Presentation of interim report Q1 2017
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PostNord reported lower revenues and profits in the first quarter of 2017 compared to the same period last year. Net sales decreased 4% to SEK 9.3 billion due to declining mail volumes and increased competition in logistics. Adjusted EBIT fell 37% to SEK 191 million as cost reductions did not fully offset the loss of mail revenues. A new financially sustainable production model is being introduced in Denmark to adapt to continuing digitization trends. Overall, the company continues its transformation efforts to improve profitability through further cost adjustments amid declining mail volumes.
Presentation of interim report Q1 2017
- 1. First quarter 2017 April 28, 2017
- 2. 2 Overview – results PostNord AB (publ), Q1 2017 SEKm Q1 2017 Q1 2016 2 FY 2016 Net sales 9,348 9,638 -4% 38,478 Adjusted EBIT1 191 300 500 EBIT 94 300 -1,083 Net income for the period 16 219 -1,583 Cash flow from operating activities 990 189 1,321 Net debt -688 639 354 1Adjusted for items affecting comparability. For more information, please refer to the Interim report for the first quarter 2017. 2Change excluding acquisitions/divestments and currency.
- 3. First quarter 2017 3PostNord AB (publ), Q1 2017 Market trends: − Growing digitization, mail volumes continuing to decline − Continued growth in e-commerce − Tough competition in the logistics market Decision to introduce a new financially sustainable production model in Denmark and to continue to reduce the Group’s administrative costs. New Swedish Postal Services Act announced for May
- 4. Trends in the market 4 Mail volumes fell by a total of 8% compared with Q1 2016 • -17% in Denmark • -7% in Sweden Parcel volumes rose by a total of 9% compared with Q1 2016 • E-commerce-related B2C parcels increased by 10% MAIL, MILLIONS OF UNITS PostNord AB (publ), Q1 2017 PARCELS, MILLIONS OF UNITS 0 50 100 150 200 250 300 350 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 Sweden,priority mail Sweden,non-priority mail Denmark, priority mail/ Quickbrev Denmark, non-priority and C-mail 0 10 20 30 40 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17
- 5. PostNord, Group QUALITY BACK ON A HIGH LEVEL THE TRANSFORMATION FOR SUSTAINABLE PROFITABILITY CONTINUES. 5 NET SALES AND EBIT MARGIN -12 -7 -2 3 8 0 2,000 4,000 6,000 8,000 10,000 12,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Net sales, SEKm EBIT margin (%) PostNord AB (publ), Q1 2017 Net sales SEK 9,348m (9,638) − Net sales decreased by 4% excluding currency effects, acquisitions and disposals − Growing digitization, decreasing mail volumes, growth in e- commerce-related services Adjusted EBIT SEK 191m (300), EBIT SEK 94m (300) − Items affecting comparability, SEK -97 m (-), relates to the transformation of the Danish operations − Continued cost adjustments to meet the decline in mail volumes − A new financially sustainable production model is being introduced in Denmark
- 6. PostNord Sweden 6 0 2 4 6 8 10 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN PostNord AB (publ), Q1 2017 Net sales decreased by 2% – Mail volumes decreased by a total of 7% – Increased sales for eCommerce & Logistics, mainly through continued growth in e-commerce, and pallets and mixed cargo groupage. EBIT SEK 119m (198) – The decline in the mail business could not be fully offset by growth in logistics – Further major cost reductions
- 7. PostNord Denmark 7 -60 -50 -40 -30 -20 -10 0 10 0 1,000 2,000 3,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales fell by 10% excluding currency effects and acquisitions – Mail volumes fell by 17% – Positive growth for e-commerce , pallets and mixed cargo groupage Adjusted EBIT SEK -121m (-51), EBIT SEK -218m (-51) – Continued strong trend of digitization – Lower mail income not offset through cost adjustments – A new financially sustainable production model will be introduced PostNord AB (publ), Q1 2017
- 8. PostNord Norway 8 -4 -3 -2 -1 0 1 2 3 4 0 500 1,000 1,500 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales decreased by 3% excluding currency effects and acquisitions – Price pressure and terminations of unprofitable customer agreements in thermo EBIT SEK 16m (-1) – Robust cost adjustments and increased flexibility in meeting volume fluctuations PostNord AB (publ), Q1 2017
- 9. PostNord Finland 9 -6 -5 -4 -3 -2 -1 0 1 2 0 100 200 300 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales rose by 7% excluding currency effects and acquisitions – Increase in parcel volumes EBIT SEK 1m (-12) – Q1 2016 affected by costs related to the acquisition of Uudenmaan Pikakuljetus Oy (UPK) PostNord AB (publ), Q1 2017
- 10. PostNord Strålfors 10 0 1 2 3 4 5 6 7 8 9 10 0 200 400 600 800 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales fell by 2%, excluding exchange rates, acquisitions and divestments – Increase in digital communication offerings and market communication largely compensated for a general decline in physical communication EBIT SEK 53m (34) – The improvement was due to good control of costs, lower staffing levels and an increase in digital communication PostNord AB (publ), Q1 2017 *Adjusted EBIT margin *
- 11. SEK 9,392m 11 Trend of costs *Excluding restructuring costs GROUP’S OPERATING COSTS, SEKmTREND OF GROUP’S COSTS PostNord AB (publ), Q1 2017 0 2,000 4,000 6,000 8,000 10,000 12,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Restructuring costs Other expenses, depreciation and impairments* Transportation expenses Personnel expenses* *Including cost inflation -3% +2% +2%-1% SEK 9,324m
- 12. 12 Trend of cash flow CASH FLOW, FIRST QUARTER 2017, SEKm PostNord AB (publ), Q1 2017 -13 Cash flow from operating activities SEK 990m (189) – Positively affected by a compensation from Postens Pensionsstiftelse (the Posten Pension Fund) and a positive change in working capital Cash flows from investing activities SEK -421m (-188) − Investments focused mainly on the integrated production model and IT development. − Cash and cash equivalents of SEK 150m were invested in commercial paper Cash flow for the period SEK 568m (10) 345 645 -421 -1 0 200 400 600 800 1,000 1,200 FFO Change in working capital Investments Financing
- 13. 13 Net debt SEKm Mar 31, 2017 Dec 31, 2016 Sept 30, 2016 Interest-bearing debt 3,743 3,745 3,863 Pensions and disability pension plans -1,520 -1,201 158 Long- and short-term investments -765 -613 -613 Cash and cash equivalents -2,146 -1,577 -625 Net debt -688 354 2,783 Net debt/EBITDAI, times -0.5 0.2 1.9 Net debt ratio, % -9 5 39 Financial preparedness 5,646 4,927 3,975 Net debt decreased by SEK 1,042m to SEK -688m – Affected by positive return of pension obligations and positive cash flow Financial preparedness amounting to SEK 5,646m, of which cash and cash equivalents total SEK 2,146m PostNord AB (publ), Q1 2017
- 14. 14 Credit profile Credit Total amount SEK bn Amount utilized SEK bn Revolving credit facility, maturing in 2019 2.0 0.0 Bridging facility maturing in 2018 1.0 0,0 Commercial paper 3.0 0.0 Credit institutions 1.5 0.6 MTN bonds 6.0 2.95 Total utilized, March 31, 2017 3.6 Credit lines with short maturity 2.0 MATURITY STRUCTURE, MARCH 31, 2017, SEKmOVERVIEW OF LINES OF CREDIT, MARCH 31, 2017 0 500 1,000 1,500 2,000 2,500 2017 2018 2019 2020- Overdraft credit Credit institutions MTN bonds An undrawn revolving credit facility (RCF) of SEK 2.0bn is in place, maturing in 2019. An undrawn bridging facility (RCF) of SEK 1.0bn is in place, maturing in 2018. PostNord AB (publ), Q4 2016
- 15. Area Key ratio Outcome Dec. 31, 2016 Target Profitability Return on capital employed (ROCE) -15% 10.5% Capital structure Net debt ratio -9% 10-50% Dividend policy Dividend 2017: No dividend 40-60% of net income for the year Financial targets 15 The targets are long-term and are to be assessed over a period of 3-5 years. The financial targets were adopted at the 2014 AGM PostNord AB (publ), Q1 2017
- 16. 16 Disclaimer This document does not contain an offer of securities in the United States or any other jurisdiction; securities may not be offered or sold in the United States absent registration or exemption from the registration requirements under the U.S. Securities Act of 1933, as amended. Any offer of securities will be made, if at all, by means of a prospectus or offering memorandum issued by PostNord. Forward-looking statements Statements made in this document relating to future status or circumstances, including future performance and other trend projections 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. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of PostNord. Forward-looking statements herein apply only as at the date of this document. PostNord will not undertake any obligation to publicly update or revise these forward-looking statements to reflect future events, new information or otherwise except as required by law. postnord.com Gunilla Berg, CFO, +46 10 436 28 10 Per Mossberg, Chief Communications Officer, +46 10 436 39 15 ir@postnord.com