The Impact of Digitalization on the Romanian Post

Romania – Overview

• Population: 19.6 million (2017 est)• 7th largest population in the EU, between

Poland and the Netherlands

• GDP: 23,957 USD (PPP, per capita)Euro area average: 38,234

• GDP growth: ~4.5% p.a. (past 5 years)Fastest growth in the EU for 2016, 2017

• Internet connection speed:Top 10 in the world by almost any metric (average connection speed, percentage of high-speed connections, etc)

• Relatively low Internet penetration (58%, compared to Europe’s 78% average)

0 lei

200,000,000 lei

400,000,000 lei

600,000,000 lei

800,000,000 lei

1,000,000,000 lei

1,200,000,000 lei

1,400,000,000 lei

1,600,000,000 lei

2008 2009 2010 2011 2012 2013 2014 2015

1,4

00

,303

,00

0

1,4

35,7

40

,00

0

1,37

6,8

50,0

00

1,26

4,8

10,7

98

1,20

5,53

2,0

00

1,15

2,9

71,0

00

1,12

5,29

9,5

45

1,0

78,6

70,8

97

CAGR -3,66%

Romanian Post Turnover

CAGR -3,66%

¹ Other Revenues: changing destination; press subscription; retail; E-post; Postfax; mailboxes subscription; other revenues; settlements with foreign postal administrations (~46% of

other revenues); sales of goods

Letter Post, including Ipost[19,71%]

Parcels [2,99%]

Express[2,77%]

Registered Items

[16,15%]

Pay on delivery, including

Special Delivery[2,81%]

DirectMail

[0,53%]

Postal&

Financial Services(money

transfer) [4,92%]

Cash collection

[2,56%]

Pensions[35,76%]

OtherRevenues¹[ 11,80%]

Romanian Post Revenue Structure (2015)

Pensions

• High market share in a slow-growing market

• Market share: 80%

• Defend existing business

• Constant fee in the last 3 years:

• Future trend: development in bankingproducts (credit card)

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100,000,000 lei

200,000,000 lei

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500,000,000 lei

600,000,000 lei

2008 2009 2010 2011 2012 2013 2014 2015

464,759,360

514,477,390

520,837,553

435,793,550

408,732,340

398,839,119

384,353,959

394,419,231

• High market share in a slow-growing market

• Market share: 70%

• New product implemented: IPost

• Defend existing business

• Adapt core business

• Optimize/automate/digitize/capture value from digitalspace

• Introduce mail to the young generation – mobile apps

0 lei

50,000,000 lei

100,000,000 lei

150,000,000 lei

200,000,000 lei

250,000,000 lei

300,000,000 lei

350,000,000 lei

400,000,000 lei

2008 2009 2010 2011 2012 2013 2014 2015

384,611,435

364,164,672

342,953,749

327,730,226

308,376,945

277,591,502

227,224,877

217,441,004

Letters (Letter Post, IPost)

E-commerce Statistics

• 5,000 active online stores (2016)

• 8.4 average orders per customer per year

• Payment methods:• 90% cash on delivery

• 7% card online

• 3% other methods (online banking, SMS, etc)

0

500

1000

1500

2000

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3000

20132014

2015

2016

2017

mil.

EU

R

45%

21%

30%

est. 30%

Romanian E-commerce Market Size

Parcels and Express

• Weak competitive position in a rapidly growing markets

• Market share: 12%

• Future trends: + 15% market share

• Adapt core business:

• Requires innovation for improving competitive position

• AWB – recently implemented

• new business product for e-commerce services

providers – Pick up Point (PostCollect)

• D+1 – nationwide is required for improving market

share 0 lei

5,000,000 lei

10,000,000 lei

15,000,000 lei

20,000,000 lei

25,000,000 lei

30,000,000 lei

35,000,000 lei

2008 2009 2010 2011 2012 2013 2014 2015

25,869,890

26,620,370

26,581,260

29,172,507

30,061,404

28,289,309

29,188,716

32,937,647

0

100

200

300

400

500

600

2014

2015

2016

2017

Mil.

EU

R

17%

23 %

est 21%

Romanian Parcels Market Size

Romanian Parcels Market Share

Nume FirmaCifra Afaceri2015 [lei]

% in total CA

FAN COURIER EXPRESS SRL 399.323.193 27,31%

URGENT CARGUS SRL 311.920.096 21,33%

NEMO PROD COM IMPEX SRL 109.812.815 7,51%

DPD Romania 94.800.000 6,48%

GLS General Logistics 55.900.000 3,82%

Atlassib 34.500.000 2,36%

COMPANIA NATIONALA POSTA ROMANA 30.526.893 2,09%

SPRINT CURIER 19.513.395 1,33%

SOMEDAY (DELIVERY SOLUTIONS) 8.608.369 0,59%

Altii (incl. DHL, TNT, UPS) 397.500.000 27,18%

1.462.404.761 100,00%

Source: The Ministry of Finance, May 2016

Romanian Post’s e-Services

• In 2015, by launchig a new website, Romanian Post started to extend its services to Internet users

• The first two postal e-services available on Romanian Post's website are: money transfer (through

eMandat postal service) and press subscription. Both services offer the card payment option

• Other postal e-services available on Romanian Post's website are: postal codes and offices lookup

(with multiple filter options), electronic tracking of postal shipments (with a subscription for

automated e-mail notification)

• Within the website, a section with complex functions for filling postal forms is underconstruction,

and will be launched for normal users in Q2 2016. The business clients benefit from a dedicated

platform for postal shipments management (awb.posta-romana.ro)

• Also, new services with electronic payment (i.e. postal stamps selling and personalized postcards

sending) will be launched on Romanian Post website in Q3 2016

POST COLLECT®

• A new product tailored to online stores, available nationwide

• Parcel delivery in Post Office, at customer’s choice and convenience

• Integrated software application for client’s websites (post offices database)

• Improved circulation times (D+1)

• Dedicated postal counters within post offices, extended working hours, including weekends

• SMS / e-mail notification

• Competitive tariffs

POST COLLECT® Partnership with eMag®

POST COLLECT® Shipments for eMag

365

4,86510,528

18,935

80,606

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Jan/16 Feb/16 Mar/16 Apr/16 May/16 Jun/16 Jul/16 Aug/16 Sep/16 Oct/16 Nov/16

During Black Friday, the traffic reached 90,680 packages (November 2016)