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TRANSCRIPT
Posti Group Oyj
Financial Statements Release 1-12/2018
1
Posti succeeded well
in the important
Christmas season,
parcel volumes rose
to a record level
10/24/2018
Posti Group
Posti Group2
Posti in figures Net sales
1 610,3(1 647,0) EUR million
Adjusted operating result
44,8(42,4)
EUR million
18 500number of personnel
11countries
Over
1 000 Parcel lockers
Letter volumes
continues to decline,
parcel volumes rose
to a record-level
once again.
Year 2018:
The Group’s net
sales decreased,
adjusted
operating result
improved
Posti delivered
a total of 44.1
million parcels
10/24/2018
Posti Group3
Posti Group: Q4 Highlights
• Net sales decreased by 4.0% to 434.3 EUR million (452.3 EUR
million). Net sales decreased especially in Itella Russia. The net
sales was also impacted by the volume of addressed mail, which
has been steadily declining due to changes in consumer behavior
and rapid digitalization.
• Group’s adjusted EBITDA decreased to 38.5 EUR million (40.9)
EUR million.The development was two-edged. Mail, Parcel and
Logistics Services had a negative effect on the adjusted EBITDA.
However, there was also positive development due to the
improved result development of both OpusCapita and Itella
Russia.
• Posti´s adjusted operating result decreased by 1.6 EUR million
to EUR 21.4 million (EUR 23.0 million)
• The net sales of Parcel services increased whereas the net sales
of Postal Services continued to decrease, which reflects the
transformation of the market.
Parcel continued to drive growth and Posti succeeded in
delivering Christmas to its customers and citizens
Posti Group4
Business Environment and Strategy
10/24/2018
The Finnish economy is still growing
and e-commerce trend continues
10/24/2018
5
Finland´s gross domestic
product (GDP) is forecasted
to accelerate to
2.7% in 2018,
but economic growth is
predicted to slow down.
The Finnish economy
supports growth in e-
commerce and logistics.
Posti´s e-commerce studies:
• Finns differ significantly from other
Europeans in how they prefer to
receive their parcels. For example,
22% of Finnish consumers prefer
to have parcels delivered to parcel
lockers
• 59% of the Finns have already
used parcel lockers
• The volume of purchases from
foreign online stores is growing.
Consumers estimate that in 2025
e-commerce will account for 30%
of their purchases
Sources: Ministry of Finance, IPC Online ShopperSurvey, n=28 892, E-commerce Survey made by Posti Group n=2121
Posti Group
10/24/2018
Parcel volumes keep growing
6
+17 %
The number of parcels going
through Posti Parcel Lockers
10–12 2018
+11 %
B2C parcel volume growth in
Finland and in the Baltics
10–12 2018
-10 %
Addressed letter volumes
10-12 2018
+4 %
Freight volumes*
10-12 2018
* The reported figure for domestic freight excludes food logistics and is measured in waybills
9.4 9.3 9.5
12.0
10.4 10.5 10.3
13.0
+10% +13% +9% +8%
Q1 Q2 Q3 Q4
2017 2018
Parcel volumes (million units) in Finland and in the Baltics
Posti Group
10/24/2018
Posti Group7
1. Keep mail relevant to
customers
2. Win e-commerce play
3 Rething Logistics
4. Renew service culture
– Posti Orange
5. Digitally powered to
secure your service
delivery
Good progress towards our strategic targets
• Posti continues its growth in logistics by
acquiring Suomen Transval Group Oy.
• The number of parcel points increased: there
are now over 1,000 parcel points!
• Posti set a new record: 1.3 million parcels
passed through Posti in one week In December
• Posti is renewing its organization and operating
model to better correspond to market needs and
e-commerce growth. The new organization
model came into force on January 1, 2019.
• Posti has succeeded in adapting operations to a
decreasing amount of mail.
Posti succeeded in delivering Christmas for our customers
and all citizens
10/24/2018
Posti Group8
Christmas greetings continues
to be part of the Finnish
Christmas tradition, but
volumes are declining. More
than 23 million Christmas
cards were sent this year in
Finland compared to 26 million
in 2017.
The net sales of Parcel
Services grew
particularly due to the
Christmas season.
The growth was seen
especially in the
volumes of domestic
B2C parcels and
international B2C
parcels addressed to
Finland.
In December, Posti set a
new record: 1.3 million
parcels passed through
Posti in one week.
Posti Group9
Q4 Financials
10/24/2018
363 351 331
403366 360
330
391
2829
29
33
27 25
25
271616
15
17
15 15
14
1677
4
0
50
100
150
200
250
300
350
400
450
500
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Other operations
OpusCapita
Itella Russia
Mail, Parcel andLogistics Services
414402
379
452
408 399
369
434
-1.5% -0.7% -2.5% -4.0%0
50
100
150
200
250
300
350
400
450
500
Q1 Q2 Q3 Q4
2017 2018
Posti Group Q4 net sales
10/24/2018
Posti Group10
Group’s net sales, EUR million External net sales by segment, EUR million
• Q4 net sales declined by 4.0% to 434 EUR million (452 EUR million)
53.9
44.8
2.6 -2.2
-9.5
Mail, Parceland Logistics
Services
Itella Russia OpusCapita Otheroperations
Posti Group
3.8 %15.5
0.1 %0.3
1.0 %3.6
5.1 %23.0
2.8 %11.5
1.5 %6.1
1.6 %5.8
4.9 %21.4
0
5
10
15
20
25
Q1 Q2 Q3 Q4
2017 2018
Posti Group Q4 adjusted operating result
10/24/2018
Posti Group11
Group’s adjusted operating result, EUR million
and as a percent of net sales2018 adjusted operating result by segment, EUR million
3.7%*-3.3%*
2.8%*
* percent of net sales
2.5%*
• Q4 adjusted operating result declined by 1.6 EUR million to 21.4 EUR million (23.0 EUR million)
408 415
382
450
400 401
367
420
177 178159
182 175 173152
176
0
50
100
150
200
250
300
350
400
450
500
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Total Costs Personnel expenses
Posti´s total costs structure trend
10/24/2018
Posti Group12
• Average number of FTE in Q4 2018 was 16,202 (16,807)
Group’s operating expenses *, EUR million
* includes depreciation and amortization, excludes impairment losses
• Cost structure is lower than in the comparison period
• Declining mail volume needs to be off-set by cost structure development
Long term financial targets
10/24/2018
Posti Group13
Adjusted operating result percentage 4% Net debt / Adjusted EBITDA less than 2.0x
Strict management of free cash flow Continuously increasing ordinary dividend
2.9 2.92.6
2.8
0
1
2
3
4
%
-0.5x
-0.7x
-0.4x-0.3x
-1.0x
-0.5x
0.0x
38.8
29.9
0
10
20
30
40
50
EU
R m
illio
n
Adjusted free cash flow
18.025.0 27.0
35.0
13.0
0
10
20
30
40
50
60
70
EU
R m
illio
n
ordinary dividend extra dividend
10/24/2018
Posti Group14
Segments
Mail, Parcel and Logistics Services Q4 key figures
10/24/2018
Posti Group15
EUR million10-12
2018
% of
Net sales
10-12
2017
% of
Net sales
Net sales 393.9 403.2
Net sales change, % -2.3% 0.5%
Adjusted EBITDA 33.0 8.4% 38.1 9.5%
EBITDA 32.9 8.3% 37.9 9.4%
Adjusted operating result 22.7 5.8% 27.3 6.8%
Operating result 21.4 5.4% 27.1 6.7%
• Mail and Marketing Services net sales decreased, driven
by constantly falling volumes in addressed letters. The net
sales are strongly influenced by the last quarter of the year
and especially by the Christmas season. More than 23
million Christmas cards were sent this year in Finland
compared to 26 million in 2017.
• The Press Service net sales suffered from volume decline
as well as from price competition.
• The net sales of Parcel Services grew particularly due to
growth in consumer parcels.
• Logistics Services net sales decreased by 2.7%. In
Logistics services, the development in domestic freight,
measured in waybills, was positive, but growth was slower
than in the comparison period. This is mainly due to the
Finnish business environment.
Itella Russia Q4 key figures
10/24/2018
Posti Group16
EUR million10-12
2018
% of
Net sales
10-12
2017
% of
Net sales
Net sales 27.2 33.0
Net sales change, % -17.5% 4.7%
Adjusted EBITDA 3.2 11.7% 1.6 5.0%
EBITDA -1.1 -4.1% -16.2 -49.0%
Adjusted operating result 1.7 6.3% -0.1 -0.3%
Operating result -2.6 -9.4% -17.9 -54.3%
Itella Russia’s net sales measured in local
currency decreased by 5.6%. Reported euro-
denominated net sales decreased by 14.7% to
EUR 25.1 (29.4) million due to currency translation
effects. The divestment of Maxipost during Q2
impacted negatively on net sales. Contract
Logistics was slightly negative following
optimization of the regional business during 2017
where some unprofitable locations were closed.
• Itella Russia’s net sales measured in local currency
decreased.
• The divestment of Maxipost during Q2 impacted negatively
on net sales. Net sales also decreased slightly in Road
transport, Air and Sea and Contract logistics.
• Itella Connexions, a Posti subsidiary in Russia, was
divested in December 2018. Itella Connexions is a
customer relationship management and digital agency.
• The result improvement was driven by Contract Logistics
but also Road Transport contributed as well as the
divestment of Maxipost.
OpusCapita Q4 key figures
10/24/2018
Posti Group17
EUR million10-12
2018
% of
Net sales
10-12
2017
% of
Net sales
Net sales 17.4 17.4
Net sales change, % 0.0% -1.4%
Adjusted EBITDA 2.1 12.1% -1.0 -6.0%
EBITDA 1.5 8.8% -2.1 -11.8%
Adjusted operating result 0.9 5.4% -2.3 -13.1%
Operating result 0.4 2.1% -3.3 -18.9%
• OpusCapita’s net sales remained flat but SaaS
subscription revenue grew by 41%.
• Conversion from on-premise to SaaS proceeded
successfully especially in the Cash Management product
line. Net Sales in paper-based transaction products
continued to decline as expected. Both Cash Management
and Procurement and Invoice Automation product lines
closed landmark deals during the fourth quarter.
• The adjusted EBITDA increased by the cost-savings
program as well as growth in the high value product
segments.
Henkilöstökulut laskivat
Henkilöstö
keskimäärin (FTE), työntekijää
10/24/2018
Posti Group18
Työsuhde-etuuksista
aiheutuvat kulut
Materiaalit ja palvelut
Liiketoiminnan muut kulut
-173,3 -177,9
-127,1 -126,1
-84,1 -91,1
17 561 17 454
Milj.euroa 30.6.2018 30.6.2017
Outlook
10/24/2018
Posti Group19
Net sales, excluding
possible new acquisitions
and divestments, is
expected to increase
from 2018 driven by
Transval acquisition.
The Group’s adjusted
operating result is
expected to increase
from 2018 due to
Transval acquisition and
transition to IFRS 16
accounting principles.
Outlook for 2019
Posti Group20
10/24/2018