second quarter 2020/media/files/b/bpost...2020/08/04 · 1 as defined among others under the u.s....

Investor presentationSecond quarter 2020

August – September 2020

Financial Calendar

03.11.2020 (17:45 CET)Quarterly results 3Q20

More on corporate.bpost.be/investors

Contents

Highlights & guidance2Q20 Highlights – 4

Outlook 2020 – 5

bpost Group at a glanceInvestment rationale – 7

Dividend policy – 8

Overview – 9

LT vision & strategic aspirations – 10

Management – 11

Sustainability – 12

Mail & Retail – 13-21

Parcels & Logistics Eurasia – 22-30

Parcels & Logistics N. America – 31-35

2Q20 resultsEBIT bridge – 37

Key financials – 38

Results by segment – 39

Mail & Retail – 40 & 41

Parcels & Logistics Eurasia – 42 & 43

Parcels & Logistics N. America – 44 & 45

Corporate – 46

Cash flow – 47

Balance sheet – 48

Financing Structure & Liquidity – 49

1H20 resultsEBIT bridge – 51

Key financials – 52

Results by segment – 53

Mail & Retail – 54 & 55

Parcels & Logistics Eurasia – 56 & 57

Parcels & Logistics N. America – 58 & 59

Corporate – 60

Cash flow – 61

Additional InfoKey financials FY19 – 63

Results by segment FY19 – 64

Relationship with State – 65

USO & SGEI – 66

European mail market – 67

Key contacts – 68

Investor presentationSecond quarter 2020

1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995

2Q20 Roadshow presentation2

DisclaimerThis presentation is based on information published by bpost Group in its Second Quarter 2020 Interim Financial Report made available on August, 4th 2020 at 5.45pm CET and in its 2019 Annual Report available on corporate.bpost.be/investors. This

information forms regulated information as defined in the Royal Decree of 14 November 2007. The information in this document may include forward-looking statements1, which are based on current expectations and projections of management about future

events. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the

future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that

such forward-looking statements will prove to have been correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statements contained herein to reflect actual results, changes in

assumptions or changes in factors affecting these statements. This material is not intended as and does not constitute an offer to sell any securities or a solicitation of any offer to purchase any securities.

Highlights 2Q20Guidance 2020

Highlights of 2Q20

4

Mail & Retail

€ 36.0m7.7% EBIT margin

• Total operating income at

€ 468.1m (-10.2%) driven by

COVID-19 impact on mail

volumes & on retail and by

deconsolidation of Alvadis

• Underlying mail volume

decline at -17.7% driven by

COVID-19 lockdown with

visible catch-up in June

• Adjusted EBIT decline

(-51.9%) from mail evolution

amplified by COVID-19.

• M&R COVID-19 impact1:

€ -37.0m

Parcels & Logistics

Eurasia

€ 32.4m11.0% EBIT margin


€ 294.9m (+46.4%) driven

by positive COVID-19

development in all revenue

lines, especially Parcels

BeNe (+64.2%)

• Parcels BeNe organic

volumes +78.4%

• Adjusted EBIT, excl. YoY

negative evolution of

terminal dues settlements,

up € +13.0m (+67%)

operationally.

• PaLo EA COVID-19 impact1:

€ +13.1m

Parcels & Logistics

N. Am.

€ 17.6m 5.0% EBIT margin


€ 353.9m (+48.0%) driven

by E-commerce logistics, in

particular growth at Radial

from existing customers

and new business signed in

2019

• Adjusted EBIT increase

(€ +18.1m) driven by

positive evolution of E-

commerce logistics (mainly

Radial), partially offset by

margin pressure in

International mail.

• PaLo NA COVID-19 impact1:

€ +16.5m

Group operating

income

€ 1,052.7m

Group adjusted

EBIT

€ 74.9m 7.1% EBIT margin

2Q20 COVID-

19 impact1 on

Group EBIT

estimated at

€ -9.5m

2Q20 Roadshow Presentation

2Q20

1 All COVID-19 impacts mentioned

in this presentation are best effort

estimates based on actuals and are

net results of both positive and

negative impacts. Group impact

includes € -2.0m at Corporate.

Net negative impact of COVID-19, mainly in M&R, is compensated by growth in Parcels and E-commerce logistics next to targeted cost containment actions and cost phasing towards 2H20

Initial 2020

Group adjusted

EBIT guidance

range can be

reconfirmed

5 2Q20 Roadshow Presentation

Initial 2020 Group EBIT outlook reconfirmed

Group

Assuming no second national or important local lockdown in 2020, nor any

event deriving from COVID-19 uncertainties, the adjusted EBIT between € 240-

270m can be reconfirmed.

Contribution per Business Unit will differ from the initial outlook issued in March.

Gross capex of € 150m maximum (vs. up to € 200m pre-COVID-19)

Outlook FY20

COVID-19 disclaimer

Given ongoing limited visibility about the duration and severity of the pandemic and its different impacts across the globe, the reconfirmed outlook could still be

impacted by these uncertainties or any event deriving thereof.

Based on the current situation and facts, bpost Group reconfirms adjusted EBIT guidance for 2020in the range of € 240-270m.

Dividend

The Board will recommend to the Annual Shareholders’ Meeting not to grant a

dividend on the results of FY20 to shareholders.

bpost Group remains fully committed to delivering sustainable shareholder

returns.

Given the high level of uncertainty that still remains in light of COVID-19 and its

impact on the overall economy, bpost Group’s priority is in the current

circumstances the strength of bpost’s balance sheet, cash reserves and capacity

to invest on the long term.

A new dividend policy going forward will be decided by the Board when the

longer term impact of the COVID-19 crisis becomes more clear.

bpost Group at a glance

bpost Group offers a strong investment rationalebpost Group aims at being a responsible company, delivering sustainable returns to its shareholders

What?

at a glance – Group

We continue to transform the mail and

proximity business in the home market to

sustain solid cashflows

We develop sustainable activities in the

high growth e-commerce logistics &

parcels business in our

Belgium/Netherlands home market and

key geographies in Europe and North

America

How?

Multiple levers for

transformation of

the legacy

business: natural

attrition,

alternating

distribution

model, stable and

predictable

regulation,

network

optimization,…

Experienced

management

team with

embedded

financial discipline

and a strong

business

transformation

track record

Growth in

e-commerce

logistics &

parcels: aspired

sizeable share of

revenues

A solid balance

sheet with single

'A' credit rating

7 2Q20 Roadshow presentation

We create value for shareholders

Dividend Policy

• IPO dividend policy until 2019: Minimum 85% of BGAAP net profit of the

mother company bpost SA/NV (unconsolidated). This policy is now

suspended.

• Dividend on FY19 results limited to interim dividend due to COVID-19 crisis

• Board will recommend not to grant a dividend on FY20 results to preserve

the strength of bpost’s balance sheet, cash reserves and capacity to invest on

the long term.

• Updated dividend policy: A new dividend policy will be decided by the Board

when the longer term impact of the COVID-19 crisis becomes clear.

Dividend is constrained by net results of a given year

(in BGAAP) + distributable reserves

Distributable reserves (€ 199m end 2019)

built gradually as from 2013, primarily to neutralize the non-recurring impact of

exceptional costs Interim gross DPS (€)Final gross DPS (€)

Pay-out ratio

91% 85% 90% 85% 90% 100%

2Q20 Roadshow presentation8

0.931.04 1.05 1.06 1.06 1.06

0.62

0.20

0.22 0.24 0.25 0.25 0.25

20192013 20162014 2015

1.13

2017 2018

1.26 1.29 1.31 1.31 1.31

72%

Capital allocation and dividend policy are under review


35,377average

# FTE & interims

A diversified mail operator with a footprint in e-commerce logistics

Revenues % of total

Transactional mail € 748m 19%

Advertising mail € 236m 6%

Press € 344m 9%

Proximity and convenience retail network € 465m 12%

Value added services € 104m 3%

Parcels Be-Ne € 381m 10%

E-commerce logistics € 133m 3%

Cross-border € 300m 8%

E-commerce logistics € 1,018m 26%

International mail € 87m 2%

Mail & Retail€ 1,897m

49%

Parcels & Logistics

Europe & Asia€ 813m

21%

Parcels & Logistics

North America€ 1,098m

29%

€ 3,837.2m1

revenues

€ 537.0m14.0%

EBITDA

€ 310.8m8.1%

EBIT

€ 181.2mnet profit

9

2019 figures (adjusted)1 49.4% Mail & Retail, 21.2% Parcels & Logistics Europe & Asia, 28.6% Parcels & Logistics North America and 0.8% Corporate revenue


2Q20 Roadshow presentation

Long-term vision & strategic aspirations

”Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium”

10

Mail services to citizens and

State remain core and will

continue to generate profit

with a more adapted

distribution model

Drive profitable growth in

Parcels BeNe and further

develop e-commerce logistics

in Europe

Optimize Radial to deliver in

the promising North

American e-commerce

market

1 2 3



Our experienced management team has responsibilities down to the bottom-line

11

Jean-Paul Van AvermaetGroup CEO

Luc CloetCEO Mail & Retail

Kathleen Van BeverenCEO Parcels & Logistics Europe & Asia

Henri de RomréeCEO Parcels & Logistics North

America

Leen GeirnaerdtCFO

Mark MichielsCHRO

Nico CoolsCIO

Dirk TirezCLO



Sustainability is at the heart of our activities

3-pillar CSR strategy linked to United Nations

Peoplewe care about our

employees and engage

them

• Employee health &

safety

• Employee training and

talent development

• Ethics & diversity

• Social dialogue

Planetwe strive to reduce our

impact on the

environment

• Green fleet

• Green buildings

• Waste management

Proximitywe are close to the

society

• To our community

• To our suppliers

• To our customers

through our services

Selected awards and recognition

• IPC EMMS Scorecard 2019 (sector index): #3

• EcoVadis (clients index): Gold rating

• Ethibel Indexes: reconfirmed as a constituent of the Ethibel Sustainability Index

(ESI) Excellence Europe since 19/03/2018

• Sustainalytics: score 17.7% (low risk)

• MSCI: Score A

• Vigeo Eiris: 91% (sector average: 71%)

• ISS: Governance Score: 5, Environment Score: 1, Social Score: 3

• Carbon Disclosure Project: Score B (peer average C)

Ambitious CO2 reduction targets

• Since 2007 bpost Group has cut its CO2 emissions by almost 40%

• Target of reducing CO2 emissions from activities by at least 20% by 2030

• By 2030, at least 50% of vehicles will be fully electric

Shared Value Creation• Continuity of our business

• Employee satisfaction and engagement

• Customer satisfaction

12



Sub-segments Revenues 2019, €m

Transactional mail

Advertising mail

Press

Proximity and convenience retail network

Value added services

Total

748

1,897

236

344

465

104

Mail & Retailat a glance

at a glance – M&R

13

~7.1mletters handled daily

Servicing 5m letter boxes

~2,300points of presence in Belgium

5industrial sorting centers

~20.1koperational FTEs

Key facts & figures


Key value drivers for Mail & Retail

Key value drivers From To

14

Speed of mail volume decline -7.9% in 2019

Between 9% - 11% in 2020 (ex-COVID-19)

Share of mail volume decline compensated

through price increase18-45% over 2014-2017

>50%1

Renegotiation/retendering of future 6th

Management contract and press concessions

Three contracts

until end 2020; compensation contractually set

Extensionof the 2 press concessions until end 2022

Expected agreement on 7th Management contract

Evolution of operating model

(mail collect and distribution)

Fixed D+1

based model(everywhere, everyday)

Flexible,

differentiated offering (prior vs. non-prior.)

at a glance – M&R

1 58% in 2019


Domestic mail volume decline expected to accelerate from -7.9% in 2019 up to ~-9% to -11% in 2020 (ex-COVID-19 impact)

1 As of start FY19 Transactional Mail excludes outbound and Press includes Ubiway press distribution

-5.0%-5.0%-4.2%

-7.9%-5.8%

-4.4%-5.8%

-13.9%

-5.3%-5.0% -5.9%-3.7%

-8.1%

-12.8%

-5.7%

-9.2%

2013 2014 2015 2016 2017 2018

-3.0%

-9.1%

1.5%

-4.9%

-22.3%

-3.0%-7.2%

-4.7%

-6.6%

-3.0% -2.8%-3.7%

-2.8% -2.8%-3.8%

-6.5%

20191

Underlying change

in domestic mail volume

Transactional mail

Advertising mail

Press

Key drivers

• E-substitution at large

corporates and SMEs

• Intensifying competition in

advertising media

• Shift to digital for newspapers

& magazines

• Service level elasticity

from the implementation of the

Alternating Distribution Model

15

at a glance – M&R


1H20

Designated provider of the

Universal Service Obligation

until end 20231

• Collection, sorting, transport and distribution of

postal items up to 2kg and single piece postal

packages up to 10kg

• Collect and deliver 5x per week

• Cover full territory of Belgium for collection and

delivery of items belonging to universal service

• Apply uniform tariffs and an identical service

across the territory

4 key contracts with the

Belgian State

• Management contract for the provision of the

USO (2019-2023)

• 6th Management Contract (2016-2020): for the

provision of certain SGEIs, i.e. maintenance of

retail network, cash at counter, cash payment of

pensions at home

• 2 press concessions (2016-2020 extended for 2

years until end 2022): (1) for distribution of

periodicals and (2) for distribution of

newspapers

Postal law of 10 February 2018

provides stable & predictable

mail pricing framework

• Single piece mail & USO parcels falling within

“small user basket” are subject to a price cap

• Price cap2 = inflation - (volume evolution +

cost reduction factor x efficiency gains

sharing factor)

• Volume and operational discounts allowed for

other USO products (bulk)

• Price increases done in practice on a yearly

basis: +4.4% on average in 2019 on all domestic

mail items; +5.1% on average for 2020

Regulatory aspects

1 Refer to slide 66 for more details2 Exact formula: Price cap = health index April n-1/health index April n-2 * (1 - [expected volume decline/(expected volume decline +1)] - 2.8%*33%) - 1

16

at a glance – M&R


Volume decline

Compensation for

mail volume decline

Larger mail volume decline results

in larger allowed price increase

[V/(V+1)] with V as the expected

negative volume trend on the Small

User Basket

Inflation

Compensation for inflation

Higher inflation results in

larger allowed price increase

Ratio of the health index as

measured in April of the years

n-1 and n-2

Efficiency gains

Calculation

logic

Correlation

to price cap

Description

New Postal Law

1 Detailed formula: Price cap = (1 + inflation) * (1 - [V/(V+1)] – 0.9%) – 1, giving for the above example the following calculation (1+2%) * (1 – [-6%/(-6%+1)] – 0.9%) - 1 = 7.6%

Drivers of the price cap formula

Illustrative example assuming 2% inflation and -6% average volume decline:

(Effective as of February 10, 2018)

Price cap1: 7.6% = –[ 106.4% 0.9% ]x

Mechanism to share 1/3 of the

efficiency gains target

with consumers

Constant and fixed by law

Fixed by the law at 0.9%

(i.e., 1/3 of 2.8% efficiency

gains target)

17

102%

provides stable and predictable regulatory framework to increase prices in context of accelerating mail volume decline

at a glance – M&R


Price increase and mix effects expected to compensate >50% of mail volume decline

1 2018 was at 70%, 2019 was 58%

57 60

67 6871

42

27

20 21

13

172013 14 2018-1911615

Domestic mail volume Domestic mail price/mix

72% 45% 18%30% 31% >50%

% Share of volume effect compensated by price/mix

Volume and price/mix impact on revenue €m

Building on the New

Postal Law for price

regulated products

Price increase on small

user basket rejected by

regulator

Key drivers

• Accelerating domestic mail

volume decline

• New price cap mechanism of

Postal Law defining max price

increase for small user basket,

and serving as guideline for

price increase on non-price

capped products

• Price increase partly

offset by shift to less expensive

mail products

18

at a glance – M&R


Management has developed an extended set of cost control options

Industrial Mail

Centers

• Optimize mail

sorting centers

footprint

• Pursue continuous

improvement

Collect &

Transport

• Align number of red

boxes to mail

volume decline

• Stop collect on

Saturday and

increase flexibility of

pick-up, delivery

and dispatch timing

constraints

• Transport

optimization (fill-in

rate and routes)

Distribution

• Introduce new

generation of

Georoute and time

potential

management

• Simplify process for

selected transactions

• Enhance customer

experience and

productivity through

digital (e.g.,

consumer

preferences)

Operating model

• Differentiated

offering and

Alternating

Distribution Model

• Take measures to

address absenteeism

FTE Unit cost

• Further optimize FTE

mix

19

at a glance – M&R


Newspapers

Same day delivery

Parcels

D+1 offering

Acceptance for D+3-41

A differentiated offering enables a new distribution model to accommodate changing customer needs

D+1

Available to consumers

who need D+1 delivery

Mail

Adjusted “day certain” distribution

frequency: in a given street, mail will be

distributed on selective days of the week

D+1 delivery will remain available

as a separate product (“Prior”)

Within D+3

Service level agreement (SLA)

“within 3 days” No

changeIndividuals

~92%

94%

Professionals

1 Based on a bpost SA/NV study with 1,000 households & 500 businesses (< 200FTE) interviewed in February 2015

2004 2018 2022 2022

~70

~55 <50

~70

Model until mid-March 2020:

everywhere, everyday

ADM:

D+3 combined

with D+1

Differentiated offeringas of January 1st 2019

Alternating Distribution Modelas of mid-March 2020

Optimizing drop densityShare of houses receiving mail on any given day, %

20

at a glance – M&R


Labor cost will benefit from decrease of mail related FTEs and optimized employee mix

1 bpost SA/NV scope, excluding retail network

Operational FTE evolution1

Average FTEs and interims, ‘000

Age pyramidHeadcount bpost SA/NV per age, 31/12/19

Operational FTE mix evolution1 Average cost per contract type1

Indexed

2016

Allocated

to mail

17 18

Allocated

to parcels

80-85%

15-20%

19

18.8 19.3 20.0 20.1

39% 35% 31% 28%

34% 39% 42% 47%

18% 17% 17% 16%10% 10% 9%Other

17

8%

16 18 19

Contractual

Auxiliary

postman

Civil servant

~74

~95Contractual

Auxiliary

postman

Civil servant 100

0-39 40-49

9,739

50+

9,633

6,787Pay-scale contractuals

Non pay-scale contractuals

Civil servants

Natural

attrition

Average

natural attrition

is expected to

range from

1,200 to 1,300

FTEs/year

21

at a glance – M&R


3 main cross-border

activity centers

i.e. Brussels brucargo, Heathrow UK

and Hong Kong

Sub-segments Revenues 2019 (€m)

Parcels BeNe

• Last-mile B2C delivery in the

Benelux

• Total of ~74m parcels in 2019

E-commerce logistics

• Mostly fulfilment & transport

activities in Europe spread over 11

locations

• Activities include Radial EU, Active

Ants and DynaFix

Cross-border

• International mail & parcels

• Majority of cross-border volume is

inbound mail and parcels from

Europe and Asia

Total

381

813

133

300

Parcels & Logistics Europe and Asia at a glance

at a glance – PaLo Eurasia

Peak days of up to

530k parcels during COVID-19

lockdown

Key facts & figures

Fulfilment footprint

covers 11 locations across 6

countries in Europe


Key value drivers for Parcels & Logistics Europe & Asia

Key value drivers From To

Ability to capture profitable growth in a competitive

environment

BeNe-wide offering addressing customer requirements

Optimized last-mile operations based on parcels

characteristics and in line with delivery requirements

Volume growth rate of 20-30% with

price/mix effect up to -6% over

2016-2018

Focus on Belgium (sales force,

contracts, DHL partnership)

Parcel hubs where enough density

Double-digit volume growth rate,

address price/mix

BeNe-wide approach

Flexible parcels distribution

footprint in close collaboration with

Mail & Retail


Ability to organically capture market growth of ~10%

p.a. (vs. in-sourcing, pan-European players)

E-commerce logistics in PL, NL &

BE and DynaFix

Increase scale & skills by leveraging

capabilities of Radial US and Active

Ants

Develop international cross-border parcels, also across

continents

Ability to maintain international mail volume

Natural business evolution Developing international parcel

flows driven by growing

e-commerce activity

Sub-segments

Parcels BeNe

E-commerce

logistics

Cross-border


Differentiate

pricing policy

• Strategic pricing initiatives

Integrated

BeNe offering

• Dedicated, specialized

sales force

• Integrated commercial

offers

• Partnership with DHL

Parcels

Attract key foreign

e-commerce players

• Partnerships with

e-commerce players

• E2E service offering

(“gateway to Europe”)

Convenience

& Cost leadership• Increased convenience

through improved receiver

journey and additional pick-

up drop-off lockers (KPI: Net

Promoter Score)

• Flexible distribution footprint

in close collaboration with

Mail & Retail

• Increase sorting capacity

• Fulfilment infrastructure

• Transport optimization

• Digital excellence

Four strategic initiatives for Parcels BeNe at a glance – PaLo Eurasia

Focus on 4 strategic initiatives


We have an established position in the Belgian B2C/C2C parcels market


Unique selling proposition

Offer best last-mile and broadest delivery options,

supported by acquisitions and partnerships:

• Home delivery 7/7 & evening delivery,

including high-end deliveries (2-man)

• ~2,300 pick-up & drop-off points

• >250 parcel lockers in Belgium

(2 new parcel lockers every week in 2020)

• Click & Collect

• Non-exclusive partnerships with DPDHL for B2C parcel delivery into

Belgium (from Germany/France & Benelux)

B2C

C2C

B2B

2019e parcel market1: 100% = € 1.6bn

CAGR 2018-20e1, %

B2C / C2X B2B

~12%

0-4%

1 Source: Effigy


Partnership with DHL Parcels NL allows to cover the full BeNe region and to capture important cross-border flows

Competitive offering• Very competitive & dynamic region with many large players such as PostNL,

DHL, DPD, FedEx

Large NL-based

e-commerce players• Looking for a BeNe wide offering with regards to last-mile

• Benchmarking prices on a BeNe level

Purchasing behavior• NL is the most important import country to BE (~30% of import flows)

• BE consumers mainly buy from NL players such as Bol.com and Coolblue


26

Launched in June 2018


The parcels operating model will be continuously optimized

Optimize distribution cost

using drop density of mail

rounds

• Maximize parcels in mail rounds

• Cost advantage due to higher drop density

leading to lower unit costs

Evolve towards dedicated

parcel infrastructure to match

customer requirements

• Nationwide Parcel distribution footprint to

accommodate distribution of parcels that are

not in mail rounds

• Benefits for customer proximity and special

services e.g. late-in services, “large scale”

evening distribution or same day distribution

Increase sorting capacity

• Increase sorting capacity in the existing centers

of Brussels, Charleroi & Antwerp to cope with

increasing volume (optimizing sorting footprint

mail & parcels)

• Use technology (e.g. address recognition)



Supported by acquisitions, bpost Group has initial assets along the entire value chain of e-commerce logistics

Order

• Order management

• Payment services, tax services and fraud prevention


1Fulfilment

• Order reception in warehouses in the proximity of clients

• Preparation for shipment

2

Delivery

• Hybrid transport network for high-end and urgent delivery

• Last-mile delivery

4Customer Care

• Phone, email, social media & chat support

• Advanced analytics

3

28

Realtime

technology


11fulfilment centers /

facilities

6Countries

~€ 133m2019 revenue

~1,500Employees

E-commerce logistics activities in Europe can be developed thanks to an already strong European footprint


Cold chain facility Fulfilment sites Personalized logistics

29

Poland

Germany

UK

The

Netherlands

Belgium

Italy


Type of clients E-tailers & click-and-mortar (omnichannel) Pure e-tailers

Size of clients Medium/large Small/medium

Level of automation Lower, depends on client High (AutoStore + automated packaging)

Level of Customization High, product and price tailored by client Very low

Current locations UK, Germany, Belgium, The Netherlands, Italy and Poland The Netherlands

E-commerce logistics in Europe has 2 complementaryengines of growth i.e. Radial Europe and Active Ants

1 Including Landmark Global and Belgium fulfilment

Leveraging knowledge and

experience from Radial US

Leveraging NL success story

in other European countries


30

1


Sub-segments Revenues 2019, €m

E-commerce logistics1

International Mail2

Total

1,008

1,098

89

Parcels & Logistics North America

1 Radial North America, Landmark Global, Apple Express and FDM2 MSI, Imex, Mail Inc. = The Mail Group

Objectives

• Growth engine for bpost

Group, to be a leading

e-commerce logistics

player in US

• Grow with cross-border

commerce

• International mail

providers delivering

profit through

infrastructure

optimization

at a glance – PaLo N. Am.

at a glance

International mail

solutions and catalogue

fulfilment through US

companies

Capabilities to support

mid-sized e-tailers to

expand cross-border and

last-mile distribution in

Canada and Australia

US e-commerce logistics

provider fulfilling 72m

parcels p.a. with proven

client base, IT

infrastructure and

capabilities along the E2E

value chain


Acquisition of US-based Radial on 16 November 2017

Acquisition rationale

Our growth

• Integrated e-commerce logistics provides access to a larger and more

attractive profit pool

• Radial as growth engine and key profit contributor

Presence in the US and Europe

• Strengthen US position building on presence with Landmark Global

• Scale bpost Group’s e-commerce logistics capabilities in the Benelux and

Europe

Strong growth of e-commerce

• e-commerce is growing rapidly with US being an attractive and advanced

space (+15% p.a. growth of online retail over 2004-2022e)

• Transatlantic e-commerce is growing at >25% p.a. with 20% of European

parcels coming from the US

Knowledge and experience

• Knowledge and experience of the e-commerce logistics chain increase

exponentially with the acquisition of an experienced player

Key acquisition data Radial Global

• Enterprise Value: $ 820m

• Sales 2017: $ 1,082m

• EBITDA 2017: $ 57m (5.3% margin)

• 100% acquisition of the shares

• Financed through a € 650m 8-year bond issue carrying a coupon of

1.25% (issued 4 July 2018)

Key indicators for Radial North America

• TCV of new business went from $ 217m in 2018 to $ 385m in 2019

and is at $ 224m end-1H20

• ~7,100 average # of FTEs & interims (2019)

• 24 fulfilment centers (mainly US)

32



Radial North America offers multiple services across the entire e-commerce logistics value chain

Revenues

share %

Radial North

America assets Description and key strengths

Tech

no

log

yO

pera

tio

ns

Payment, Tax,

and Fraud

Prevention

Fraud Zero software Processing global payments,

maximizing successful authorization

and reconciling tax districts and

global duties

• 98.3% approval rate vs. 97.1% industry average

• 1.6% manual review rate vs. 25% industry average

Omnichannel

Technology

8,700 Stores with fulfilment

12,500 Dropship suppliers

Optimizing efficiency of order

management, ship-from-store and

in-store pick-up

• Ability to handle complex orders

• < 12 weeks to deployment vs. competition 4-6 months

• Scalability of technology

Warehousing &

fulfilment

24 fulfilment sites

in North America

Adapting warehouse management

and parcels preparation to

e-commerce with pragmatic

automation

• 80%+ orders shipped day 0

• ~100% US coverage

• Experience of scaling employees / workforce up to ~20k

peak capacity

Freight

Management

100%

Asset light

Managing a large network of carriers

for a seamless customer experience

• Rates 5-15% cheaper than in-sourcing for mid-sized players

• Clients reached in 2.4 days on average

Customer Care 3,400+

Seats across 4 sites

Having a single view of customer’s

history and profile combined with

leading self-service tech

• Advanced data analytics

33

17%

74%

9%



~$ 680bn total

US online Retail

e-commerce

Radial’s target

audience

e-commerce

revenue

$ 225-230bn

$ 45-57bn

addressable

e-commerce

logistics

Online revenue e-tailers, US

$ 680bn1 expected US online retail revenue in 2020

$ 20m

$ 2,000m

Radial North America market dynamicsand competitive landscape

Independent e-commerce logistics providers• Mid-market segment

($ 20-200m online revenue)

• Enterprise segment

($ 200-600m)

• Some selected key accounts

($ 600m-$ 2bn)

Addressable e-commerce logistics sector

34

1 Source: Forrester Data, Online Retail Forecast, 2020



Omnichannel

& PT&F

Fulfilment Freight Customer Care

Positive commercial development at Radial and financial results in line with expectations

Commercially heading in the right direction

• We continue to reap benefits from our customer-focused

approach, strong new signings in 2019, along with continued

improvement in NPS. Strong 2019 peak with a double-digit

increase in shipped parcels vs. 2018.

• Starting in 2Q18 and continuing in 2019 and 2020, we are seeing a

positive contract renewal cycle for existing clients.

• New contracts signed had a TCV of $ 385m for FY19, which was

above target and above the previous 3 years ($ 150m in 2016 and

2017, $ 217m in 2018).

• Positive TCV development continued through 1H20 with $ 224m

contract value signed.

FY18 & FY19 results impacted, as expected, by:

• Churn (mostly in Fulfilment & Transport) and repricing, with

revenue growth from new and existing customers not fully

compensating revenue loss from clients terminating with Radial.

• Webstore business phase-out, completed by end FY19

FY19 results in line with expectations

• Good end of year 2019 peak management, with productivity gains

partly offset by higher costs related to maintaining a sufficient

labor pool within a tight US labor market.

Significant growth at existing clients and 2019

new business in 1H20 (partly COVID-19 driven)

• 1H20 adjusted EBIT above break-even at € 10.1m

35



2Q20 Results

Net negative COVID-19 impact, mainly in M&R, is compensated by growth in PaLo’s next to targeted cost containment actions and cost phasing towards 2H20

37

€ million


2Q20

1 Adjusted previously called Normalized, change of terminology “Adjusted” in order to align the label of this APM to the ESMA guidelines, definition and approach remain unchanged. Adjusted excludes items that are

non-recurring in nature and significant (> € 20m). All profits or losses on disposal of activities are adjusted whatever the amount they represent, as well as the amortization and impairment on the intangible assets

recognized throughout the Purchase Price Allocation (PPA) of the acquisitions. Reversals of provisions whose addition had been excluded from income are also adjusted whatever the amount they represent.

Adjusted1

Reported

5.7

8.8

18.1

4.7

70.2

-20.7

PaLo

Eurasia

101.8

EBIT

2Q19

-38.8

Mail &

Retail

PaLo

N. America

Corporate EBIT

2Q20

107.5

74.9

-32.6

€ -0.8 excluding

2Q19 € 19.9m gain on HQ

disposal

€ million

2Q19 2Q20 2Q19 2Q20 % ↑

Total operating income 935.7 1,052.7 935.7 1,052.7 12.5%

Operating expenses 773.9 917.0 773.9 917.0 18.5%

EBITDA 161.7 135.7 161.7 135.7 -16.1%Depreciation & Amortization 59.9 65.5 54.2 60.8 12.2%

EBIT 101.8 70.2 107.5 74.9 -30.3%Margin (%) 10.9% 6.7% 11.5% 7.1%

Financial result -14.8 -14.0 -14.8 -14.0

Profit before tax 92.7 59.5 98.4 64.2 -34.8%Income tax expense 29.3 15.9 29.8 16.1

Net profit 63.4 43.6 68.6 48.0 -30.0%

FCF 4.5 113.2 18.5 44.1 -

Net Debt at 30 June 692.5 539.5 692.5 539.5 -22.1%

Capex 25.8 24.9 25.8 24.9 -3.5%Average # FTEs and interims 33,819 37,853 33,819 37,853 11.9%

Reported Adjusted1

Key financials 2Q20

38

Amortization of intangibles recognized

during PPA is adjusted, leading to

increase in EBIT (€ +4.7m) and income

tax expense (€ +0.3m)

Adjusted FCF excludes the cash Radial

receives on behalf of its customers for

performing billing services

1

2


2Q20

1 1

1 1

2 2

Results by segment 2Q20

39

2Q20

€ million

M&R PaLo Eurasia PaLo N. Am. Corp Eliminations Group

External operating income 407.5 292.1 351.9 1.3 0.0 1,052.7

Intersegment operating income 60.7 2.8 2.0 85.4 -150.9 0.0

Total operating income 468.1 294.9 353.9 86.7 (150.9) 1,052.7Operating expenses 411.2 257.8 318.2 80.6 -150.9 917.0

EBITDA 56.9 37.1 35.7 6.0 135.7

Depreciation & Amortization 21.5 5.5 21.5 17.0 65.5

Reported EBIT 35.4 31.6 14.2 -11.0 70.2

Margin (%) 7.6% 10.7% 4.0% -12.7% 6.7%

Adjusted EBIT 36.0 32.4 17.6 -11.0 74.9

Margin (%) 7.7% 11.0% 5.0% -12.7% 7.1%


Top-line decrease driven by COVID-19 impacts on mail and on retail and by deconsolidation of Alvadis

40

2Q20 – M&R

Transactional

Overall good resistance of volumes with

underlying decline at -16.7% of which:

-19.0% QTD May-20: all product

categories negatively impacted by COVID-

19 lockdown.

-8.9% Jun-20 driven by an overall catch-

up in volumes post COVID-19 lockdown,

particularly visible in smaller administrative

mail volumes and registered letters.

Domestic Mail

Operating income decline at € -40.9m i.e.

€ +0.4m working days impact, € -3.7m

elections 2Q19, € -51.0m volume (-17.7%

underlying volume decline, i.e. -22.3%

QTD May-20, -6.6% Jun-20), and

€ +13.5m price/mix.

Proximity and convenience

retail network

Decrease mainly driven by:

‐ the deconsolidation of Alvadis

(€ -7.8m) as of September 2019

‐ Ubiway retail revenues impacted by

partial COVID-19 related closure of

the network and reduced footfall

‐ Decline in banking & finance

revenues from less traffic in post

offices and less ATM transactions

M&R external operating income, € million

Advertising

-26.6% underlying volume decline:

-37.0% QTD May-20 driven by COVID-19

lockdown of all non-essential retail until

May 10 included. Gradual recovery in food

retail advertising as of second half of April

and certain other sectors as of May.

-4.2% Jun-20: strong volume recovery

in certain sectors due to a catch up.

Press

-8.0% underlying volume decline driven by

e-substitution and rationalization.


Mainly lower revenues from phasing out of

e-ID activities, document management

and European license plates.

3 1 4

2 3 5

1

2

3

4

5

21

2Q19

-1.5

Advertising

479.4

-16.7Transactional

-22.7

Press

-27.8

Proximity and

convenience

retail network

-3.2Value added

services

2Q20 407.5

-71.9


2Q19 2Q20 % ↑

479.4 407.5 -15.0%

187.4 170.7 -8.9%

60.2 37.5 -37.7%

87.2 85.8 -1.7%

117.5 89.7 -23.7%

27.1 23.9 -11.8%

42.0 60.7 44.5%

521.4 468.1 -10.2%426.8 411.2 -3.6%

94.6 56.9 -39.8%20.9 21.5 2.7%

73.7 35.4 -51.9%14.1% 7.6%

74.8 36.0 -51.9%14.4% 7.7%

22,052 23,004 4.3%

-9.4% -17.7%

-11.1% -16.7%

-5.6% -26.6%

-6.7% -8.0%

€ million

Underlying Mail volume decline

Press

Advertising


Intersegment operating income

Operating expenses

EBITDA

Reported EBIT

Average # FTEs and interims

Transactional

Additional KPIs

Mail & Retail

Depreciation & Amortization

Margin (%)

Adjusted EBIT

Margin (%)

Total operating income

External operating income

Transactional

Advertising

Press


M&R EBIT impacted by mail evolution amplified by COVID-19

Key takeaways 2Q20• Total operating income decline of € -53.2m primarily driven by

domestic mail volume decline, Ubiway retail decline and the

deconsolidation of Alvadis. Until end of May, mail volumes were

significantly impacted by COVID-19 with a visible catch-up as of June,

partly compensated by higher intersegment operating income related

to higher parcels volumes.

• Operating expenses (incl. adjusted D&A) declined by € +14.4m:

‐ Higher payroll & interim costs driven by (1) headcount from higher

parcel volumes & absenteeism and (2) price from COVID-19

premium & salary indexation; together with specific COVID-19 opex

‐ Fully compensated by lower material costs from Ubiway Retail incl.

Alvadis deconsolidation impact, higher recoverable VAT, cost

containment actions and cost phasing towards 2H20 (e.g. holidays).

• COVID-19 impacted EBIT by an estimated € -37.0m, explained by the

top-line development on domestic mail and retail as well as

additional costs like the COVID-19 premium, health & safety

measures, increase in absenteeism and additional bad debt risk.

• M&R adjusted EBIT declined by € -38.8m to € 36.0m.

41

2Q20 – M&R


Favourable COVID-19 revenue development across the board in PaLo Eurasia

42

2Q20 – PaLo Eurasia


Revenue growth mainly driven by

positive COVID-19 impact

(€ +11.3m) at Radial Europe, Active

Ants & DynaFresh.

Further revenue growth driven by

the integration of MCS Fulfilment

(part of Active Ants) as from

October 1, 2019, contributing

€ 2.9m.

Cross-border

Net favourable revenue impact

from COVID-19 (€ +15.4m) driven

by:

‐ a gradual ramp-up in Asian

parcel volumes since May,

evolving exponentially through

June, resulting from rail solution

as an alternative to air freight

‐ partly offset by COVID-19 linked

revenues losses on other

international parcels volumes

and lower in- and outbound mail

volumes

Excluding COVID-19, growth in

commercial business with Asia as

main driver.

Unfavourable YoY evolution of

terminal dues settlements (€ -2.2m).

PaLo Eurasia externaloperating income, € million

1

2

3

2 3

17.0

20.2Cross-border

196.52Q19

58.4Parcels BeNe

E-commerce

logistics

292.12Q20

+95.6


Parcels BeNe

Parcels BeNe volume growth of

+78.4%1 driven by thriving online

sales during COVID-19 lockdown

(QTD May-20 volumes up +80.6%,

Jun-20 +74.3%).

COVID-19 revenue impact is

estimated at € +44.2m.

1

1 Parcels volume growth is composed of former

Domestic Parcels (i.e. pre new segment reporting since

2019) and Dynalogic volumes. This does not cover the

full scope of Parcels BeNe since not all revenues

included in Parcels BeNe can be expressed in volumes.

Strong EBIT development from positive COVID-19 volume impacts across all business lines

Key takeaways 2Q20• Total operating income € +93.5m (+46.4%) driven by positive

development in all revenue lines, especially Parcels BeNe

(€ +58.4m, +64.2%). Total positive COVID-19 revenue impact stood

at € +70.9m. Excluding COVID-19 and the unfavourable YoY

evolution of terminal dues (€ -2.2m), revenues were up € +24.8m.

• Excluding the unfavourable YoY evolution of terminal dues

settlements (€ -2.0m), operating expenses (incl. adjusted D&A) were

up € -82.7m (+46.0%), mainly explained by higher volume-linked

variable costs translating into increased payroll, interim and transport

costs across all business lines. Specific COVID-19 opex also

contributed to the YoY cost increase and includes the premium,

increase in absenteeism, health and safety measures and additional

bad debt provisions.

• COVID-19 had an estimated EBIT impact of € +13.1m from COVID-19

driven revenue increase in all business lines partly offset by the

aforementioned specific COVID-19 additional opex.

• Adjusted EBIT increased by € +8.8m (+37.2%) to € 32.4m. Excluding

the YoY terminal dues settlements (€ -4.2m), adjusted EBIT was up

€ +13.0m (+67%) operationally.

43

2Q20 – PaLo Eurasia

2Q19 2Q20 % ↑

196.5 292.1 48.7%

91.0 149.4 64.2%

29.4 46.3 57.8%

76.1 96.3 26.5%

4.9 2.8 -42.2%

201.4 294.9 46.4%173.6 257.8 48.5%

27.9 37.1 33.2%5.5 5.5 -0.2%

22.3 31.6 41.5%11.1% 10.7%

23.6 32.4 37.2%11.7% 11.0%

3,153 3,845 21.9%

17.7% 78.4%


Additional KPIs

Parcels volume growth


Parcels & Logistics Europe and Asia


Operating expenses


EBITDA


Parcels BeNe


Cross-border

€ million

Reported EBIT

Margin (%)

Adjusted EBIT

Margin (%)


Parcels & Logistics North America driven by significant growth at existing clients and by 2019 new business

44

2Q20 – PaLo N. Am.


YoY increase of +53.5% (+50.7% at

constant exchange rate).

Revenue increase mainly driven by

Radial NA recording significant

growth of existing customers

(+49%), as well as customers

launched in 2019 slightly offset by

customer churn. Landmark also

recorded higher sales from new

and existing customers.

COVID-19 related closures of

customers’ brick and mortar stores

increased volume through E-

commerce logistics. Total revenue

impact is estimated at € +92.0m.

International mail

Declining revenues at The Mail

Group1 (-6.5%) despite positive FX

evolution (-8.5% at constant

exchange rate).

Significant drop-off in business mail

segment as a result of COVID-19.

COVID-19 revenue impact is

estimated at € -2.0m with the main

negative impact seen in April 2020

and improving month by month

thereafter.

1 Combination IMEX, Mail Inc & MSI

1

2

1 2

PaLo North America externaloperating income, € million

238.0

351.9

115.4E-commerce

logistics

2Q19

-1.4

2Q20

International

mail

+113.9


2Q19 2Q20 % ↑

238.0 351.9 47.9%

215.6 331.0 53.5%

22.3 20.9 -6.5%

1.1 2.0 85.4%

239.0 353.9 48.0%226.5 318.2 40.5%

12.6 35.7 184.4%16.4 21.5 31.4%

-3.8 14.2

-1.6% 4.0%

-0.5 17.6

-0.2% 5.0%

6,986 9,399 34.5%

199.2 317.3 59.3%

7.3 30.8

-4.9 13.6

Radial North America EBITDA, $m

Radial North America EBIT, $m


Additional KPIs, adjusted

Radial North America revenue, $m


Reported EBIT

Margin (%)

Adjusted EBIT

Margin (%)

€ million




EBITDA

International mail


Operating expenses


Strongly positive EBIT evolution driven by e-commerce Logistics, especially Radial

Key takeaways 2Q20• Total operating income increase of € +114.8m or +48.0% (+45.3% at

constant exchange rate) mainly driven by growth at Radial from

existing customers and customers launched in 2019. Total net

COVID-19 revenue impact for North America is estimated at

€ +90.0m

• Operating expenses (incl. adjusted D&A) increased by € -96.7m

(€ -92.3m excl. FX) driven by higher variable costs from volume

growth (primarily at Radial) and bad debt impact, as well as higher

payroll costs, increased D&A related to the 3 new fulfilment centers,

and COVID-19 additional expenses. International Mail was impacted

by YoY increase in transport costs.

• COVID-19 impacted EBIT by an estimated € +16.5m, mainly related

to additional e-commerce logistics volumes, partly offset by

additional health and safety measures, increased transport costs

relating to International Mail and bad debt.

• Adjusted EBIT up € +18.1m to € 17.6m driven by positive operating

leverage in E-commerce logistics, in particular at Radial. This was

partly offset by continuing margin pressure in International mail.

45

2Q20 – PaLo N. Am.


Corporate EBIT decline driven by headquarters profit on disposal in 2Q19

Key takeaways 2Q20

• External revenues down by € -20.5m driven by lower building

sales (gain on headquarter sale of € 19.9m in 2Q19) and slightly

lower rental income.

• Operating expenses (incl. D&A) decreased by € +7.6m driven by

lower demand for services from the operational Business Units

(€ -7.6m intersegment operating income) namely due to lower

demand for IT-related projects. Net of the intersegment operating

income, the opex (incl. D&A) was flat as YoY negative VAT

recovery impact (€ -1.7m) and COVID-19 related costs were offset

by lower project costs at corporate level, i.e. cost containment.

• COVID-19 impacted EBIT by an estimated € -2.0m, mainly related

to additional costs for health and safety measures.

• As a result, adjusted EBIT decreased by € -20.7m YoY.

46

2Q20 – Corporate

2Q19 2Q20 % ↑

21.8 1.3 -94.3%

93.0 85.4 -8.2%

114.8 86.7 -24.5%88.1 80.6 -8.5%

26.7 6.0 -77.5%17.1 17.0 -0.3%

9.6 -11.0

8.4% -12.7%

9.6 -11.0

8.4% -12.7%

1,629 1,605 -1.5%Average # FTEs and interims


Operating expenses

EBITDA


Reported EBIT

Margin (%)

Adjusted EBIT

Margin (%)

€ million

Corporate




Increased FCF1 thanks to payment terms in payablesNo bpost NV / SA tax prepayment in current quarter compensates LY’s proceeds from HQ building sale

47

+

CF from operating activities

More cash flows relating to collected proceeds due to Radial’s clients: € +83.1m, high level of

merchandise sales in COVID-19 period

Absence of tax prepayment in 2Q20 (vs. € 51.0m in 2Q19)

Excluding the above, CF from operating activities: € +31.5m, of which:

‐ € +30.3m improvement in working capital evolution: primarily driven by extended

payment terms during COVID-19 period partly offset by higher receivables due to

increased sales

CF from investing activities

Proceeds from buildings sales: € -57.1m

(Sale of HQ building Centre Monnaie in

2Q19)

Capex at € 24.9m decreased by € +0.9m

vs 2Q19 and was mainly spent on

increased capacity (Radial, Parcels B2C and

Active Ants mainly)

CF from financing activities

Absence of dividend payment in 2Q20 (vs.

€ 50.0m in 2Q19)

Commercial papers issuance: € -12.1m

1 Free cash flow = cash flow from operating activities + cash flow from investing activities

+

=

+

=

2Q20

Reported ‐ € million

2Q19 2Q20 Delta

Cash flow from operating activities -27.3 138.3 165.6

Cash flow from investing activities 31.8 -25.1 -56.9

Free cash flow 4.5 113.2 108.7

Financing activities -60.8 -24.4 36.4

Net cash movement -56.3 88.8 145.1

Capex (25.8) (24.9) 0.9


Balance Sheet

48

2Q20

Main balance sheet movements

PPE decreased due to the depreciation (€ 108.6m) and the transfer to assets held for sale (€ 7.8m), partially offset by capex (€ 31.5m) and right of use assets recognized (€ 54.7m).

Trade & other receivables decreased due to the usual settlement of the SGEI receivable during the first quarter of the year.

Total equity increased in line with the realized profit (€ 91.5m), partially offset by the fair value adjustment of bpost bank’s bond portfolio (€ 11.9m) and the net impact of the integration of Active Ants

International comprising the non-controlling interests and the recognition of the contingent consideration for the purchase of the remaining shares (€ 14.7m).

Interest-bearing loans & borrowings recorded an increase mainly linked to the increase of the lease liabilities for IFRS 16.

Other liabilities increased due the income tax payable, as no prepayments were done in 2020 yet.

€ million

Assets Dec 31, 2019 Jun 30, 2020

PPE 1,133.6 1,105.1

Intangible assets 898.3 890.4

Investments in associates and joint ventures 239.5 235.6

Other assets 41.8 39.2

Trade & other receivables 759.0 638.6

Inventories 34.7 36.1

Cash & cash equivalents 670.2 925.4

Total Assets 3,777.1 3,870.2

€ million

Equity and Liabilities Dec 31, 2019 Jun 30, 2020

Total equity 682.6 749.5

Interest-bearing loans & borrowings (incl. bank overdrafts) 1,449.9 1,464.8

Employee benefits 320.6 315.3

Trade & other payables 1,278.5 1,261.4

Provisions 29.8 28.3

Derivative instruments 1.3 0.4

Other liabilities 14.3 50.6

Total Equity and Liabilities 3,777.1 3,870.2


€ million

External Funding Dec 31, 2019 Jun 30, 2020

Long-term

Long-term bond1 (1.25% - 07/2026) 650.0 650.0

Bank loans 183.2 183.4

Amortizing Loan (€ 100m) ‐ 12/2022 18.2 18.2

Term Loan ($ 185m) - 07/2023 165.0 165.2

Shor t-term

Bank loans: Amortizing Loan (€ 100m) ‐ 12/2022 9.1 9.1

Commercial Papers 164.5 168.1

Total External Funding 1,006.8 1,010.6

Financing Structure & Liquidity

49

2Q20

Liquidity: Cash & Committed credit lines

Total available liquidity at June 30, 2020 consisted out of € 925.4m cash & cash equivalents of

which € 718.5m is readily available on bank current accounts and as short-term deposits.

In addition, bpost Group has 2 undrawn revolving credit facilities for a total amount of

€ 375.0m.

External Funding & Debt Amortization (excl. IFRS16 lease liabilities)

Out of € 1,010.6m external funding on balance sheet at June 30, 2020:

‐ € 168.1m commercial paper outstanding with maturity ranging between 1 to 6 months. In

July, bpost Group seized the opportunity of favorable market conditions to issue € 100m

of commercial paper with a maturity of 7 months (until Jan-21) and thus secured a major

part of the short-term funding until the collection of the SGEI payment in January 2021.

‐ € 9.1m during 4Q20 (i.e. the current portion of the EIB loan).

1 € 650m long-term bond with a carrying amount of € 643.1m, the difference being the re-offer price and issuance fees.

€ million

Available Liquidity Dec 31, 2019 Jun 30, 2020

Cash & cash equivalents 670.2 925.4

Cash in network 163.6 130.9

Transit accounts 105.8 90.4

Cash payment transactions under execution -26.7 -14.5

Bank current accounts 377.4 658.5

Short-term deposits 50.0 60.0

Undrawn revolving credit facilities 375.0 375.0

Syndicated facility - 10/2024 300.0 300.0

Bilateral facility - 06/2025 75.0 75.0

Total Available Liquidity 1,045.2 1,300.4


1H20 Results

1H20 EBIT impacted by significant COVID-19 related mail volume decline, partly compensated by strong PaLo performance

51

€ million

1H20

1 Adjusted previously called Normalized, change of terminology “Adjusted” in order to align the label of this APM to the ESMA guidelines, definition and approach remain unchanged. Adjusted excludes items that are

non-recurring in nature and significant (> € 20m). All profits or losses on disposal of activities are adjusted whatever the amount they represent, as well as the amortization and impairment on the intangible assets

recognized throughout the Purchase Price Allocation (PPA) of the acquisitions. Reversals of provisions whose addition had been excluded from income are also adjusted whatever the amount they represent.

Adjusted1

Reported

11.1

7.7

18.4

9.3

192.2

EBIT

1H19

150.6

-66.2

141.3

Mail &

Retail

PaLo

N. America

PaLo

Eurasia

-12.6

Corporate EBIT

1H20

203.3

-52.7

€ +7.3 excluding

2Q19 € 19.9m gain on HQ

disposal


€ million

1H19 1H20 1H19 1H20 % ↑

Total operating income 1,842.5 1,987.3 1,842.5 1,987.3 7.9%

Operating expenses 1,529.7 1,714.4 1,529.7 1,714.4 12.1%

EBITDA 312.8 272.9 312.8 272.9 -12.8%Depreciation & Amortization 120.6 131.6 109.5 122.3 11.7%

EBIT 192.2 141.3 203.3 150.6 -25.9%Margin (%) 10.4% 7.1% 11.0% 7.6%

Financial result -22.3 -18.4 -22.3 -18.4


Net profit 113.5 91.5 123.7 100.3 -18.9%

FCF 190.6 307.4 213.9 290.3 35.7%

Net Debt at 30 June 692.5 539.5 692.5 539.5 -22.1%

Capex 41.5 45.4 41.5 45.4 9.5%Average # FTEs and interims 33,901 36,274 33,901 36,274 7.0%

Reported Adjusted1

Key financials 1H20

52








1

2

1H20

1 Unaudited figures

1 1

1 1

2 2


1H20 COVID-19 impact on Group EBIT estimated at € -26.2m

Results by segment 1H20

53

1H20

€ million


External operating income 865.2 502.5 611.8 7.6 0.0 1,987.3

Intersegment operating income 102.9 5.9 3.3 175.9 -287.9 0.0

Total operating income 968.1 508.4 615.2 183.5 (287.9) 1,987.3Operating expenses 825.1 450.0 569.1 158.2 -287.9 1,714.4

EBITDA 143.0 58.4 46.1 25.3 272.9


Reported EBIT 100.0 47.8 3.5 -10.0 141.3

Margin (%) 10.3% 9.4% 0.6% -5.4% 7.1%

Adjusted EBIT 101.2 49.3 10.1 -10.0 150.6

Margin (%) 10.5% 9.7% 1.6% -5.4% 7.6%


Top-line decrease driven by COVID-19 impacts on Domestic Mail and on retail and by deconsolidation of Alvadis

54

1H20 – M&R

Transactional

-12.8% underlying volume decline of

which:

-16.7% March to May-20: COVID-19

lockdown negatively impacted all mail

categories, in particular smaller

administrative mail volume and registered

letters.

Excluding COVID-19, underlying mail

volumes are subject to ongoing

e-substitution and digitization.

Domestic Mail

Operating income decline at € -58.5m i.e.

€ +1.4m working days impact, € -3.7m

elections 2Q19, € -80.1m volume (-13.9%

underlying volume decline, with March to

May-20 at -20.1% due to COVID-19), and

€ +24.0m price/mix.

Proximity and convenience

retail network

Decrease mainly driven by:

‐ the deconsolidation of Alvadis

(€ -15.3m) as of September 2019

‐ COVID-19 impact on Ubiway retail

revenues from partial closure of the

network and reduced footfall

‐ Decline in banking & finance

revenues

M&R external operating income, € million

Advertising

-22.3% underlying volume decline of

which:

-36.2% March to May-20 mainly impacted

by cancelled campaigns from COVID-19

lockdown of all non-essential retail from

March 18 through May 10 and ban on

promotions through April 3.

Press

-6.6% underlying volume decline driven by

e-substitution and rationalization.


Lower revenues from phasing out of e-ID

activities, European license plates and

document management partly

compensated by higher revenue from fines

management.

3 1 4

2 3 5

1

2

3

4

5

21

965.9

1H20

1H19

-18.9Transactional

-35.8Advertising

-3.8Press

-41.0

Proximity and

convenience

retail network

Value added

services-1.0

865.2

-100.6


1H19 1H20 % ↑

965.9 865.2 -10.4%

382.9 364.0 -4.9%

121.1 85.3 -29.6%

175.7 171.9 -2.2%

233.8 192.7 -17.6%

52.4 51.3 -2.0%

83.0 102.9 23.9%

1,048.9 968.1 -7.7%840.9 825.1 -1.9%

208.0 143.0 -31.2%42.3 43.0 1.8%

165.7 100.0 -39.6%15.8% 10.3%

167.4 101.2 -39.6%16.0% 10.5%

21,958 22,590 2.9%

-9.3% -13.9%

-10.5% -12.8%

-6.7% -22.3%

-8.0% -6.6%

€ million

Underlying Mail volume decline

Press

Advertising



Operating expenses

EBITDA

Reported EBIT


Transactional

Additional KPIs

Mail & Retail


Margin (%)

Adjusted EBIT

Margin (%)



Transactional

Advertising

Press


M&R EBIT impacted by COVID-19 mail evolution despite a good recovery in June and lower opex

Key takeaways 1H20• Total operating income decline of € -80.7m primarily driven by

domestic mail volume decline (€ -58.5m), lower Ubiway retail

revenue and the deconsolidation of Alvadis partly compensated by

higher intersegment operating income related to higher parcels

volumes.

• Operating expenses (incl. adjusted D&A) decreased by € +14.5m.

Higher payroll & interim costs and specific COVID-19 opex were

more than compensated by lower material costs from Ubiway Retail

(incl. Alvadis deconsolidation impact), higher recoverable VAT, cost

containment actions and cost phasing towards 2H20.

• COVID-19 impacted EBIT by an estimated € -51.4m. This is

explained by the top-line development on domestic mail and retail

as well as additional costs: COVID-19 premium, health & safety,

increase in absenteeism, additional bad debt risk.

• M&R adjusted EBIT declined by € -66.2m to € 101.2m.

55

1H20 – M&R


PaLo Eurasia significantly positively impacted by COVID-19 across the board

56

1H20 – PaLo Eurasia


Revenue growth of € +25.4m

mainly driven by positive COVID-19

impact (€ +11.3m, all in 2Q20) at

Radial Europe, Active Ants &

DynaFresh.

Further revenue growth driven by

the integration of MCS Fulfilment

(part of Active Ants) as from

October 1, 2019, contributing

€ +5.2m YTD, and growth at Radial

Europe from new customers gained

in 2019.

Cross-border

Net favourable revenues impact

from COVID-19 (€ +9.7m) driven

by:

‐ a gradual ramp-up in Asian

parcel volumes since May,

evolving exponentially through

June, resulting from rail solution

as an alternative to air freight

‐ partly offset by COVID-19 linked

revenues losses on other

international parcels volumes (UK

and Rest of Europe) and lower

in- and outbound mail volumes

Excluding COVID-19, growth in

commercial business with Asia as

main driver.

Unfavourable YoY evolution of

terminal dues settlements (€ -3.1m).

PaLo Eurasia externaloperating income, € million

1

2

3

2 3

75.7

25.4

1H20

1H19 388.2

Parcels BeNe

E-commerce

logistics

13.2Cross-border

502.5

+114.3


Parcels BeNe

Parcels BeNe volume growth of

+50.0%1, driven by thriving online

sales during COVID-19 lockdown

(March to May volumes up by

63.2%).

COVID-19 revenue is estimated at

€ +44.7m.

1

1 Parcels volume growth is composed of former

Domestic Parcels (i.e. pre new segment reporting since

2019) and Dynalogic volumes. This does not cover the

full scope of Parcels BeNe since not all revenues

included in Parcels BeNe can be expressed in volumes.

1H19 1H20 % ↑

388.2 502.5 29.4%

178.4 254.1 42.4%

60.2 85.6 42.3%

149.6 162.8 8.8%

10.0 5.9 -41.5%

398.2 508.4 27.7%348.3 450.0 29.2%

49.9 58.4 17.1%11.2 10.6 -5.4%

38.7 47.8 23.6%9.7% 9.4%

41.6 49.3 18.5%10.4% 9.7%

3,141 3,640 15.9%

17.3% 50.0%

€ million

Reported EBIT

Margin (%)

Adjusted EBIT

Margin (%)


Parcels & Logistics Europe and Asia


Operating expenses


EBITDA


Parcels BeNe


Cross-border


Additional KPIs

Parcels volume growth

Strong EBIT development from positive COVID-19 volume impacts across all business lines

Key takeaways 1H20• Total operating income € +110.2m (+27.7%) driven by positive

development in all revenue lines, especially Parcels BeNe

(€ +75.7m, +42.4%). Total positive COVID-19 revenue impact stood at

€ +65.7m. Excluding COVID-19 and the unfavourable YoY evolution of

terminal dues (€ -3.1m), revenues were up € 47.6m.

• Excluding the unfavourable impact of terminal dues settlements

(€ -2.5m) and YoY VAT recovery impact (€ -2.5m), the operating

expenses (incl. adjusted D&A) increased by € -97.6m (+26.9%), mainly

from higher payroll, interim and transport costs driven by volume

growth across all business lines and specific COVID-19 opex, being: the

premium, increase in absenteeism, health and safety measures,

additional bad debt provisions, higher use of subcontractors.

• COVID-19 had an estimated EBIT impact of € +11.3m, from COVID-19

driven revenue increase in all business lines partly offset by the

aforementioned specific COVID-19 additional opex.

• Adjusted EBIT increased by € +7.7m to € 49.3m. Excluding YoY

additional VAT recovery and terminal dues settlements (together

€ -8.1m), adjusted EBIT was up € +15.7m (+47%) operationally.

57

1H20 – PaLo Eurasia


Parcels & Logistics North America driven by significant growth at existing clients and 2019 new business

58

1H20 – PaLo N. Am.


YoY increase of +35.4% (+32.4% at

constant exchange rate).

Revenue increase mainly driven by

Radial North America recording

significant growth of existing

customers (+31%) driven by

COVID-19 as well as new clients

launched in 2019, slightly offset by

client churn.

COVID-19 estimated impact on

revenues: € +92.0m

International mail

Declining revenues at The Mail

Group1 (-4.8%) despite positive FX

evolution (-7.2% at constant

exchange rate).

Significant drop-off in business mail

segment as a result of COVID-19.

COVID-19 estimated impact on

revenues at € -2.0m with the main

negative impact seen in April 2020

and improving month by month

thereafter.

1 Combination IMEX, Mail Inc & MSI

1

2

1 2

PaLo North America externaloperating income, € million

148.9

611.8

465.11H19

E-commerce

logistics

-2.2International

mail

1H20

+146.7


1H19 1H20 % ↑

465.1 611.8 31.5%

420.1 569.0 35.4%

45.0 42.8 -4.8%

2.5 3.3 36.7%

467.6 615.2 31.6%449.2 569.1 26.7%

18.4 46.1 150.4%33.2 42.7 28.4%

-14.8 3.5

-3.2% 0.6%

-8.3 10.1

-1.8% 1.6%

7,168 8,422 17.5%

386.4 532.5 37.8%

5.4 34.8

-20.1 0.7

Radial North America EBITDA, $m

Radial North America EBIT, $m


Additional KPIs, adjusted

Radial North America revenue, $m


Reported EBIT

Margin (%)

Adjusted EBIT

Margin (%)

€ million




EBITDA

International mail


Operating expenses


Strongly positive EBIT evolution of Radial partly offset by continuing margin pressure in International mail

Key takeaways 1H20• Total operating income increase of € +147.6m or +31.6% (+28.5% at

constant exchange rate) mainly driven by growth at Radial from

existing customers and customers launched in 2019. COVID-19

impact on revenues is estimated at € 90.0m.

• Operating expenses (incl. adjusted D&A) increased by € -129.2m

(€ -118.1m excl. FX) driven mainly by higher variable costs from

volume growth (primarily at Radial) and bad debt impact, as well as

increased D&A related to the 3 new fulfilment centers and COVID-

19 additional expenses. International Mail was impacted by YoY

increase in transport costs.

• COVID-19 impacted EBIT by an estimated € +16.2m, mainly related

to additional e-commerce logistics volumes, partly offset by

additional health and safety measures, increased transport costs

relating to International Mail and bad debt.

• Adjusted EBIT up € +18.4m driven by positive operating leverage in

E-commerce logistics, in particular at Radial. This was partially offset

by continuing margin pressure in International mail.

59

1H20 – PaLo N. Am.


Corporate EBIT decrease mainly driven by lower building sales

Key takeaways 1H20

• External revenues are down by € -15.7m driven by lower building

sales: the gain on headquarter sale of € 19.9m in 2Q19 was partly

offset by higher building sales in 1Q20.

• Operating expenses (incl. D&A) decreased by € +4.8m driven by

lower demand for services from the operational Business Units

(€ -1.9m intersegment operating income), especially due to lower

demand for IT-related projects. Net of the intersegment operating

income, the opex (incl. D&A) was down due to lower project costs

at corporate level (cost containment) more than offsetting

negative YoY VAT recovery impact (€ -1.7m) and additional

COVID-19 related costs.

• COVID-19 impacted EBIT by an estimated € -2.3m, mainly related

to additional costs for health and safety measures.

• As a result, adjusted EBIT decreased by € -12.7m.

60

1H20 – Corporate

1H19 1H20 % ↑

23.3 7.6 -67.2%

177.8 175.9 -1.1%

201.0 183.5 -8.7%164.5 158.2 -3.9%

36.5 25.3 -30.6%33.8 35.3 4.3%

2.7 -10.0

1.3% -5.4%

2.7 -10.0

1.3% -5.4%

1,634 1,623 -0.7%Average # FTEs and interims


Operating expenses

EBITDA


Reported EBIT

Margin (%)

Adjusted EBIT

Margin (%)

€ million

Corporate




Reported ‐ € million

1H19 1H20 Delta

Cash flow from operating activities 174.9 341.9 167.1

Cash flow from investing activities 15.7 -34.5 -50.2

Free cash flow 190.6 307.4 116.8

Financing activities -104.9 -51.0 53.9

Net cash movement 85.7 256.4 170.7

Capex (41.5) (45.4) (3.9)

Positive evolution of FCF1 mainly driven by payment terms in payables and lower tax related cash flows

61

+

CF from operating activities

Higher collected proceeds due to Radial’s clients: € +40.5m, high level of merchandise sale in

COVID-19 period

Absence of tax prepayment in 1H20 (vs. € -51.0m in 1H19)

Tax assessments on previous years: € +21.3m YoY variance (€ +7.5m positive settlement in 1Q20

vs. € -13.8m in 1Q19)

Excluding the above, CF from operating activities: € +54.3m, of which:

‐ € +65.4m improvement in working capital evolution: primarily positive impact of extended

payment terms in payables, partly offset by negative impact of clients balance evolution

‐ Partly offset by lower operating results

CF from investing activities

Proceeds from buildings sales: € -46.1m

Capex: € -3.9m (€ 45.4m 2Q20 vs € 41.5m

LY). Main investments in 1H20 include

increased capacity at Radial, Parcels B2C

and Active Ants, and ICT projects

CF from financing activities

Absence of dividend payment in 1H20:

€ +50.0m

1 Free cash flow = cash flow from operating activities + cash flow from investing activities

+

=

+

=

1H20


Additional info

€ million

FY18 FY19 FY18 FY19 % ↑ FY19 IFRS16

Total operating income 3,850.2 3,837.8 3,850.2 3,837.2 -0.3%

Operating expenses 3,279.1 3,300.2 3,279.1 3,300.2 0.6% +107.6

EBITDA 571.1 537.6 571.1 537.0 -6.0% +107.6

Depreciation & Amortization 177.7 247.7 146.8 226.2 -105.3

EBIT 393.4 289.9 424.3 310.8 -26.7% +2.3

Margin (%) 10.2% 7.6% 11.0% 8.1%

Financial result -23.8 -61.5 -23.8 -61.5 -9.7


Net profit 263.6 154.7 290.4 173.1 -40.4%

FCF 241.2 302.0 231.5 288.0 24.4% +112.3

bpost S.A./N.V. net profit (BGAAP) 262.3 172.6 262.3 172.6 -34.2%

Net Debt at 31 December 344.8 779.9 344.8 779.9 +432.3

Capex 114.9 162.3 114.9 162.3 41.2%Average # FTEs and interims 36,109 35,377 36,109 35,377

Reported Adjusted1

Key financials FY19

63








bpost net profit BGAAP excludes Centre

Monnaie’s profit on disposal:

Since the sales price will be reinvested,

the profit on disposal and related

taxation will be spread throughout the

depreciation of these reinvestments

This lowers the tax costs on the profit

on disposal as the statutory tax rate

decreased as from 2020 to 25%

1

3

2

1 Unaudited figures

FY19

1

3

1

1 1

2 2


Results by segment FY19

64

FY19

€ million


External operating income 1,897.1 813.2 1,097.5 30.1 0.0 3,837.8

Intersegment operating income 174.7 17.8 6.8 372.0 -571.2

Total operating income 2,071.7 830.9 1,104.2 402.1 (571.2) 3,837.8Operating expenses 1,734.2 747.7 1,048.7 340.7 -571.2 3,300.2

EBITDA 337.5 83.2 55.5 61.4 537.6


Reported EBIT 253.8 61.5 -16.1 -9.3 289.9

Margin (%) 12.3% 7.4% -1.5% -2.3% 7.6%

Adjusted EBIT 257.4 65.8 -3.0 -9.3 310.8

Margin (%) 12.4% 7.9% -0.3% -2.3% 8.1%


bpost Group’s long-term relationship with the Belgian State

Belgian State

State as a long-term

shareholder

• Belgian State has 51% shares

• bpost Group’s board is composed of

6 board members (incl. CEO) proposed by the Belgian

State and 5 independent directors

• Belgian State supports a regular dividend policy

bpost Group provides SGEIs1

on behalf of the State

2016-2020

• 2 press distribution contracts (newspapers & periodicals)

– prolonged for 2 years until the end of 2022

• Sixth management contract for other SGEIs

• Contractual amounts (excl. inflation2, volume impact &

sharing of efficiency gains) of € 261.0m in 2016 (actual

amount: € 264.9m), € 260.8m in 2017 (actual amount:

€ 270.0m), € 257.6m in 2018 (actual amount: € 271.4m),

€ 252.6m in 2019 (actual amount: € 271.0m) and

€ 245.6m in 2020

State as important customer

• State is a key commercial client to bpost Group

• Several other agreements in place with the State, such as

European license plates (won by bpost Group through

tender)

1 SGEI stands for Services of General Economic Interest cfr. slide 16 and 662 All amounts need to be adjusted for inflation on a cumulated yearly basis

Other SGEIs

Press

Shareholder

Belgian State

Free float

# shares

102,075,649

97,925,295


Sixth management contract and press concessions will be renegotiated before 2022

Scope

€ 271m state compensation in 2019Amount including inflation, volume variance and sharing of efficiency gains

State compensation

possible in case of USO being financial burden

Timing

USO & SGEI

Universal Service

Obligation (USO)

• Collect, sort, transport & distribute letter mail up to

2kg, parcels up to 10kg and parcels up to 20kg

from other EU member states

• 1 access point per municipality

• Collect and deliver 5x/week

• Full territory of Belgium

• USO pricing constraints

• Provide adequate information on USO products

and services

• Quality control obligation (95% of prior

mail/parcels D+1, 97% D+2)

6th Management Contract

Services not typically associated with mail operators

(SGEI), e.g.,

• Retail network

(1,300 postal service points of which

at least 650 post offices)

• Cash at Counter

• Election mail (distribution)

• Cash payment of pensions at home

Press concessions

• Also part of SGEIs

• Newspaper early delivery 6x/week

• Periodical delivery 5x/week

• Quality control obligation of maximum 7

complaints per 10,000 deliveries

• FTEs

• ~1,700 FTEs for newspaper deliveries which

are dedicated rounds

• Delivery of periodicals is integrated in the

regular mail rounds

• Complementary management contract granted by

the State

• Runs until end of 2023, renewable by consecutive

terms of 5 years

• Runs until end of 2020

• Notified and validated by European Commission

under State Aid rules

• Runs until end of 2022

• Notified and validated by European Commission

under State Aid rules



2008-19 CAGR for addressed mail volumesas reported by major incumbent European postal operators, percent

A relatively resilient mail market vs. other European operators

Addressed mail volume per capita 2019 operator level*

1 Includes addressed mail2 Includes addressed mail3 Includes addressed mail4 Includes addressed mail

European mail market

210

189

175

155

136

136

133

132

102

45

42

SW

UK

CH

AU

DE

FR

BE

NL

IT

DK

EU

Note: definition of addressed mail may differ by operator

Source: Company information; Annual reports; Investor presentations; IPC; Eurostat

5 Includes mail communication and dialogue marketing6 Includes addressed mail7 Includes addressed mail (publishers services excl.)8 Includes addressed mail excluding press

9 Includes all domestic mail10 Includes inland addressed mail11 Includes letter mail and addressed direct mail / media post

1

* Excludes domestic competitors

5

11

10

2

3

8

4

7

6

-5.4% SW

-12.9%

UK

DE

CH-3.5%

FR

AU

BE

EU

NL

IT

DK

-2.2%

-3.5%

-4.4%

-5.0%

-5.7%

-6.0%

-8.6%

-9.1%

5

1

11

9

10

3

2

4

7

6

(1) 2018 data

(2) 2008-18 data

(1)

(2)

Stéphanie VoisinManager Investor Relations

Email: [email protected]

Direct: +32 (0) 2 276 21 97

Mobile: +32 (0) 478 48 58 71

Address: bpost Group, Centre Monnaie, 1000 Brussels, Belgium

Saskia DheedeneHead of Investor Relations

Email: [email protected]

Direct: +32 (0) 2 276 76 43

Mobile: +32 (0) 477 92 23 43

Address: bpost Group, Centre Monnaie, 1000 Brussels, Belgium

Key contacts


Questions

2

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