Leading Mail and Logistics Operator in the Nordic Region Page 1
Created by the Biggest Merger of its kind in Europe PostNord AB was created through the merger of Posten AB and Post Danmark A/S in 2009 A leading supplier of business communication in the Nordic region 40% of shares held by the Danish state and 60% by the Swedish state. Votes are allocated 50/50 PostNord offers communication and logistics solutions to, from and within the Nordic region in Europe Mail operator for all of Denmark and all of Sweden One of the largest operators in Nordic advertising markets The strongest business partner for Nordic e-commerce 2011 results: Net sales of SEK 39 bn, EBIT margin of 4.0% A leading provider of logistics services to, from and within the Nordic region Supporting businesses, society and individuals with distribution services since 1624 Page 2
Strong Nordic Presence PostNord offers mail and advertising services in Sweden and Denmark Logistics services for flows to, from and within the Nordic region Page 3 Information logistics services throughout the Nordic region and in a number of other European countries, through Strålfors 12,000 mail carriers in Sweden and 11,000 in Denmark More than 4,800 distribution points with generous opening hours thoughout the Nordic region 30% Net sales 2011 9% Average number of employees 2011 2% 3% 3%1% 1% 56% Sweden Denmark Norway Finland Other countries 36% 59%
Continued Profitability ty in a Changing g Market Mail volume development PostNord, indexed EBIT PostNord, Posten and Post Danmark, SEKm 1 100 4 000 80 3 000 60 2 000 40 20 1 000 0 0 Page 4 1 EBIT 2002-2003 Posten & Post Danmark non-ifrs, EBIT 2004-2007 Posten & Post Danmark IFRS, PostNord from 2008
Extensive e Staff Reductions Implemented e Average number of employees 60 000 50 000 40 000-13,000 30 000 20 000 10 000 0 2008 2009 2010 2011 Q2 2012 Page 5
Mail Business: Increasing Efficiency cy Maintained level of mail business expenses per mail unit Decreasing level of mail business employees per mail unit 12 5000 Total exp pense/mail unit 10 8 6 4 2 4000 3000 Mail volum es Avg. no of emp ployees/million un nits 12 10 8 6 4 2 5000 4000 3000 Mail volum es 0 2000 0 2000 2008 2009 2010 2011 Q2 2012 LTM 2008 2009 2010 2011 Q2 2012 LTM Total expense/mail unit, SEK Avg. no of employees/million units Mail volumes, million units Mail volumes, million units in spite of a total mail volume decline of 18% since 2008 Page 6
Logistics Business: Increasing Logistics Share of Sales Net sales mix PostNord businesses, % 1 Mail Q2 2012 LTM 2011 2010 2009 2008 Logistics Strålfors Including the acquisition of Green Cargo Logistics, logistics services now represent more than 1/3 of Group net sales Page 7 1 Q2 2012 LTM includes 2011 net sales of Green Cargo Logistics.
Key Investment e t Highlights g Markets Regulated mail market with attractive cash flow profile. Logistics market with growth opportunities. Strong e-commerce growth driving demand for parcel services. Position Strong position as Nordic market leader. Comparatively high barriers to entry in mail. Opportunity to grow logistics market share. Financials Stable financial position. Proven ability to deliver margins and cash flows in a changing market environment. Additional rationalization potential. ti Ownership Highly critical service in society. Stable governmental shareholder structure in mid-term perspective. Change of control clause (51%). Financial targets Return on equity to exceed 10% over a business cycle. Equity-to-assets ratio of at least 35%. Policy to distribute 40% of net profit. Credit rating Unrated. Shadow ratings by SEB (BBB+) and Danske Bank (BBB+). Page 8
Businesses Business area Mail Denmark Business area Mail Sweden Business area Logistics Strålfors Delivers distribution solutions in the Danish communications market Mail Delivers distribution solutions in the Swedish communications market A leading operator in the Nordic logistics market offering a unique scope of coverage through the market s strongest distribution network Develops, produces and delivers systems and services for efficient business communication Net sales Q2 2012 LTM 1 Adjusted EBIT margin, % 34% 7% 22% Mail Denmark Mail Sweden Logistics 10% Mail Denmark 8% MilS Mail Sweden 6% 4% Logistics 2% Strålfors 37% Strålfors 0% 2009 2010 2011 H1 2012 Page 9 1 Q2 2012 LTM includes 2011 net sales of Green Cargo Logistics.
Mail Broad Service Portfolio o o Key services Mail distribution Advertising services Distribution of goods Business communication and other mail services (distribution of mail items/letters weighing less than 2 kg) Distribution of unaddressed and addressed direct mail Combined media services Consulting services Net sales per service area Q2 2012 LTM 27% 14% Material maintenance, supplier management, inventories, i customer 59% deliveries Letters Advertisements and Newspapers Other Home delivery services Concept for home delivery of goods, food and beverages to consumers Facility services Outsourcing of management of external and internal mail items for e-commerce, city logistics, municipal distributions, medical logistics, etc Newspaper distribution Distribution of newspapers and periodicals Page 10
Mail Structural Market Changes from Digitization PostNord mail volumes, million units Market position 3 000 2 500 2 000-3% ~-5% PostNord s market shares for physical mail distribution and direct marketing span from 65-95%, depending on service and market 1 500 1 000 500-12% ~-12% PostNord distributes close to 90% of domestic mail volumes in Sweden and 100% of domestic volumes in Denmark 0 2008 2009 2010 2011 2012E Breve Danmark Meddelande Sverige Largest direct competitor is Posten Norge -3% (Bring Citymail) il) focus on pre-sorted mail in large urban areas in Sweden Ongoing paradigm shift with an increased number of communication methods Bring Citymail closed its Danish operations in 2010 Co-ordinated initiatives in Nordic business and societies towards increased digitization Structural change to continue given increasing range of communication methods and political ambition to accelerate digitization for the public Mail volumes will continue to fall sharply in coming years, towards new and lower normalized levels Page 11
Logistics One eof the Region s ego Leading Logistics ogstcs Companies Key services and top 3 market positions Net sales per logistics service area Q2 2012 LTM Parcels Parcels B2B #1 in SE and DK, top 3 in NO Parcels B2C #1 in SE and DK, #2 in NO and SF Solutions InNight #1 in SE and NO, top 3 in DK and SF Green Cargo Logistics 7% 24% 47% 3PL Consignment freight/part loads Courier Top 3 position in Scandinavia Top 3 in NO #1 in DK Other logistics services Groupage/ #2 in NO, top 3-4 in SE pallets 22% Parcels Solutions Solutions: Green Cargo Logistics (2011 net sales) Other logistics services Page 12
Strålfors Restructuring and Focus on Value Creation Operations Key service areas Core business to help large companies to communicate with their customers in an effective and cost saving way Collects, processes, stores and delivers customers information that is crucial to the running of their businesses. Business in Sweden, Norway, Denmark, Finland, Poland, France and the UK Business Communication -3% Data Management (maintenance and development of databases) Marketing Communication Service Fulfillment (supply chain activities serving customers with information and logistics handling) Page 13
Strategic Outlook Roadmap PostNord 2015 Target picture Strategies Activities Deliver on merger rationale Leading Nordic logistics business Meet USO requirements Changes to meet mail volume decreases and ensure profitability Cost adjustments Implementation of new production strategy Dialogue on tomorrow s USO Create financial value Sustainable growth Improve operating margin Effective capital utilization Lay the groundwork for a potential IPO Profitable mail businesses Growth within logistics Appropriate capital structure Attractive dividend Cohesive group with strategic governance Increased coordination Improved efficiency Expansion within logistics broaden offer and market presence Develop profitable businesses that support mail business Value maximization of Strålfors Organic growth through additional sales and partnerships Potential complementary acquisitions Complementary digital it services New areas of application for existing production resources Cost reductions in existing core business Growth activities within Data Management, Marketing Communication, Fulfillment Page 14
Financial Position and Funding Overview Page 15
Financing Roadmap ap PostNord 2015 A cash generating mail business and growth opportunities within logistics A clear strategy for repositioning PostNord in keeping with market changes Increasing investments allowing for greater operational flexibility and scaleability Substantial restructuring costs but underlying cost cuttings Continued acquisitions Strong financial i position Aiming for greater financial flexibility Page 16
Group GoupSaesa Sales and Earnings SEKm H1 2012 H1 2011 2011 2010 2009 Net sales 19,480 19,743 39,466 41,669 44,663 Change, % -1-7 -5-7 -3 EBIT 114 631 1,571 1,375 284 Adjusted d EBIT 769 804 1,891 2,057 1,689 Net profit 1 59 498 1,225 1,031 2,414 EBIT margin, % 2 06 0.6 32 3.2 40 4.0 33 3.3 06 0.6 Adjusted EBIT margin, % 2 3.9 4.1 4.8 4.9 3.8 Adjusted EBIT margin, % Return on equity, rolling 12 months, % 3 6% 4% 2% 0% 2009 2010 2011 H1 2011 H1 2012 12% 10% 8% 6% 4% 2% 0% 2009 2010 2011 H1 2012 Page 17 1 Includes capital gain of SEK 2,002 on the sale of shares in bpost in 2009 2 Includes Other income 3 Excludes capital gain of SEK 2,002 on the sale of shares in bpost in 2009
Cost Management age e Expenses, SEKm Cost reduction program for administration as of 30 Jun, 2012 50000 40000 30000 20000 10000 2/3 completed Jun 30 0 Personnel expenses* Transport expenses, other expenses, depreciation and impairments* Restructuring costs Cost reduction program to reduce administrative expenses by SEK 1 billion by end of 2012, set up in 2011 In addition to ongoing rationalizations made within the group Cost base lowered by SEK 6.2 bn from 2009 to Q2 2012 LTM Page 18 *Excluding restructuring costs
Stable Cash Flows SEKm H1 2012 H1 2011 2011 2010 Cash flow from operating activities 723 671 1,634 1,824 Investing activities -2,026-767 -1,813-1,199 Financing activities 1,789-1,305-1,353-1,782 of which dividend payout to shareholders -368-1,000-1,000-1,440 Cash flow for the period 486-1,401-1,532-1,157 Liquid id funds, end of period 2,591 2,240240 2,107 3,640 CAPEX, % of net sales 4.9 3.4 4.9 3.1 Cash flow from operating activities, MSEK 1 Cash flow from investing activities, MSEK 1 2 000 1 500 4 000 1 000 500 2 000 0 Q309 Q210 2010 2011 Q212 LTM 0 Q309 Q210 2010 2011 Q212 LTM Page 19 1 Data starting from creation of PostNord Group. 2009 cash flow from investing activities excludes effect from the sale of shares in bpost
Solid Financial a Position o Net debt and net debt/ebitda, SEK and times 2000 1000 0 1000 2000 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 1,0 0,5 0,0 0,5 1,0 10 Net financial position SEKm Jun 30, 2012 Jun 30, 2011 Dec 31, 2011 Dec 31, 2010 Cash and cash equivalents 2,591 2,240 2,107 3,640 Interest-bearing liabilities 3,252 1,146 1,098 1,454 Pension provisions 1,640 1,402 1,587 1,458 Net debt 2,301 308 578-728 Equity-to-assets to ratio, % 41 46 47 46 Fin. preparedness, SEK bn 4.6 Major off-balance sheet items as at 31 Dec 2011 Operating leases of SEK 7.3 bn, of which 6.5 relating to real property Pension commitments of SEK 18.2 bn, whereof SEK 15.8 bn funded pension plans. Assets managed by Posten Pension Fund amounts to SEK 14.3 bn, consolidation 104%. Expected payments of SEK 1 bn in 2012 relating to benefit plans Aiming for greater financial flexibility Page 20
Sources and Uses of Capital Cash generation Investments in operations PP&E investments of SEK 7-8 bn expected in 2012-2014 2014 Increase group profitability and cash flow from operations Release of capital by increasing capital efficiency Logistics M&A Restructuring costs When available, acquire accretive businesses in line with strategy t to grow profitably SEK 2-3 bn expected in total in 2012-2014. Normal run rate of 0.5-1.0% 10% of personnel expenses External funding Shareholder remuneration Dividend policy: 40% of net profit. Dependant on implementation of strategy and financial position Optimise capital structure by increasing indebtedness Liquidity/buffer Finance policy: Payment readiness to exceed SEK 1,5bn Prudent assessment based on general macroeconomic development, mail volume development and other significant market changes Page 21
Key Investment e t Highlights g Markets Regulated mail market with attractive cash flow profile. Logistics market with growth opportunities. Strong e-commerce growth driving demand for parcel services. Position Strong position as Nordic market leader. Comparatively high barriers to entry in mail. Opportunity to grow logistics market share. Financials Stable financial position. Proven ability to deliver margins and cash flows in a changing market environment. Additional rationalization potential. ti Ownership Highly critical service in society. Stable governmental shareholder structure in mid-term perspective. Change of control clause (51%). Financial targets Return on equity to exceed 10% over a business cycle. Equity-to-assets ratio of at least 35%. Policy to distribute 40% of net profit. Credit rating Unrated. Shadow ratings by SEB (BBB+) and Danske Bank (BBB+). Page 22
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. Page 23
postnord.com Investor Relations oscar.hyleen@posten.se monica.edblad@posten.se Treasury magnus.wilsby@posten.se martin.andersson@posten.se