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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

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Page 1: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

Page 2: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

Page 3: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

Page 4: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

Posti Group4

Business Environment and Strategy

10/24/2018

Page 5: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

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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

Page 7: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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.

Page 8: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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.

Page 9: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

Posti Group9

Q4 Financials

10/24/2018

Page 10: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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)

Page 11: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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)

Page 12: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

Page 13: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

Page 14: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

10/24/2018

Posti Group14

Segments

Page 15: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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.

Page 16: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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.

Page 17: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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.

Page 18: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

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

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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

Page 20: Posti succeeded well in the important€¦ · 2. Win e-commerce play 3 Rething Logistics 4. Renew service culture –Posti Orange 5. Digitally powered to secure your service delivery

Posti Group20

10/24/2018