Presentation of interim report Q2 2016
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PostNord reported financial results for the second quarter of 2016, with net sales declining 1% to SEK 9,590 million. Adjusted EBIT was SEK -1 million, down from SEK 33 million in the prior year, due to declining mail volumes and increased costs. Mail volumes fell 8% overall compared to the second quarter of 2015. However, parcel volumes rose 9% due to continued growth in e-commerce. Net debt increased to SEK 1,020 million as a result of pension obligations. Cost-cutting programs were ongoing to adapt to the lower mail volumes.
Presentation of interim report Q2 2016
- 1. Second quarter 2016 August 12, 2016
- 2. 2 Overview – results PostNord AB (publ), Q2 2016 SEKm Q2 2016 Q2 2015 H1 2016 H1 2015 FY 2015 Net sales 9,590 9,666 -1% 19,228 19,699 -2% 39,351 EBITDAI 213 934 917 1,697 2,436 Adjusted EBIT 1) -1 33 299 345 927 EBIT -270 503 30 815 564 Net income for the period -282 390 -63 593 278 Cash flow from operating activities 387 -127 598 1,013 1,670 Net debt 1,020 743 1,020 743 -171 1) Adjusted for items affecting comparability. For more information, please refer to the interim report for January-June 2016.
- 3. Second quarter 2016 3PostNord AB (publ), Q2 2016 Market trends: − Mail volumes continuing to decline − Continued growth in e-commerce − Tough competition in the logistics market − Weak economy in Norway and Finland New postal legislation in Denmark – new postal services from July 1 Swedish inquiry into postal legislation ongoing SEK 2 billion credit facility refinanced G.P. Forwarding acquired in Denmark PostNord Strålfors signed an agreement to divest its non- Nordic operations PostNord’s environmental target approved by Science Based Targets
- 4. Trends in the market 4 Mail volumes fell by a total of 8% compared to Q2 2015 • -17% in Denmark • -6% in Sweden Parcel volumes rose by a total of 9% compared to Q2 2015 • E-commerce-related B2C parcels increased 15% MAIL, MILLIONS OF UNITS PARCELS, MILLIONS OF UNITS PostNord AB (publ), Q2 2016 0 50 100 150 200 250 300 350 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 Sweden,priority mail Sweden,non-priority mail Denmark, priority mail Denmark, non-priority and C-mail 0 10 20 30 40 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 Parcels,total
- 5. PostNord, Group FOCUS MAINTAINED ON HARMONIZED OFFERING IN THE NORDICS AND READJUSTMENT OF MAIL OPERATIONS. 5 NET SALES AND EBIT MARGIN -4 -2 0 2 4 6 8 10 0 2,000 4,000 6,000 8,000 10,000 12,000 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Net sales, MSEK EBIT-margin, % PostNord AB (publ), Q2 2016 Net sales SEK 9,590m (9,666) – Net sales fell 1%, excluding currency effects and acquisitions – Decreasing mail volumes, growth in e-commerce services and continued tough competition in the logistics market Adjusted EBIT SEK -1m (33), EBIT SEK -270m (503) – Items affecting comparability, net, SEK -269m (470), consisting primarily of items relating to the sale of Strålfors’ non-Nordic operations. – Cost-cutting programs completed brought operating costs down – Ongoing adjustments and efficiency improvements are being implemented to meet declining mail volumes
- 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 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Net sales, MSEK EBIT-margin, % NET SALES AND EBIT MARGIN PostNord AB (publ), Q2 2016 Net sales increased by 1% – Mail volumes decreased by a total of 6% – Increased sales for eCommerce & Logistics, mainly through continued growth in e-commerce. Adjusted EBIT SEK 91m (173), EBIT SEK 76m (173) – Costs adapted to lower volumes – Negative impact of increased social insurance costs for young people
- 7. PostNord Denmark 7 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 0 1,000 2,000 3,000 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Net sales, MSEK EBIT-margin, % NET SALES AND EBIT MARGIN Net sales fell by 1% – Mail volumes fell by 17% – Price adjustment for priority mail partly offset volume decline – Higher volumes of B2C parcels – Positive growth for heavy logistics Adjusted EBIT SEK -222m (-202), EBIT SEK -253m (298) – Lower mail income not yet fully offset through cost adjustments. – Wide-ranging action program in progress PostNord AB (publ), Q2 2016
- 8. PostNord Norway 8 -6 -4 -2 0 2 4 6 8 10 0 500 1,000 1,500 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Net sales, MSEK EBIT-margin, % NET SALES AND EBIT MARGIN Net sales decreased by 9%, and by 2% excluding currency effects and acquisitions – The logistics market was affected by weak growth in the Norwegian economy, in turn caused by the steep drop in the price of oil. EBIT SEK -4m (-5) – Wide-ranging program to reduce costs is in progress to offset the decline in revenue. PostNord AB (publ), Q2 2016
- 9. PostNord Finland 9 -6 -4 -2 0 2 4 6 8 10 0 100 200 300 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Net sales, MSEK EBIT-margin, % NET SALES AND EBIT MARGIN Net sales rose by 44% percent, and by 11% excluding currency effects and acquisitions – Increase in parcel volumes EBIT SEK -3m (-1) – Integration costs related to the acquisition of Uudenmaan Pikakuljetus Oy (UPK) in Finland charged to earnings PostNord AB (publ), Q2 2016
- 10. PostNord Strålfors 10 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 0 200 400 600 800 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Net sales, MSEK EBIT-margin, % NET SALES AND EBIT MARGIN Net sales rose by 3%, and by 7% excluding exchange rates and acquisitions – Increased sales under new customer agreements in Finland and Norway Adjusted EBIT SEK 34m (8), EBIT SEK -189m (8) – Income affected by items related to the ongoing sale of non- Nordic operations – Improvement in adjusted operating income explained by cost-cutting programs implemented PostNord AB (publ), Q2 2016 * Adjusted EBIT margin *
- 11. SEK 9,722m 11 Trend of costs *Excluding restructuring costs GROUP’S OPERATING COSTS, SEKmTREND OF GROUP’S COSTS 0 2,000 4,000 6,000 8,000 10,000 12,000 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Restructuring costs Other expenses, depreciation and impairments* Transportation expenses Personnel expenses* *Including cost inflation -1% +3% -1%+1% 9,936 SEKm PostNord AB (publ), Q2 2016
- 12. 12 Trend of cash flow CASH FLOW, SECOND QUARTER 2016, SEKm PostNord AB (publ), Q2 2016 -13 Cash flow from operating activities SEK 387m (SEK -127m) Cash flows from investing activities SEK -622m (SEK -208m) − Cash and cash equivalents of SEK 300m were invested in commercial paper − Investments in tangible and intangible non- current assets consist mainly of investments in infrastructure for the integrated production model Cash flow for the period SEK -255m (SEK 1,017m) 53 334 -622 -20 -300 -200 -100 0 100 200 300 400 500 FFO Change in working capital Investments Financing
- 13. 13 Net debt SEKm June 30, 2016 Mar. 31, 2016 Dec. 31, 2015 Interest-bearing debt 3,854 3,849 3,840 Pensions and disability pension plans -620 -1,051 -1,867 Long- and short-term investments -560 -254 -250 Cash and cash equivalents -1,654 -1,905 -1,894 Net debt 1,020 639 -171 Net debt/EBITDAI, times 0.3 0.3 -0.1 Net debt ratio, % 7 7 -2 Financial preparedness 3,955 3,905 3,894 Net debt increased by SEK 381 to SEK 1,020 – Affected by revaluation of pension obligations as a result of lower discount rate Financial preparedness amounting to SEK 3,955m, of which cash and cash equivalents total SEK 1,654m PostNord AB (publ), Q2 2016
- 14. 14 Credit profile Credit Total amount SEK bn Amount utilized SEK bn Revolving credit facility, maturing in 2019, SEK 2.0 0.0 Commercial paper, SEK 3.0 0.0 Credit institutions 1.5 0.7 MTN bonds, SEK 6.0 2.9 Total utilized, June 30, 2016 3.6 Credit lines with short maturity 0.1 MATURITY STRUCTURE, JUNE 30, 2016, SEKmOVERVIEW OF LINES OF CREDIT, JUNE 30, 2016 0 500 1,000 1,500 2,000 2,500 2016 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. PostNord AB (publ), Q2 2016
- 15. Area Key ratio Outcome Dec. 31, 2015 Target Profitability Return on capital employed (ROCE) -2.3% 10.5% Capital structure Net debt ratio 13% 10-50% Dividend policy Dividend 2016: No dividend 2015: No dividend 40-60% of net income for the year (guide value 50%) 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), Q2 2016
- 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 AB (publ), Q2 2016
- 17. 17 postnord.com Gunilla Berg, CFO, +46 10 436 28 10 Per Mossberg, Chief Communications Officer, +46 10 436 39 15 ir@postnord.com PostNord AB (publ), Q2 2016