 are available
€ million
3Q18 3Q19 % ΔExternal operating income 456.5 444.5 -2.6%
Transactional 172.7 169.0 -2.2%Advertising 55.1 50.8 -7.7%Press 84.0 81.3 -3.2%Proximity and convenience retail network 119.0 117.4 -1.3%
Value added services 25.7 25.9 0.9%Intersegment operating income 37.4 41.6 11.2%Total operating income 493.8 486.0 -1.6%Operating expenses 431.7 426.9EBITDA 62.2 59.1Depreciation & Amortization 10.6 20.7Reported EBIT 51.5 38.5 -25.4%Margin (%) 10.4% 7.9%Normalized EBIT 52.2 38.4 -26.4%Margin (%) 10.6% 7.9%
Capex 7.8 9.3Average # FTEs and interims 22,741 23,070
Additional KPIs1
Underlying Mail volume decline -7.8%Transactional -9.2%Advertising -6.5%Press (incl. Ubiway) -3.4%
44
Organic growth in Parcels BeNe and E-commerce logistics
3Q19 – PaLo Eurasia
14.9
3Q18
Parcels BeNe
3.6E-commercelogistics
0.5Cross-border
3Q19 195.1
176.1
+18.9
PaLo Eurasia external operating income, € million
• Reported volume growth of +20.3% (former DomesticParcels and DynaLogic volumes) driven by e-commerce.Good volume development at Dynalogic.
• Negative price/mix fully mix-driven.• Positive € 1.7m earn-out reversal on DynaGroup.
• Organic growth at Active Ants and Radial Europe driven bynew client wins.
• Driven by inbound (better price/mix), additional salesvolumes in the UK offset by lower revenues from Asia andRest of Europe.
45
Solid EBIT margin improvement thanks to volume growth and run-off of some non-performing businesses
3Q19 – PaLo Eurasia
Key takeaways 3Q19
• Total operating income increase of € +11.5m primarily driven by Parcels BeNe (€ +14.9m) resulting from volume growth and a € +1.7m earn-out reversal at Dynagroup. Organic top-line increase in E-commerce logistics.
• Operating expenses excluding IFRS 16 impact increased by € -4.9m, or 2.7%, far less than operating income, as a result of the run-off of non-performing businesses and decrease in transport costs partly related to cross-border mix.
• IFRS 16 impact of € +2.2m on operating expenses and € -2.1m on D&A.
• Normalized EBIT increased by € +6.6m.
1 As of 1Q19 Parcels BeNe volumes include DynaLogic & former Domestic Parcel volumes. This does not cover the entire Parcels BeNe operating income line. 3Q18 operating income is restated, but not all comparable KPIs for 3Q18 are available.
€ million
3Q18 3Q19 % ΔExternal operating income 176.1 195.1 10.8%
Parcels BeNe 79.4 94.4 18.8%E-commerce logistics 28.7 32.3 12.4%Cross-border 67.9 68.4 0.7%
Intersegment operating income 10.7 3.2 -69.8%Total operating income 186.8 198.3 6.1%Operating expenses 180.8 183.5EBITDA 6.0 14.8Depreciation & Amortization 4.7 5.1Reported EBIT 1.3 9.7Margin (%) 0.7% 4.9%Normalized EBIT 3.7 10.4Margin (%) 2.0% 5.2%
Capex 1.4 3.1Average # FTEs and interims 3,170 3,230
Additional KPIs1
Parcels volume growth 20.3%
46
Radial FY18 customer churn and repricing compensated by new business and positive FX development
3Q19 – PaLo N. Am.
PaLo North America external operating income, € million
3Q18
Internationalmail1
1.3E-commercelogistics
0.0
3Q19
238.5
239.9
+1.3
• YoY increase of +0.6%, -3.7% at constant exchange rate. Revenue decline within Radial North America form continued impact of FY18 client churn and repricing compensated by new business and positive FX development.
1 Combination IMEX, Mail Inc & MSI
47
EBIT mainly impacted by client churn & repricing in line with expectations
3Q19 – PaLo N. Am.
Key takeaways 3Q19
• Total operating income decline of € -0.3m or -0.1% (-4.4% at constant exchange rate) mainly driven by Radial customer churn and re-pricingcompensated by new business and positive FX development.
• Excluding FX and IFRS impact, total expenses decreased by € +11.0m. Decrease mainly at Radial driven by 9% improvement in Fulfilment labor productivity, lower payroll and medical expense, and reduced PT&F chargebacks.
• IFRS 16 impact of € +7.7m on operating expenses and € -8.1m on D&A.
• Normalized EBIT improved by € +0.5m.
€ million
3Q18 3Q19 % ΔExternal operating income 238.5 239.9 0.6%
E-commerce logistics 217.1 218.4 0.6%International mail 21.4 21.4 -0.1%
Intersegment operating income 3.1 1.5 -51.5%Total operating income 241.7 241.4 -0.1%Operating expenses 239.1 229.7EBITDA 2.5 11.6Depreciation & Amortization 11.3 20.2Reported EBIT (8.8) (8.6)Margin (%) -3.7% -3.6%Normalized EBIT (5.8) (5.3)Margin (%) -2.4% -2.2%
Capex 6.8 22.7Average # FTEs and interims 7,946 7,059
Additional KPIsRadial North America revenue, $m 207.9 195.3 -6.1%Radial North America EBITDA, $m -2.0 5.1Radial North America EBIT, $m -15.2 -11.2
48
3Q18 3Q19 % ΔExternal operating income 2.7 2.2 -18.1%Intersegment operating income 85.9 88.6 3.2%Total operating income 88.5 90.8 2.6%Operating expenses 80.2 77.8 -3.1%EBITDA 8.3 13.0 57.5%Depreciation & Amortization 11.7 18.2Reported EBIT (3.4) (5.2)Margin (%) -3.8% -5.7%Normalized EBIT (3.4) (5.2)Margin (%) -3.8% -5.7%
Capex 10.8 12.4Average # FTEs and interims 1,666 1,617
Corporate
3Q19 – Corporate
Key takeaways 3Q19
• Slightly less real estate disposals than in 3Q18.
• Negative operating expenses development ex-IFRS 16 due to higher project-related costs.
• IFRS 16 impact of € +7.2m on operating expenses and € -7.4m on D&A.
€ million
49
REPORTED - € million 3Q18 3Q19excl IFRS 16
IFRS 16 3Q19 Delta
Cash flow from operating activities -30.2 -5.9 +37.7 +31.8 +61.9Cash flow from investing activities -23.1 -47.5 -47.5 -24.4Free cash flow -53.3 -53.5 +37.7 -15.8 +37.5Financing activities +106.4 -9.1 -37.7 -46.8 -153.1Net cash movement +53.1 -62.5 +0.0 -62.5 -115.6
Capex -26.9 -47.6 -47.6 -20.7
Stable Free Cash Flow1 generation
3Q19
1 Free cash flow = cash flow from operating activities + cash flow from investing activities
CF from operating activities (€ +61.9m YoY), mainly:• Transfer of operating leases to financing activities due to IFRS 16: € +37.7m• CF from operating activities before changes in working capital: € -19.8m• Increase in working capital needs: € -1.4m• Collected cash due to Radial’s clients: € +1.5m• Lower tax prepayments: € +44.0m explained by the timing of the prepayments and the lower profit
before taxes.
CF from investing activities (€ -24.4m YoY), explained by:• The increased capex: € -20.7m, primarily investments in new fulfillment centers by PaLo N. America• M&A activities: € -1.4m, sale Alvadis, payment contingent consideration Dyna group and acquisition of
Vector Invest BV• Lower sales buildings: € -2.3m
CF from financing activities, in 2019 (€ -46.8m) mainly relates to:• Cash outflows related to operating lease liabilities: € -37.7m, as a consequence of IFRS 16 application• Interest on the bond: € -8.1m
50
Dec 31, 2018
Sep 30, 2019
Total equity 702.3 807.2Interest-bearing loans & borrowings 1,024.8 1,460.5Employee benefits 308.4 315.3Trade & other payables 1,230.0 986.2Provisions 39.5 34.8Derivative instruments 0.8 1.1Other liabilities 39.5 14.7
Total Equity and Liabilities 3,345.1 3,619.9
Equity and LiabilitiesDec 31,
2018Sep 30,
2019
Intangible assets 874.9 907.1PPE 708.0 1,110.3Investments in associates 251.2 248.6Other assets 70.6 37.2Trade & other receivables 723.2 566.7Inventories 36.9 36.8Cash & cash equivalents 680.1 713.1
Total Assets 3,345.1 3,619.9
Assets
Strong balance sheet structure
3Q19
€ million
IFRS 16 impacts
• Total assets (PPE) as of 30th September 2019 have increased by € 429.9m compared to 31st Dec. 2018 related to IFRS 16.
• Total liabilities as of 30th September 2019 (interest-bearing loans & borrowings) have increased by€ 428.4m compared to 31st Dec. 2018 related to IFRS 16.
• Balance sheet of 31st December 2018 is not restated for IFRS 16 impact.
Current TradingYTD19
52
YTD19 EBIT in line with expectations, with mail volume decline, wage drift and Radial partly compensated by a solid PaLoEurasia performance and HQ sale
YTD19
€ million
1 Normalization excludes items that are non-recurring in nature and significant (> € 20m). All profits or losses on disposal of activities are normalized whatever the amount they represent, as well as the amortization on the intangible assets recognized throughout the Purchase Price Allocation (PPA) of the acquisitions
17.7
15.0
EBITYTD19
249.6
EBITYTD18
-45.8
Mail & Retail
PaLo Eurasia
-9.2
PaLo N. America
0.2
Corporate
226.6
241.6
267.3
29.2
-25.7
Normalization1
Reported
Including € 1.7m earn-out reversal Dynagroup
• Includes € 19.9m profit on Centre Monnaie (HQ) disposal
• 2Q18 included a € 14.9m provision reversal
53
IFRS16YTD18 YTD19 YTD18 YTD19 % ∆ impact
Total operating income 2,718.6 2,724.0 2,718.6 2,723.4 0.2%Operating expenses 2,353.9 2,312.7 2,353.9 2,312.7 -1.8% 79.6EBITDA 364.7 411.3 364.7 410.7 12.6% 79.6Depreciation & Amortization 115.1 184.7 97.4 169.1 -77.7EBIT 249.6 226.6 267.3 241.6 -9.6% 1.9Margin (%) 9.2% 8.3% 9.8% 8.9%Financial result (15.7) (34.7) (15.7) (34.7) (7.1)Profit before tax 240.5 201.3 258.3 216.3 -16.2% (5.2)Income tax expense 81.5 74.4 83.2 75.6 1.5Net profit 159.1 126.9 175.1 140.7 -19.6% (3.7)FCF 19.4 174.9 45.6 204.2 86.8bpost S.A./N.V. net profit (BGAAP) 184.2 118.2 184.2 118.2 -35.8%Net Debt at 30 September1 354.1 751.3 354.1 751.3 428.4
Average # FTEs and interims 34,276 34,254 34,276 34,254
Reported Normalized1
Key financials YTD19
YTD19
€ million
1 Normalized figures are not audited
Amortization of intangibles
recognized during PPA is normalized, leading to increase in EBIT (€ +15.7m)
and income tax expense (€ +1.2m)
Normalized FCF excludes the cash Radial receives on
behalf of its customers for
performing billing services
bpost net profit BGAAP excludes Centre Monnaie’sprofit on disposal:• Since the sales price will be reinvested, the profit on
disposal and related taxation will be spread throughout the depreciation of these reinvestments
• This lowers the tax costs on the profit on disposal as the statutory tax rate decreases as from 2020 to 25%
Normalization of € -0.6m at
operating income level related to the disposal of Alvadis
54
Results by segment YTD19
YTD19
€ million
PaLo PaLoM&R Eurasia N. Am. Corp Eliminations Group
External operating income 1,410.3 583.3 705.0 25.4 - 2,724.0Intersegment operating income 124.6 13.2 4.0 266.4 (408.2) -Total operating income 1,534.9 596.5 708.9 291.8 (408.2) 2,724.0Operating expenses 1,267.8 531.9 678.9 242.3 (408.2) 2,312.7EBITDA 267.1 64.7 30.1 49.5 411.3Depreciation & Amortization 63.0 16.3 53.5 52.0 184.7Reported EBIT 204.2 48.3 (23.4) (2.5) 226.6Margin (%) 13.3% 8.1% -3.3% -0.9% 8.3%Normalized EBIT 205.9 51.9 (13.7) (2.5) 241.6Margin (%) 13.4% 8.7% -1.9% -0.9% 8.9%
55YTD19
1 Free cash flow = cash flow from operating activities + cash flow from investing activities
Positive evolution of FCF1 supported by lower outflows related to M&A activities and HQ sale
CF from operating activities (€+68.6m), mainly:• Transfer of operating leases to financing activities due to IFRS 16: € +86.8m• CF from operating activities before changes in working capital: € -62.3m• Increase in working capital needs: € -3.8m• Collected cash due to Radial’s clients: € -3.2m• Lower tax prepayments: € +53.0m
CF from investing activities (€ +86.9m), mainly:• M&A due to cash outflows LY: € +53.5m• Sale Alvadis: € +5.9m• Proceeds from sale of buildings: € +50.0m, mainly due to MCM sale• Capex: € -22.6m
CF from financing activities decreased in 2019 mainly due to:• Cash outflows related to operating lease liabilities, as a consequence of IFRS 16
application in 2019: € -86.8m• Interest on the bond in 2019: € -8.1m• In 2018 bond issuance and commercial papers offset the reimbursement of the
bridge loan for Radial acquisition and related costs.
REPORTED - € million YTD18 YTD19excl IFRS 16
IFRS 16 YTD19 Delta
Cash flow from operating activities +138.1 +119.8 +86.8 +206.7 +68.6Cash flow from investing activities -118.7 -31.8 -31.8 +86.9Free cash flow +19.4 +88.0 +86.8 +174.9 +155.4Financing activities +49.6 -64.9 -86.8 -151.7 -201.3Net cash movement +69.0 +23.1 +0.0 +23.1 -45.9
Capex -66.4 -89.0 -89.0 -22.6
Additional info
57
FY17 FY18 FY17 FY18 % ΔTotal operating income 3,023.8 3,850.2 3,023.8 3,850.2 27.3%Operating expenses 2,425.9 3,279.1 2,425.9 3,279.1 35.2%EBITDA 598.0 571.1 598.0 571.1 -4.5%Margin (%) 19.8% 14.8% 19.8% 14.8%EBIT 492.9 393.4 501.6 424.3 -15.4%Margin (%) 16.3% 10.2% 16.6% 11.0%Profit before tax 488.7 381.0 497.5 411.9 -17.2%Income tax expense 165.8 117.4 168.2 121.4Net profit 322.9 263.6 329.3 290.4 -11.8%FCF (485.8) 241.2 (500.8) 231.5bpost S.A./N.V. net profit (BGAAP) 291.0 262.3 291.0 262.3 -9.8%Net Debt/ (Net cash), at 31 December 292.4 344.8 292.4 344.8
Reported Normalized1
Summary of key financials FY18
FY18
€ million
1 Normalized figures are not audited
€ 30.9m linked to amortization on intangible assets (purchase price allocation “PPA” Radial, Ubiway, Dynagroup, de Buren & Imex)
Tax impact of PPA on amortization of
€ 4.1m
Normalized FCF excludes the cash Radial receives on
behalf of its customers for
performing billing services.
58
IFRS 16: Main impacts YTD19
IFRS16
Group M&R PaLoEurasia
PaLo N. Am. Corporate
Operating expenses +79.6 +31.5 +6.4 +21.5 +20.2
EBITDA +79.6 +31.5 +6.4 +21.5 +20.2
D&A -77.7 -30.1 -6.2 -21.0 -20.4
EBIT +1.9 +1.3 +0.2 +0.5 -0.2
Net financial costs -7.1 -2.5 -0.5 -3.6 -0.5
CF from operating activities
+86.8
CF from financing activities
-86.8
Net debt +428.4
€ million
59
IFRS 16: Main impacts 2019
IFRS16
IFRS 16 impact on 2019
Operating expenses ~+104 Decrease as rent & rental expenses to be recognized as depreciation and interest costs
EBITDA ~+104 Increase due to lower rent & rental costs
D&A ~-100 Increase due to new depreciation of right-of-use assets
EBIT ~+4 Marginal increase due to opex and depreciation impacts
Net financial costs ~-8 Increase due to interest expense from unwinding of the discount of the lease liability
CF from operating activities ~+104 Leasing-related cash outflows transferred to CF from financing activities
CF from financing activities ~-104 Leasing-related cash outflows transferred from CF from operating activities
Assets & Liabilities ~+418
€ million
60
IFRS 16: Main impacts 2019 per business unit
IFRS16
M&R
Parcels & Logistics Europe &
Asia
Parcels & Logistics
North America
Corporate Group
Operating expenses ~+45 ~+10 ~+21 ~+27 ~+104
EBITDA ~+45 ~+10 ~+21 ~+27 ~+104
D&A ~-43 ~-10 ~-20 ~-27 ~-100
EBIT ~+2 ~0 ~+1 ~0 ~+4
€ million
61
bpost’s long term relationship with the Belgian State
Belgian State
State as a long term shareholderBelgian State has 51% sharesbpost’s board is composed of 5 board members and CEO appointed by the Belgian State and 6 independent directors
Belgian State supports a regular dividend policy
bpost provides SGEIs1 on behalf of the State2016-20202 press distribution contracts (newspapers & periodicals)
Sixth management contract for other SGEIs
Contractual amounts (excl. inflation2, volume impact & sharing of efficiency gains) of € 261.0m in 2016 (actual amount: € 264.9m), € 260.8m in 2017 (actual amount: € 270.0m), € 257.6m in 2018 (actual amount: € 271.4m), € 252.6m in 2019 and € 245.6m in 2020
State as important customerState is a key commercial client to bpostSeveral other agreements in place with the State, such as European license plates (won by bpost through tender)
1 SGEI stands for Services of General Economic Interest cfr. slide 17 and 622 All amounts need to be adjusted for inflation on a cumulated yearly basis
Shareholder
Belgian State
Free float
# shares
102,075,649
97,925,295
PressRetailFinancial services
62
Management contracts and press concessions will be (re)negotiated in the timing of the plan
USO & SGEI
Scope
€271* state compensation in 2018
Universal Service Obligation (USO)
State compensation possible in case of USO being financial burden
• Collect, sort, transport, & distribute letter mail up to 2kg, parcels up to 10kg, and parcels up to 20kg from other EU member states
• 1 access point per municipality
• Collect and deliver 5x/week• Full territory of Belgium• USO pricing constraints• Provide adequate
information on USO products and services
• Quality control obligation (95% of prior mail/parcels D+1, 97% D+2)
6th Management Contract
Services not typically associated with mail operators (SGEI), e.g.,• Retail network• Cash at Counter• Election mail (distribution)• Cash payment of pensions
at home
• Also part of SGEIs• Newspaper early delivery
6x/week • Periodical delivery
5x/week• Quality control obligation
of max 7 complaints per 10k deliveries
• ~3,000 FTEs
Timing • Complementary management contract granted by the State• End of 2023, renewable by
consecutive terms of 5 years
• End of 2020• Notified and validated by
European Commission under State Aid rules
• End of 2020• Notified and validated by
European Commission under State Aid rules
Press concessions
* Amount including inflation, volume variance and sharing of efficiency gains
63
A relatively resilient mail market vs. other European operators
European mail market
2008-18 CAGR for addressed mail volumesas reported by major incumbent European postal operators, percent
AU
UK
DE
CH
NL
DK
IT
SW
FR
BE
EU
Addressed mail volume per capita 2018 operator level*
1
11
3
8
7
6
10
5
2
4
SOURCE: Company information; Annual reports; Investor presentations; IPC; Eurostat
Note: definition of addressed mail may differ by operator1 Includes addressed mail2 Includes addressed mail3 Includes addressed mail4 Includes addressed mail
5 Includes mail communication and dialogue marketing6 Includes addressed mail7 Includes addressed mail (publishers services excl.)8 Includes addressed mail excluding press9 Includes all domestic mail
DK
SW
IT
FR
AU
CH
NL
DE
BE
UK
EU
3
8
4
5
6
7
11
10
1
2
10 Includes inland addressed mail11 Includes letter mail and addressed direct mail / media post
* Excludes domestic competitors
225
200
184
155
149
146
140
125
106
50
46
-2.1%
-5.0%
-5.1%
-5.4%
-6.0%
-9.2%
-9.3%
-13.1%
-4.0%
-3.4%
-3.4%
64
Key contacts
Saskia Dheedene
Head of Investor Relations
• Email: [email protected]• Direct: +32 (0) 2 276 76 43• Mobile: +32 (0) 477 92 23 43• Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Stéphanie Voisin
Manager Investor Relations
• Email: [email protected]• Direct: +32 (0) 2 276 21 97 • Mobile: +32 (0) 478 48 58 71• Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Slide Number 1Investor presentation third quarter 2019Slide Number 3Highlights of 3Q19Slide Number 5Slide Number 6bpost offers a strong investment rationaleWe create value for shareholdersA diversified mail operator with a footprint in e-commerce logisticsLong-term Visionbpost will deliver on 3 strategic aspirations…… supported by an experienced management team with responsibilities down to the bottom-lineSustainability is at the heart of our activitiesMail & Retail at a glanceKey value drivers for the Mail & Retail businessDomestic mail volume decline expected to accelerate �from -5.8% in 2018 up to ~-9% in 2019Regulatory aspectsNew Postal Law provides stable and predictable regulatory framework to increase prices in context of accelerating mail volume declinePrice increase and mix effects expected to compensate �>50% of mail volume decline over 2018-22Management has developed an extended �set of cost control optionsbpost evolves towards a differentiated offering to accommodate changing customer needsLabor cost will benefit from decrease of mail related FTEs and optimized employee mixParcels & Logistics Europe and Asia at a glanceKey value drivers for Parcels & Logistics Europe and AsiaFour strategic initiatives for Parcels BeNeWe have an established position in the Belgian B2C/C2C �parcels marketPartnership with DHL Parcels NL allows to cover the full BeNe region and to capture important cross-border flowsThe parcels operating model will be continuously optimizedSupported by acquisitions, bpost has initial assets along the entire value chain of e-commerce logisticse-Commerce Logistics activities in Europe can be developed thanks to an already strong European footprinte-Commerce Logistics in Europe has two complementary engines of growth i.e. Radial Europe and Active AntsParcels & Logistics North America at a glanceAcquisition of US-based on 16 November 2017Radial North America offers multiple services across the entire �e-commerce logistics value chainRadial North America market dynamics and competitive landscapePositive commercial development at Radial and financial results in line with expectationsRadial action plan will result in $ 80-100m potential EBITDA improvement by 2022Slide Number 383Q19 EBIT in line with expectations, with mail volume decline and wage drift partly compensated by a solid PaLo Eurasia performanceKey financials 3Q19Results by segment 3Q19M&R operating income reduction caused by mail volume declineM&R EBIT impacted by mail volume decline and wage driftOrganic growth in Parcels BeNe and E-commerce logisticsSolid EBIT margin improvement thanks to volume growth and run-off of some non-performing businessesRadial FY18 customer churn and repricing compensated by �new business and positive FX developmentEBIT mainly impacted by client churn & repricing in line with expectationsCorporateStable Free Cash Flow1 generationStrong balance sheet structureSlide Number 51YTD19 EBIT in line with expectations, with mail volume decline, wage drift and Radial partly compensated by a solid PaLo Eurasia performance and HQ saleKey financials YTD19Results by segment YTD19Positive evolution of FCF1 supported by lower outflows related to M&A activities and HQ saleSlide Number 56Summary of key financials FY18IFRS 16: Main impacts YTD19IFRS 16: Main impacts 2019IFRS 16: Main impacts 2019 per business unitbpost’s long term relationship with the Belgian StateManagement contracts and press concessions will be (re)negotiated in the timing of the plan A relatively resilient mail market vs. other European operatorsKey contactsSlide Number 65
