Update Vision 2015 Q2 & HY 2010 Results · Update Vision 2015 Q2 & HY 2010 Results Analyst...
Transcript of Update Vision 2015 Q2 & HY 2010 Results · Update Vision 2015 Q2 & HY 2010 Results Analyst...
Update Vision 2015Q2 & HY 2010 ResultsAnalyst PresentationPeter Bakker, CEOBernard Bot, CFO2 August 2010
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Today’s announcement
• CFO
• Q2 & HY 2010 Results
• Vision 2015
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Bernard Bot, Chief Financial Officer
Effective 2 Augustus 2010, appointment to member of Board of Management will be notified to shareholders in upcoming AGM in April 2011
Works for TNT since 2005 within FinanceBusiness ControlM&ARisk ManagementLeading major corporate projects
Prior to joining TNT: partner at McKinsey & Company (primarily post, transport and logistics sectors)
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Q2 results highlights
GROUP• Operating income € 55 million after initial € 168 million net
Master plan III provision• Underlying* operating income € 211 million • Profit attributable to shareholders € 3 million • Cash, as expected, below prior year mainly due to phasing of taxes paid
and changes in working capital• Interim 2010 dividend of € 28 cents per share
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Q2 results highlights
EXPRESS• Underlying* revenues increase of € 150 million (+10.3%)• Underlying* operating income € 73 million up 15.9%• Volumes back around 2007 levels (core kilos +9.5% versus Q2 2009)• Yield (excl fuel surcharge) down 2%
MAIL• Underlying* revenues decline of € 28 million (-2.7%)• Underlying* operating income € 136 million (€ 139 million in Q2 2009)• Addressed mail volumes in the Netherlands declined by 8.4% (corrected
for working days), Parcel volumes grew by more than 10%• Final restructuring programme (Master plan III) announced
* The underlying figures are at constant currency and exclude the impact of working days and one-offs (Express: €3m restructurings,€2m book gain aircrafts; Mail €6m positive outcome OPTA case, €3m book gain sale subsidiaries, € 168 million net Master plan III provision; Group: €4m Vision 2015 projects) in 2010 and the impact of restructuring related costs/one-offs in 2009.
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Consensus GDP forecast Europe eases
Development of forecast consensus GDP growth (%)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jan09
Feb09
Mar09
Apr09
May09
Jun09
Jul09
Aug09
Sep09
Oct09
Nov09
Dec09
Jan10
Feb10
Mar10
Apr10
May10
Jun10
US 2010E consensus Europe 2010E consensus
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Margin improvement through yield and cost management
Update Vision 2015
Volumes back at around 2007 levels, though yield (excl fuel surcharge)
and temporary cost pressures exist
Roll-out of additional owned Asia-Europe capacity to correct over-reliance on commercial linehaul
Express summary
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Volumes continue to improve
* Average per working day
Express 2010 volumes versus prior year and 2007 (%)
-15%
-10%
-5%
0%
5%
10%
15%
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Core kilos* versus prior yearCore cons* versus prior yearCore cons* versus 2007
Core kilos* versus 2007
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Express underlying revenues up € 150 million
Underlying revenues development € millions
Note: indicative only
1,600 1,450 Other
Underlying Q2 2010
Emerging Platforms
Fuel surchargePrice
Volume impact (cons)
Underlying Q2 2009
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Express underlying operating income increase € 10 million
Operating income development € millions
Actions taken
Note: indicative only* Excluding Brazil and commercial air linehaul
Comm air linehaul
7363Other
Underlying Q2 2010Brazil
Emerging Platforms*
Cost per conPrice
Volume impact (cons)
Underlying Q2 2009
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Margin improvement through yield and cost management
• Customer mix
• Product mix
• Pricing pressure
Yield
Cost• Mostly outside core markets• Commercial linehaul• Brazil• Higher cost inflation and
investments in emerging markets
• +3.5% price announcement• Up-rating of underperforming
contracts• Rebalancing customer portfolio• Implementation of an improved
pricing mechanism for significant part of the customer base
• Roll-out of additional owned Asia-Europe capacity
• Further roll-out LEAN and GO efficiency programmes to outside Europe
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Mail summary
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Strong performance Emerging Mail & Parcels
Master plan savings € 25 million
Master plan III: final restructuringprogramme announced,
€ 168 million net provision established
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Master plan III: final restructuring in Mail Netherlands
2009
2010
2012
2015
Inform and prepareFirst
steps
Continued roll-out
Fundamental cost-base transformation• Significant decrease of full time jobs• Socially responsible implementation
via forced and voluntaryredundancies and attrition
Infrastructure efficiencies and streamlining
operational processes
Introduction of three peak days of deliveryCentralisation of bag-level sortation
Migration of labour costs towards market conforming levels
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Outlook 2010
Modest improvement European economyGlobal economic recovery remains fragile – caution is warrantedFocus on costs and cash will continueO
vera
llE
xpre
ssM
ail
Volumes and revenues expected to be well above 2009 levelsOperating income improvement clearly tempered by yield pressure and cost inflationSpecific yield management and cost reduction actions taken
Addressed volume decline in the Netherlands of 7-9%Master plan savings of € 75 million targetedMail operating income expected to be below 2009 levels, including the impact of higher P&L charges for pensions
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Today’s announcement
• CFO
• Q2 & HY 2010 Results
• Vision 2015
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1 2 3 4 5Emerging PlatformsEmerging Platforms SDSSDSParcels Freight Mail NL EMN
Cost leadership & customer focus
Vision 2015
Vision 2015 was launched on 3 December 2009
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Prevent downside► Structural volume
decline Mail NL► Challenges in
liberalisation and regulation
Accelerate upside► Cyclical and high growth► Develop day-definite
delivery services through cost leadership and customer focus
► Pole position in emerging economies
Vision 2015 has reviewed TNT’s portfolio
Current Mail portfolio + =Current CEP
portfolio
Cyclicality
Group
• Partner option EMN• Dutch parcels• New initiatives
Realise upside
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On 8 April 2010 we announced the carve-out of Mail
Review of best position
Review of best position
Carve-outCarve-out
Business plansBusiness plans
Vendor due diligence
Vendor due diligence
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Today TNT announces intended full separation
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TNT announces its intention to separate fully Express and Mail
The objective:To create two best-in-class operations with strong management and solid capital structures to successfully implement their strategies for the benefit of their shareholders and all stakeholders
This intention is subject to works councilsadvice / opinion
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Conclusions on portfolio
Strategic challenges for Express and Mail increasingly differentMail and Express two successful standalone companiesStrong balance sheet –no synergiesTwo focused investment opportunities
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Express and Mail two successful standalone companies
Four focus areas: Parcels, Freight, SDS and Emerging PlatformsAttractive high-growth opportunities in each focus area confirmedExpansion of leading positions in Europe and Emerging PlatformsBenefit from unique international offering
Track record as one of the best postal operators in the worldEuropean mail activities to concentrate on the large countriesExplore business renewal optionsContinued growth from Dutch parcel unit
ExpressExpress
MailMail
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Separation in stages
Full managerial and organisational internal separation Mail and ExpressImplementation under TNT NV per 1 January 2011
Evaluate capital market transactionRelevant advisors have been appointedExploration will contain a.o. setup of solid capitalstructure review accounting and asset allocation; resolve regulatory issues; request for workerscouncils advicePrepare shareholder approval
Internal separationInternal
separation
Separation of equity
transaction
Separation of equity
transaction
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Next steps
Explore capital market transactionsDesign transitory governanceObtain works councils advice
GroupGroup
Finalise business plans and capital structureDesign “standalone” organisation reflectingbusiness plan
ExpressExpress
Finalise business plans and capital structureDesign “standalone” organisationResolve (USO) regulatory matters
MailMail
Q2 & HY 2010 ResultsBernard Bot, CFO2 August 2010
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Statement of income
367
533
4,972
Underlying*
HY 2009
201
285
2,528
Underlying*
Q2 2009
507579465EBITDA262292136
424
5,226
Underlying*
HY 2010
211
2,657
Underlying*
Q2 2010
43.339.3EPS22.10.7
33.9%36.2%Effective tax rate29.4%70.0%
(84)(85)Income taxes(37)(14)
(81)(71)Net financial (expense) / income
(41)(35)
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55
2,771
ActualQ2 2010
89
178
2,528
Actual Q2 2009
164150Profit for the period
341306Operating income (EBIT)
4,9725,518Revenues
Actual HY 2009
Actual HY 2010€ millions
* The underlying figures are at constant currency and exclude the impact of working days and one-offs (Express: €3m restructurings, €2m book gain aircrafts; Mail €6m positive outcome OPTA case, €3m book gain sale subsidiaries, € 168 million net Master plan III provision; Group: €4m Vision 2015 projects) in 2010 and the impact of restructuring related costs/one-offs in 2009.
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2009 - 2010 impact of one-off charges and fx
(20)(9)(20)(9)Other91689168Restructuring related costs
(2)(2)Other
288
299
86
37
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HY 2009
295
(15)151
132
(10)3
(22)163
HY 2010
136
4(27)
73
(8)3
(6)86
Q2 2010
34Restructuring related costs
Working days
Mail150Reported EBIT
139Underlying EBIT
63Underlying EBIT
Fx
Working days
Express29Reported EBIT
Q2 2009€ millions
2727
Express Q2 underlying
Volumes back at around 2007 levels; yield pressure continuesOperating income growth constrained by specific factorsOverall cost per consignment below volume growth
15.9%6.8%
10.3%
Total
0.9%5.9%117125EBITDA
4.3%4.6%Operating margin0.5%15.4%6373Operating income (EBIT)
1.7%8.6%1,4501,600Revenues
AcqOrganicQ2 2009*Q2 2010*€ millions
* The underlying figures are at constant currency and exclude the impact of working days and one-offs (Express: €3m restructurings,€2m book gain aircrafts) in 2010 and the impact of restructuring related costs/one-offs in 2009.
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Volumes continue to improve
* Average per working day
Express 2010 volumes versus prior year and 2007 (%)
-15%
-10%
-5%
0%
5%
10%
15%
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Core kilos* versus prior yearCore cons* versus prior yearCore cons* versus 2007
Core kilos* versus 2007
10.4%
22.4%
vs Q1 2009
Q1 2010
-2.9%
-4.7%
vs Q1 2007
Q2 2010
13.6%
19.9%
vs Q2 2009
-1.0%
-5.8%
vs Q2 2007
Road volumesAir volumes
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Express yield stabilising
Express yield Rebased to Q1 2007 (excluding fuel surcharge) at comparable rates
90
92
94
96
98
100
102
104
106
Q1-07
Q2-07
Q3-07
Q4-07
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Core revenue quality yield
Core RPC
Core RPK
3030
Mail Q2 underlying
2.4%2.1%
-0.5%
Acq
-2.2%-3.0%-2.7%
Total
-5.4%168163EBITDA
13.6%13.7%Operating margin-4.3%139136Operating income (EBIT)
-2.2%1,020992Revenues
OrgQ2 2009Q2 2010*€ millions
Decrease in underlying revenue of 2.7%, while underlying addressed Mail volumes declined by 8.4%Good organic revenue and profitability growth in Emerging Mail & ParcelsDutch Parcels up more than 10%
* The underlying figures are at constant currency and exclude the impact of working days and one-offs (€6m positive outcome OPTA case, €3m book gain sale subsidiaries, € 168 million net Master plan III provision) in 2010 and the impact of restructuring related costs/one-offs in 2009.
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Volume decline -9.5% or -8.4% (corrected for working days)Limited positive mix effect –bulk vs single-item
Mail NL; addressed mail volumes
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-10%-8%-6%-4%-2%0%
Total
Actual 2009Actual 20102010 corrected for working days and one-off mailings
Q2Q1Q4Q3Q2Q1
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895200695
Target
425198227
Still to go
4702
468
Realised 2001 - 2009€ millions
MPIIIMPI & II
Total
Planning of cost savings and provisions up to 2017
2010 – 2013 2014 – 2017
Financial impact Master plan III
€ 140m € 210m2010€ 75m
Cost savings
Increase provision
Q2 2010€ 168m
Cash out for restructuring
2010 - 2015€ 80m average per year
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Reconciliation Cash EBIT(DA) Mail
6.6%7.4%as percentage of revenues6773Underlying Cash EBIT
(21)(12)Restructuring cash outflow(51)(51)Changes in pension liabilities139136Underlying EBIT
9.3%10.1%as percentage of revenues95100Underlying Cash EBITDA
168163Underlying EBITDA
(12)
(51)
Q2 2010
(21)Restructuring cash outflow
(52)Changes in pension liabilities
Q2 2009
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Net cash generated, free cash flow
483
(102)
18
567
141
(58)
484
99
HY 2009
(70)
(77)
7
0
(191)
(44)
235
(237)
HY 2010
93(61)Changes in working capital
369(72)Free cash flow
(48)(44)Net capex
73Interest received
410(31)Net cash from operating activities
(36)(32)Interest paid
289156Cash generated from operations
157(155)Income taxes paid
Q2 2009Q2 2010€ million
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Net debt development Q2 2010
Net debt € millions
(1,261)34(63)(30)(44)(31)(1,127)(1,387)Dividend 3 Jul 2010
Repayments debt and othersAcquisitionsNet Capex
Net cash from
operating activities3 Apr 201027 Jun 2009
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Coverage ratio main defined benefit pension fund:
• By end of July, coverage ratio has been restored to above the minimum required level
• Full year P&L charge expected to be ~€ 65 million in 2010, cash contributions € 287 million
• Pension fund board has decided on new investment strategy to reduce downside risk
101%End of Q2 2010
108%End of 2009
93%End of 2008
141%End of 2007
Pension developments
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Normalised net income for dividend
Adjustments (net of tax)
Restructuring related costs, positive outcome OPTA case and EMN disposals
Restructuring related costs and aircraft book gains
117Mail:
264Normalised net income
1Express:
146Profit attributable to the shareholders
Actual HY 2010€ millions
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Interim dividend 2010
• Interim dividend over normalised net income in the first half of 2010
• Ex-dividend date is 3 August 2010• Record date is 5 August 2010• Dividend payment date is 20 August 2010
Interim dividend € 0.28
In cashIn ordinary shares
Premium targeted at, but not lower than 2% above
cash dividend
Pro forma pay-out ratio 40% of normalised net income
or
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Outlook 2010
Modest improvement European economyGlobal economic recovery remains fragile – caution is warrantedFocus on costs and cash will continueO
vera
llE
xpre
ssM
ail
Volumes and revenues expected to be well above 2009 levelsOperating income improvement clearly tempered by yield pressure and cost inflationSpecific yield management and cost reduction actions taken
Addressed volume decline in the Netherlands of 7-9%Master plan savings of € 75 million targetedMail operating income expected to be below 2009 levels, including the impact of higher P&L charges for pensions
Oth
er
Structural cost savings: around € 200 millionCapex around € 350 million Pensions: cash contributions defined benefit obligations ~€ 287 millionNet financial expense: around € 140 millionTaxes paid: around € 300 million
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Warning about forward looking statements
Some statements in this presentation are "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.