Presentation of interim report Q3 2016
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Third quarter 2016 results for PostNord AB: - Net sales decreased 4% to SEK 8,895 million due to declining mail volumes and tough competition, while parcel volumes grew 8%. - Adjusted EBIT was SEK -41 million, down from SEK 81 million, as cost reductions have not fully offset lost mail revenue. - Net debt increased to SEK 2,783 million due to pension obligations and negative cash flow, though the company has SEK 3,975 million in available credit lines and cash.
Presentation of interim report Q3 2016
- 1. Third quarter 2016 October 28, 2016
- 2. 2 Overview – results PostNord AB (publ), Q3 2016 SEKm Q3 2016 Q3 2015 9M 2016 9M 2015 FY 2015 Net sales 8,895 9,218 -4% 28,123 28,917 -3% 39,351 EBITDAI 262 461 1,180 2,158 2,436 Adjusted EBIT 1) -41 81 258 426 927 EBIT -101 33 -71 848 564 Net income for the period -145 22 -208 615 278 Cash flow from operating activities -634 -264 -36 749 1,670 Net debt 2,783 1,308 2,783 1,308 -171 1) Adjusted for items affecting comparability. For more information, please refer to the interim report for January-September 2016.
- 3. Third quarter 2016 3PostNord AB (publ), Q3 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 PostNord Strålfors divested its non-Nordic operations
- 4. Trends in the market 4 Mail volumes fell by a total of 8% compared to Q3 2015 • -17% in Denmark • -6% in Sweden Parcel volumes rose by a total of 8% compared to Q3 2015 • E-commerce-related B2C parcels increased approx 20 % MAIL, MILLIONS OF UNITS PARCELS, MILLIONS OF UNITS PostNord AB (publ), Q3 2016 0 50 100 150 200 250 300 350 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 Sweden,priority mail Sweden,non-priority mail Denmark, priority mail Denmark, non-priority and C-mail 0 10 20 30 40 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16
- 5. PostNord, Group CONTINUED MAJOR CHALLENGES BEING MET BY INCREASED RESPONSIVENESS AND FURTHER READJUSTMENTS 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 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net sales, SEKm EBIT margin (%) PostNord AB (publ), Q3 2016 Net sales SEK 8,895m (9,218) – Net sales fell 4%, excluding currency effects, acquisitions and divestments – Decreasing mail volumes, growth in e-commerce services and continued tough competition in the logistics market Adjusted EBIT SEK -41m (81), EBIT SEK -101m (33) – Items affecting comparability, net, SEK -60m (-48), consisting primarily of items relating to the sale of Strålfors’ non-Nordic operations. – 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 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN PostNord AB (publ), Q3 2016 Net sales decreased by 2% – Mail volumes decreased by a total of 6% – Increased sales for eCommerce & Logistics, mainly through continued growth in e-commerce but also from TPL and fulfilment services. Adjusted EBIT SEK 47m (186), EBIT SEK 47m (167) – Costs not yet fully 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 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales fell by 7% excluding currency effects and acquisitions – Mail volumes fell by 17% – Higher volumes of B2C parcels – Positive growth for heavy logistics Adjusted EBIT SEK -209m (-149), EBIT SEK -209m (148) – Lower mail income not yet fully offset through cost adjustments. – Wide-ranging action program in progress PostNord AB (publ), Q3 2016
- 8. PostNord Norway 8 -6 -4 -2 0 2 4 6 8 10 0 500 1,000 1,500 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales decreased by 5% excluding currency effects and acquisitions – Weak demand as a result of slack growth in the Norwegian economy – Pressure on prices in the logistics market. EBIT SEK -21m (-31) – Wide-ranging program to reduce costs is in progress to offset the decline in revenue. PostNord AB (publ), Q3 2016
- 9. PostNord Finland 9 -6 -4 -2 0 2 4 6 8 10 0 100 200 300 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales rose by 22% percent, and by 3% excluding currency effects and acquisitions – Increase in parcel volumes EBIT SEK 0m (4) – Increase in transportation costs and integration costs related to the acquisition of Uudenmaan Pikakuljetus Oy (UPK) PostNord AB (publ), Q3 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 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net sales, SEKm EBIT margin (%) NET SALES AND EBIT MARGIN Net sales fell by 4%, and rose by 5% excluding exchange rates acquisitions and divestments – Increased sales under new customer agreements in Finland and from digital communication services Adjusted EBIT SEK 28m (23), EBIT SEK -21m (23) – Income affected by items related to sale of non-Nordic operations – Improvement in adjusted operating income explained by cost-cutting programs implemented PostNord AB (publ), Q3 2016 * Adjusted EBIT margin *
- 11. 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 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Restructuring costs Other expenses, depreciation and impairments* Transportation expenses Personnel expenses* *Including cost inflation -3% +0% +0%+0% SEK 9,066m PostNord AB (publ), Q3 2016 SEK 9,244m
- 12. 12 Trend of cash flow CASH FLOW, THIRD QUARTER 2016, SEKm PostNord AB (publ), Q3 2016 -13 Cash flow from operating activities SEK -634m (SEK -264m) Cash flows from investing activities SEK -384m (SEK 252m) − Cash and cash equivalents of SEK 50m 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 -1,032m (SEK -2m) 2 -636 -384 -14 -1,200 -1,000 -800 -600 -400 -200 0 200 FFO Change in working capital Investments Financing
- 13. 13 Net debt SEKm Sep 30, 2016 June 30, 2016 Mar. 31, 2016 Interest-bearing debt 3,863 3,854 3,849 Pensions and disability pension plans 158 -620 -1,051 Long- and short-term investments -613 -560 -254 Cash and cash equivalents -625 -1,654 -1,905 Net debt 2,783 1,020 639 Net debt/EBITDAI, times 1.9 0.3 0.3 Net debt ratio, % 39 7 7 Financial preparedness 3,975 3,955 3,905 Net debt increased by SEK 1,763 to SEK 2,783m – Affected by revaluation of pension obligations and negative cash flow Financial preparedness amounting to SEK 3,975m, of which cash and cash equivalents total SEK 625m PostNord AB (publ), Q3 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 Bridge facility maturing in 2018, SEK 1.0 Commercial paper, SEK 3.0 0.0 Credit institutions 1.5 0.7 MTN bonds, SEK 6.0 2.9 Total utilized, September 30, 2016 3.6 Credit lines with short maturity 2.1 MATURITY STRUCTURE, SEPTMEBER 30, 2016, SEKmOVERVIEW OF LINES OF CREDIT, SEPTEMBER 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. An undrawn bridging facility (RCF) of SEK 1.0bn is in place, maturing in 2018. PostNord AB (publ), Q3 2016
- 15. Area Key ratio Outcome Sep. 30, 2016 Target Profitability Return on capital employed (ROCE) -3.8% 10.5% Capital structure Net debt ratio 39% 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), Q3 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), Q3 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), Q3 2016