Summary 2015 Norway Post 1
4th quarter and preliminary result 2015 Part 1: Highlights and developments CEO Dag Mejdell Part 2: Results and segment review CFO Tone Wille Part 3: Q&A 2
Part 1: Highlights and developments CEO Dag Mejdell 3
2015 Highlights The growth in e-commerce continues. The Group's total e-commerce volume increased by 6 % in 2015 The new Postal Services Act is effective from 1 January 2016. The act allows discontinuance of mail distribution on Saturdays. The law will contribute to the Group s ability to adjust in line with changing customer needs At the end of 2015 Digipost had passed 587 000 users Absence due to sickness was 6 % in 2015, an improvement of 0.3 - percentage points from 2014 Delivery quality for priority mail in the fourth quarter: 85.2% (0.2 percentage points above the licence requirement). Delivery quality for priority mail in 2015 was 85.4% Second-generation biodiesel has now been tested on trucks with good results, and will therefore be used on an increased number of trucks in the Norwegian operations 4
2015 Highlights Operating revenues: MNOK 25 074, up 2.7 % from 2014 Earnings before interest and taxes*: MNOK 686, down 26.5 % from 2014 Return on invested capital (last 12 months)*: 9.9%, down 4.0 percentage points from 2014 * Before non-recurring items and write-downs 5
Operating revenue (MNOK) 2.7 % 25.000 22.613 22 451 22.981 22 925 23 557 24.404 25.074 20.000 15.000 10.000 5.000 0 2009 2010 2011 2012 2013 2014 2015 6
Earnings (EBIT) before non-recurring items and write downs (MNOK) 1.051 1 116 1.125-26.5 % 1.000 942 933 772 686 500 0 2009 2010 2011 2012 2013 2014 2015 7
Operating revenues from foreign companies 8.9 % Operating revenues in MNOK 9.000 8.000 7.190 8.122 8.845 7.000 6.443 6.434 6.000 5.871 5.855 5.959 5.000 4.886 4.000 3.967 3.000 2.000 1.000 0 1.658 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Operating revenues from foreign companies accounted for 35.3 % of the Group's operating income, up 2,0 percentage points from last year 8
Income statement Q4 2015 Q4 2014 MNOK Year 2015 Year 2014 6 623 6 553 Operating revenues 25 074 24 404 402 614 EBITDA 1 474 1 723 214 413 EBIT before non-recurring items and write-downs 686 933 381 139 Write-downs 385 282 218-60 Non-recurring expenses/(income) 307-66 5 86 Share of profit from associates* 245 126-380 420 EBIT 239 844-6 -67 Net financial items -88-123 -386 353 Income before tax 151 720 83 118 Taxes 173 271-469 235 Net income -21 449 * Includes gain from the sale of shares in EVRY ASA 9
Posten Norge will discontinue Saturday mail deliveries on 5 March 2016 From 5 March 2016 Posten Norge will discontinue mail deliveries on Saturdays. This is a consequence of declining letter volumes. Volumes on Saturdays are only some 25% of the volumes on weekdays. The new Postal Services Act of 01.01.2016 allows for this change. The discontinuing of letter deliveries on Saturday will lead to reductions of about 400 full time employees, mainly Saturday delivery personnel, and the reorganisation of shifts for approximately 10,000 employees Regional and local delivery of Saturdays newspapers will continue until further notice The Ministry of Transportation has announced a tender process for the distribution of subscription newspapers on Saturdays in areas where the newspapers do not have their own distribution network. Tender submission deadline is April 27th. Posten Norge will participate in the tender 10
Posten is planning to reduce the cost of staff and support functions The Group aims to reduce the cost of staff and support functions by MNOK 125 during 2016 This will involve a workforce reduction of 110-130 full time employees Posten has also started working on identifying opportunities for streamlining its customer service centres 11
Posten is planning to merge priority and non-priority mail into one 2-day delivery service in 2017 The decline in letter volumes is expected to continue Posten plans to merge priority and non-priority mail into a new letter service with 2-day delivery time The restructuring will provide significant cost savings For customers, a 2-day service will provide high precision and be well adapted to changing customer needs Proposed to be implemented in 2017 The proposal requires approval by the Ministry of Transportation
Posten's employees are more satisfied and less sick Over the last ten years, absence due to sickness has reduced by 35% 10 9 Absence due to sickness % Posten Group 90 80 70 60 61 67 67 68 71 72 73 75 76 75 77 78 78 79 80 8 50 40 7 30 6 20 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Absence due to sickness fell from 9.3% in 2006 to 6% in 2015. This means 550 more employees present at work every day. Society saves MNOK 315 per year and savings for Posten are approximately MNOK 200. Employee satisfaction shows good progress over time. Record high satisfaction in 2015 with 80 points. 90% percent of the employees responded to the survey
4th quarter and preliminary result 2015 Part 2: Results and segment review CFO Tone Wille 14
Norway Post s Segment Structure Group Mail Logistics 15
Segment distribution of external revenues 30 000 25 000 20 000 15 000 59 % 62 % 63 % 10 000 5 000 41 % 38 % 37 % 0 2013 2014 2015 Mail Logistics 16
Segment Post mail logistics Letter Products Banking services Dialogue services 17
Key figures 2015 mail logistics Operating revenues for 2015 were MNOK 10 069, MNOK 75 lower than last year Volume decrease addressed mail 6.4 % 11 000 10 800 10 600 Operating revenues 10 607 10 485 Volume decrease unaddressed mail 5.4 % Volume increase in Bring Citymail Sweden 1.0 % 10 400 10 200 10 409 10 144 10 069 10 000 2011 2012 2013 2014 2015 Earnings before write-downs and non-recurring items were MNOK 816 in 2015, MNOK 31 lower than 2014 Positive effects from cost reducing measures compensated for the decline in volumes The volume decline is expected to accelerate in 2016 and beyond Growth (%) -1,9 0,7-3,3-0,7 EBITE 1.142 1.150 1.100 1.065 1.050 1.000 1.033 950 900 850 816 847 800 2011 2012 2013 2014 2015 EBITEmargin (%) 9,7 10,2 10,9 8,3 8,1 18
Segment Logistics mail logistics Parcels Express Cargo Frigo Warehousing Supply Services 19
Key figures 2015 mail logistics Operating revenues for 2015 were MNOK 16 777, an increase of 5.2 % from 2014 17.000 16.500 Operating revenues 16.777 Growth in revenues for the Nordic operations The increase in private e-commerce continued Significantly affected by lower activities in the oil industry 16.000 15.500 15.000 14.500 14.000 13.500 13.000 15.941 14.248 14.941 14.317 2011 2012 2013 2014 2015 Earnings before write-downs and non-recurring items were MNOK 71 in 2015, a decrease of MNOK 336 from 2014 The decrease is as a consequence of the downturn in the oil industry, generally lower activity in the Norwegian economy and decrease in the profitability of the parcel business Market conditions are still challenging for the logistics operations in Sweden and Denmark, particularly within road freight Growth (%) 0,5 4,4 6,7 5,2 450 400 350 300 250 200 150 100 50 0 EBITE 315 435 236 407 2011 2012 2013 2014 2015 EBITEmargin (%) 2,2 3,0 1,6 2,6 0,4 71
Summary Reduced activity in the oil industry and slower growth in the Norwegian economy negatively affects the activity level in the logistics market in Norway. This is expected to continue Targeted focus on logistics continues. The establishment of a new terminal structure in Norway is progressing as planned Discontinuance of Saturday mail distribution as a response to declining letter volumes. Next steps are to merge priority and non-priority mail into a new letter service (assuming political clarification) Need for cost adjustments also includes a process to reduce costs in staff and support functions 21