Posti Group Corporation Half-year report · that won the competitive tendering process have carried...
Transcript of Posti Group Corporation Half-year report · that won the competitive tendering process have carried...
Posti Group Corporation
Half-year reportJuly 25, 2018
25.7.2018
Posti Group Corporation1
Agenda
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Posti Group Corporation2
• Highlights of January-June 2018
• April-June 2018
• January-June 2018
• Segments
• Mail, Parcel and Logistics Services
• Itella Russia
• OpusCapita
• Financial targets
• Outlook 2018
Highlights of January-June 2018
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Posti Group Corporation3
Posti in figures 2018
Net sales
(EUR million)
Adjusted EBITDA
(EUR million)
Adjusted operating
result (EUR million)
Personnel
on average, FTE
Share of USO
deliveries
January-June 2018 in a nutshell
• The parcel volume of Finland and the Baltic countries increased by 12%, with 22% growth in consumer
(B2C) parcels. The number of addressed letters decreased by 8% in Finland.
• Measured in waybills and excluding food logistics, Posti’s domestic freight grew by 6%.
• Mail items covered by the universal service obligation amounted for 4.0% of all Posti´s delivery volumes.
• Posti has completed its first sourcing procedure based on the Postal Act on the five-day delivery of
universal service letters in areas not covered by an early-morning newspaper delivery. The companies
that won the competitive tendering process have carried out deliveries for Posti before.
• In May, Posti Group Corporation signed a new EUR 150 million syndicated revolving credit facility which
replaced the previous EUR 150 million facility. The new facility has a maturity of five years with an option
to extend with two years.
• During the first half year, Itella Russia divested its MaxiPost courier business, and Posti its Scandinavian
Debt Collection business.
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Posti Group Corporation4
807.0
51.1
17.5
17,066
4.0%
Operational highlights
The Group’s adjusted operating result is expected to remain on par with 2017 or decrease slightly.
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2014 2015 2016 2017 2018
BKT:n volyymimuutos edellisen vuoden vastaavasta neljänneksestä, työpäiväkorjattu (%)
Raskaan liikenteen määrä, viimeiset 12 kk verrattuna edelliseen 12 kk:n jaksoon
Business Environment
• According to the Bank of Finland forecast
published in June, GDP growth will
accelerate to 2.9% in 2018, finally reaching
its level of 2008 preceding the financial crisis.
• Both domestic demand and growing exports
will boost overall demand.
• Transport volumes in heavy traffic continues
to increase in Finnish main roads.
• According to the Bank of Finland, Russian
GDP is forecasted to grow by 2 percent this
year.
• The Russian economic growth will remain
relatively slow, as there are no prospects for
reforms in economic income formation to
support growth.
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Heavy traffic volumes, 12 months change, %
GDP volume change from the previous year's corresponding quarter
Source: Finnish Transport Agency, Statistics Finland
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Parcel services keep growing
Posti Group Corporation6
+13%
Parcel volume growth in
Finland and in the Baltics
4–6 2018
+34%
The number of parcels going
through Posti Parcel Lockers
4–6 2018
+22%
B2C parcel volume growth in
Finland and in the Baltics
4–6 2018
+36%
The number of parcels going
through Posti Parcel Lockers
1–6 2018
+12%
Parcel volume growth in
Finland and in the Baltics
1–6 2018
+22%
B2C parcel volume growth in
Finland and in the Baltics
1–6 2018
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Posti Group Corporation7
9.4 9.3 9.5
12.0
18.7
10.4 10.5
20.9
+10% +13% +12%
Q1 Q2 Q3 Q4 Q1-Q2
2017 2018
Parcel volumes (million units) in Finland and the Baltics combined
1.111.18
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Domestic freight*
+6%
349322
0
100
200
300
400
Addressed letters
1-6 2017 1-6 2018
-8%
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Letter volumes declined by 8%, freight volumes grew by 6%
Posti Group Corporation8
Source: Posti
1-6 2017 1-6 2018 1-6 2017 1-6 2018
* The reported figure for domestic freight excludes food
logistics
Freight volumes, million unitsLetter volumes, million units
April-June 2018
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Net sales and adjusted operating resultApril-June 2018
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386 389 376
457414 402 379
452408 399
0
100
200
300
400
500
Q1 Q2 Q3 Q4
Net sales by quarters, EUR million
2016 2017 2018
402.33.4%
399.5-0.7%
0
100
200
300
400
500
4-6 2017 4-6 2018
Net SalesEUR million and change, %
19.84.9%
22.85.7%
0
5
10
15
20
25
4-6 2017 4-6 2018
Adjusted EBITDAEUR million and %
0.30.1%
6.11.5%
0
2
4
6
8
4-6 2017 4-6 2018
Adjusted operating resultEUR million and %
-7.6-1.9%
2.30.6%
-15
-10
-5
0
5
4-6 2017 4-6 2018
Operating resultEUR million and %
Key figures
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• The Group’s net sales decreased by 0.7%. Net
sales grew by 2.0% in Finland and declined by
15.6% in other countries.
• The decline in international operations’ net sales
was mainly related to the divestment of
OpusCapita’s Finance and Accounting
Outsourcing and related subsidiaries in Q3/2017.
• The increase in the adjusted EBITDA was
attributable mainly to the better result of Mail,
Parcel and Logistics Services and Itella Russia.
• The adjusted operating result increased to EUR
6.1 million and the operating result to EUR 2.3
million.
• In May, Posti Group Corporation signed a new
EUR 150 million syndicated revolving credit
facility which replaced the previous EUR 150
million facility.
4-6 2018 % 4-6 2017 %
Net sales, EUR million 399.5 402.3
Adjusted EBITDA, EUR million 22.8 5.7% 19.8 4.9%
EBITDA, EUR million 19.0 4.8% 12.8 3.2%
Adjusted operating result, EUR million 6.1 1.5% 0.3 0.1%
Operating result, EUR million 2.3 0.6% -7.6 -1.9%
Result for the period, EUR million 1.0 0.3% -13.0 -3.2%
Gross capital expenditure, EUR million 21.8 11.9
Personnel on average, FTE 17,221 18,588
January-June 2018
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Net salesJanuary-June 2018
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1,867-5.5% 1,649
-11.7%1,608-2.5%
1,6472.5%
807-1.1%
0
500
1,000
1,500
2,000
2014 2015 2016 2017 1-6 2018
Net SalesEUR million and change, %
816.15.3%
807.0-1.1%
0
200
400
600
800
1,000
1-6 2017 1-6 2018
Net SalesEUR million and change, %
Operating resultJanuary-June 2018
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58.63.1% 47.6
2.9%47.12.9%
42.42.6%
17.52.2%
0
10
20
30
40
50
60
70
2014 2015 2016 2017 1-6 2018
Adjusted operating resultEUR million and %
55.36.8%
51.16.3%
0
10
20
30
40
50
60
1-6 2017 1-6 2018
Adjusted EBITDAEUR million and %
15.81.9%
17.52.2%
0
5
10
15
20
1-6 2017 1-6 2018
Adjusted operating resultEUR million and %
2.50.3%
-16.3-2.0%
-30
-20
-10
0
10
1-6 2017 1-6 2018
Operating resultEUR million and %
Key figures
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• The Group’s net sales decreased by 1.1%. Net
sales increased 1.9% in Mail, Parcel and
Logistics Services but decreased 9.1% in Itella
Russia mainly driven by currency exchange rates.
• Net sales grew by 1.1% in Finland and declined
by 13.8% in other countries. The decline in
international operations’ net sales was mainly
related to the divestment of OpusCapita’s
Finance and Accounting Outsourcing and related
subsidiaries in Q3/2017.
• The adjusted operating result increased to EUR
17.5 million.
• As a result of management evaluation
OpusCapita’s business plan, including the
execution schedule and required investments to
implement the plan and the risk-premium of the
discount rate, an impairment loss on goodwill of
EUR 30.0 million was recognized in the first
quarter of the year.
1-6 2018 % 1-6 2017 %
Net sales, EUR million 807.0 816.1
Adjusted EBITDA, EUR million 51.1 6.3% 55.3 6.8%
EBITDA, EUR million 47.5 5.9% 42.9 5.3%
Adjusted operating result, EUR million 17.5 2.2% 15.8 1.9%
Operating result, EUR million -16.3 -2.0% 2.5 0.3%
Result for the period, EUR million -20.3 -2.5% -7.0 -0.9%
Return on equity (12 months), % -12.0 3.0
Return on capital employed (12 months) -9.8 6.6
Net debt, EUR million -10.3 -19.6
Net debt / Adjusted EBITDA -0.1x -0.2x
Adjusted free cash flow, EUR million 8.4 3.6
Gross capital expenditure, EUR million 37.2 36.3
Personnel on average, FTE 17,066 18,323
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Mail, Parcel and Logistics Services
90%
Itella Russia6%
OpusCapita4%
External net sales by segment
26.2
17.5
0.0
-3.8
-4.8
Mail, Parceland Logistics
Services
Itella Russia OpusCapita Otheroperations
Posti Group
Adjusted operating result by segment1-6 2018, EUR million
Segments
3.6%* -12.1%*
2.2%*
* percent of net sales
0.0%*
• The Mail and Marketing Services net sales were at the previous year`s level, driven by slower than expected economy letter volume decline
due to seasonal reasons and pricing and product mix changes. The prices of Posti’s cash letter services changed on May 4, 2018.
• The Press revenue was supported by the acquisition at the end of May 2017.
• Strong volume growth, especially in B2C, continued to drive parcel net sales growth. However, the net sales growth was below volume
growth due to product mix changes, the average price, and a decrease of small items that are not included in volumes.
• Logistics net sales grew by 5.2%. Warehouse fill rate was at a good level.
• The adjusted EBITDA increased to 5.7%. The result improvement was driven by increased sale in Mail and Marketing Services.
• Special items improved the operating result for the second quarter by EUR 0.4 million. The special items include EUR 0.9 million gain on the
divestment of debt collection business in Sweden which was completed in June.
Mail, Parcel and Logistics ServicesApril-June: record high parcel volumes
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EUR million 4-6 2018% of
Net sales4-6 2017
% of
Net sales
Net sales 361.8 350.7
Net sales change, % 3.2% 2.7%
Adjusted EBITDA 20.7 5.7% 19.4 5.5%
EBITDA 21.1 5.8% 17.9 5.1%
Adjusted operating result 10.2 2.8% 7.7 2.2%
Operating result 10.6 2.9% 6.1 1.7%
* The reported figure for domestic freight excludes food
logistics
161152
0
50
100
150
200
Addressed letters
4-6 2017 4-6 2018
-5%
9.3
10.5
0
2
4
6
8
10
12
Parcels
+13%
0.580.63
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Domestic freight*
+7%
Volumes, million pcs
Net sales of Mail and Marketing Services, Press Services,
Parcel Services and Logistics ServicesApril-June 2018
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EUR million
150,6
41,4
68,1
92,7
152,4
41,7
71,6
97,6
MAIL AND MARKETING SERVICES
PRESS SERVICES PARCEL SERVICES LOGISTICS SERVICES
4-6 2017 4-6 2018
+0.9%+1.2%+5.2% +5.2%
• The Mail and Marketing Services net sales were at the previous year level, driven by pricing and product mix changes.
• The Press revenue was supported by the acquisition at the end of May 2017.
• Strong volume growth, especially in B2C continued to drive parcel net sales growth. However, the net sales growth was below volume growth due to
product mix changes, the average price, and a decrease of small items that are not included in volumes.
• Logistics net sales grew by 3.5%. Warehouse fill rates also improved.
• The adjusted EBITDA declined to 6.5%. The result decrease was driven by increased employee costs driven by the collective labor agreement and lower
margins in logistics. In addition, the Q1 results included approximately EUR 3 million for items that are not expected to continue. The business mix
continued to move towards parcel and logistics. EBITDA increased to EUR 48.1 million supported by gains of sales and less restructuring costs.
• Special items improved the operating result by EUR 0.8 million. The special items include EUR 2.0 million gain on the divestment of debt collection
business in Scandinavia.
Mail, Parcel and Logistics ServicesJanuary-June: Net sales in moderate growth despite of mail volume decline
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Posti Group Corporation19 * The reported figure for domestic freight excludes food
logistics
EUR million 1-6 2018% of
Net sales1-6 2017
% of
Net sales
Net sales 728.1 714.6
Net sales change, % 1.9% 4.0%
Adjusted EBITDA 47.3 6.5% 50.9 7.1%
EBITDA 48.1 6.6% 47.9 6.7%
Adjusted operating result 26.2 3.6% 27.4 3.8%
Operating result 27.0 3.7% 24.3 3.4%
349322
0
100
200
300
400
Addressed letters
1-6 2017 1-6 2018
-8%
18.720.9
0
5
10
15
20
25
Parcels
+12%
1.111.18
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Domestic freight*
+6%
Volumes, million pcs
Net sales of Mail and Marketing Services, Press Services,
Parcel Services and Logistics ServicesJanuary-June 2018
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Posti Group Corporation20
EUR million
315,0
83,0
137,1
183,7
313,9
83,8
143,4
190,2
MAIL AND MARKETING SERVICES
PRESS SERVICES PARCEL SERVICES LOGISTICS SERVICES
1-6 2017 1-6 2018
+0.9%-0.3%+4.6% +3.5%
Itella RussiaApril-June: net sales at the previous year’s level
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Posti Group Corporation21
• Itella Russia’s net sales measured in local currency was flat at 0.1%. Reported euro-denominated net sales decreased by 15.1% to EUR
24.8 million due to currency translation effects. The transport business growth was double-digit and Contract Logistics exhibited a stable
development versus last year. The divestment of Maxipost during Q2 impacted negatively on net sales.
• The adjusted operating result improved to EUR 0.6 million. The improvement in the result was driven by capacity optimization in
warehousing as well as profitable growth in transport.
• The average fill rate for warehouses in Moscow was 86%, while in other regions it was 69%.
• On April 24, 2018, Itella Russia divested its MaxiPost courier business to the Moscow-based Strategic Business Alliance. According to its
strategy, Itella Russia focuses on its core businesses, contract logistics and transportation.
EUR million 4-6 2018% of
Net sales4-6 2017
% of
Net sales
Net sales 24.8 29.2
Net sales change, % -15.1% 15.9%
Adjusted EBITDA 2.1 8.4% 0.1 0.5%
EBITDA 2.0 8.1% 0.1 0.2%
Adjusted operating result 0.6 2.3% -1.7 -5.9%
Operating result 0.5 2.1% -1.8 -6.2%
Itella RussiaJanuary-June: Itella Russia turned profitable first time since 2014
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• Itella Russia’s net sales measured in local currency grew by 4.3%. Reported euro-denominated net sales decreased by 9.1% to 51.6 million
euros due to currency translation effects. The growth in net sales (measured in local currency) was attributable to higher volumes in the
warehouses and transport, as well as to the stabilization in the economy.
• The adjusted EBITDA increased to 6.0%. Itella Russia continues to implement measures to improve its EBITDA.
• The adjusted operating result improved and was EUR 0.0 million. The improvement in the result was driven by a release of provisions,
higher efficiency and an increase in handling and transport volumes.
• The average fill rate for warehouses in Moscow was 85%, while in other regions it was 73%.
• The operating result was EUR 0.6 million.
Warehouse fill rates at the end of the period
92%86%
83%
77%
89%
86%
77%80%
75% 75%
87%
85%
90%
89%
86% 86%
69%
76%
81% 84%
85%
90%
86%89%
85%82%
77%74%
67%
82%
75%
69%
50%
60%
70%
80%
90%
100%
Moscow Other areas
EUR million 1-6 2018% of
Net sales1-6 2017
% of
Net sales
Net sales 51.6 56.7
Net sales change, % -9.1% 22.8%
Adjusted EBITDA 3.1 6.0% 1.0 1.8%
EBITDA 3.9 7.5% 1.0 1.7%
Adjusted operating result 0.0 0.0% -2.7 -4.8%
Operating result 0.6 1.1% -2.8 -4.9%
OpusCapitaApril-June: OpusCapita started a restructuring program
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Posti Group Corporation23
• OpusCapita net sales grew by 0.7%.
• Adjusted EBITDA increased to EUR -1.0 million due to saving actions.
• EBITDA declined to EUR -1.7 million. EBITDA was burdened by a EUR 0.6 million restructuring program related special item.
• The adjusted operating result improved to EUR -2.1 million, -13.0%.
• OpusCapita announced a restructuring program on May 3, 2018, to strengthen the company´s finances. The aim is to refocus
OpusCapita´s internal resources to support continued investments in product development and further enhancement of the customer
experience. As a part of the restructuring program, OpusCapita finalized cooperation negotiations in several of its operating countries.
EUR million 4-6 2018% of
Net sales4-6 2017
% of
Net sales
Net sales 16.2 16.1
Net sales change, % 0.7% 3.2%
Adjusted EBITDA -1.0 -6.3% -1.3 -7.8%
EBITDA -1.7 -10.2% -1.3 -7.8%
Adjusted operating result -2.1 -13.0% -2.6 -16.3%
Operating result -2.7 -16.8% -2.6 -16.3%
OpusCapitaJanuary-June: improvement in the adjusted operating result
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• OpusCapita net sales declined by 1.3%. The net sales declined in paper based transaction products as well as in Professional Services
project deliveries. SaaS conversion continued successfully especially in the Cash Management product line.
• Adjusted EBITDA declined to EUR -2.0 million. EBITDA declined to EUR -2.8 million due to restructuring related special items.
• The adjusted operating result improved to EUR -3.8 million.
• The operating result declined to EUR -34.7 million. As a result of management evaluation OpusCapita’s business plan, including the
execution schedule and required investments to implement the plan and the risk-premium of the discount rate, an impairment loss on
goodwill of EUR 30.0 million was recognized in the first quarter of the year.
EUR million 1-6 2018% of
Net sales1-6 2017
% of
Net sales
Net sales 31.7 32.1
Net sales change, % -1.3% 11.1%
Adjusted EBITDA -2.0 -6.2% -1.9 -6.0%
EBITDA -2.8 -8.9% -1.9 -6.0%
Adjusted operating result -3.8 -12.1% -4.7 -14.5%
Operating result -34.7 -109.4% -4.7 -14.5%
Financial targets
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Posti Group Corporation25
Dividend policy and long term financial targets
Dividend policy
In May the Board of Directors has adopted a dividend policy pursuant to which the Company targets to pay
out a continuously increasing ordinary dividend.
Financial targets
Posti’s Board of Directors has also set in May the following long-term financial targets for Posti’s operations:
• Adjusted operating result percentage of 4 percent;
• Net debt / Adjusted EBITDA less than 2.0x
• Strict management of free cash flow
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Outlook 2018
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Outlook 2018
Net sales
• The net sales in 2018 are
expected to remain on a
par with 2017 or
decrease slightly.
• The development of
exchange rates,
especially the ruble
exchange rate, may affect
the Group’s net sales,
result and balance sheet.
Operating result
• The Group’s adjusted
operating result is
expected to remain on a
par with 2017 or
decrease slightly.
Capital expenditure
• Capital expenditure,
excluding acquisitions
and disposals, is
expected to decrease
slightly.
The Group’s business is
characterized by seasonality.
Net sales and operating profit
in the segments are not
accrued evenly over the year.
In postal services and
consumer parcels, the first
and fourth quarters are
typically strong, while the
second and third quarters are
weaker.
• Outlook for 2018 has not been changed.
Thank you!
25.7.2018
Posti Group Corporation29