bpost SA/NV

Earnings Release • May 2, 2018

First quarter 2018 results

Analyst call

Koen Van Gerven, CEO Henri de Romrée, CFO

Brussels – May 3, 2018

Investor presentation - Interim financial report 1Q18

Financial Calendar

More on corporate.bpost.be/investors

09.05.2018 Ordinary General Meeting of Shareholders

15.05.2018 Ex-dividend date

17.05.2018 Payment date of the dividend

21.06.2018 Capital Markets Day (Brussels) 08.08.2018 (17:45 CET) Quarterly results 2Q18

07.11.2018 (17:45 CET) Quarterly results 3Q18

03.12.2018 (17:45 CET) Interim dividend 2018 announcement

06.12.2018 Ex-dividend date

10.12.2018 Dividend payment date

Disclaimer

This presentation is based on information published by bpost in its First Quarter 2018 Interim Financial Report, made available on May, 2nd 2018 at 5.45pm CET 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 forwardlooking 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.

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

Highlights of 1Q18

Revenues up 27.0%

• Driven by acquisitions and continued strong parcels growth, partly offset by declining Domestic Mail revenues

Underlying Domestic Mail evolution

• -6.6% vs. the best quarter of 2017 at -4.7%
• Transactional Mail at -6.7% improved vs. FY17 at -8.1%
• Advertising Mail impacted by phasing towards 2Q18 and one-off campaigns last year

Outstanding parcels performance

• Domestic: continued double-digit volume growth driven by thriving e-commerce and C2C; price/mix effect of -6.1% fully mix related
• Logistic Solutions: mainly driven by Radial acquisition (€ +193.4m)

Organic costs impacted by higher parcels volumes, wage drift & absenteeism

• Opex influenced by acquisitions (€ +212.5m)
• Organic cost increase mainly in payroll & interim, transport, rent & project related costs

EBITDA below last year, in line with guidance

BGAAP net profit of bpost SA/NV

2018 outlook: normalized EBITDA at the low end of the range due to mail volume decline, absenteeism and productivity in parcel sorting; dividend at least € 1.31

-6.6% +28.3% + € 198.0m + € 231.5m € 916.2m

€ 140.2m

€ 72.3m

EBITDA impacted by anticipated mail volume decline, lower gain on building sales and organic cost increase

€ million

Radial diagnostic & action plan

Diagnostic

• Radial has a strong value proposition in a growing industry and the required operations to deliver that proposition.
• Phase-out of webstore business, decided in 2014, will impact financial performance in 2018 & 2019 as expected for an amount of \$ 35m to \$ 40m compared to 2017.
• Commercial function requires an improvement to address a number of critical points:
• Customer churn is higher than expected due to: insourcing, bankruptcies, acquisitions and insufficient focus on customer satisfaction
• Total Contract Value ("TCV") of new contracts signed in 2017 was below target. 1Q18 is also showing a slow start reflecting an insufficient pipeline. Lead time in fulfillment and transport between customer decision and top line impact could be around ~9 to 18 months
• Radial's international activities are considered as a strategic asset for bpost's future and will be integrated with other European fulfillment facilities under bpost leadership

Action plan

• Commercial initiatives defined and being implemented to grow the top line including:
• Robust lead generation to improve pipeline management and increase TCV realization
• Hire top Chief Revenue Officer
• Initiatives taken to improve customer satisfaction
• Initiatives taken to keep costs under control

Radial's performance in 1Q18 was slightly better than expected

• 1Q18 revenues slightly below last year driven by Fulfilment & Transport revenues +7.5% YoY offset by webstore phase-out and decrease in customer care revenues
• 1Q18 EBITDA slightly better than expected in a highly seasonal business due to higher volume from existing clients, better than budgeted productivity and cost control but below LY as a result of:
• Phase-out of (high margin) webstore business
• Increase in charge backs resulting from increased fraud activity

€ m	Reported 1Q18
Total operating income (revenues)	193.4
Operating expenses	191.9
Transport (c. 30%)
Payroll & interim (c. 40%)
Other SG&A (c. 15%)
Other costs (c. 15%)
EBITDA	1.5
Margin (%)	0.8%

Summary of key financials 1Q18

€ million

	Reported		Normalized1
	1Q17	1Q18	1Q17	1Q18	% Δ
Total operating income (revenues)	721.5	916.2	721.5	916.2	27.0%
Operating expenses	544.5	776.1	544.5	776.1	42.5%	€ 2.0m linked to amortization on
EBITDA	176.9	140.2	176.9	140.2	-20.8%	intangible assets
Margin (%)	24.5%	15.3%	24.5%	15.3%		(purchase price allocation "PPA"
EBIT	154.2	104.8	154.2	106.8	-30.7%	Ubiway, Dynagroup
Margin (%)	21.4%	11.4%	21.4%	11.7%		& de Buren)
Profit before tax	150.3	98.1	150.3	100.1	-33.4%
Income tax expense	54.2	35.6	54.2	36.1		Tax impact of PPA on amortization of
Net profit	96.1	62.5	96.1	64.0	-33.3%	€ 0.5m
FCF	166.2	151.3	166.2	151.3	-9.0%
bpost S.A./N.V. net profit (BGAAP)	94.3	72.3	94.3	72.3	-23.4%
Net Debt/ (Net cash), at 31 March	(659.1)	145.7	(659.1)	145.7

Total operating income (revenues)

€ million

		1Q17	∆	1Q18	% ∆
	Transactional mail	214.2	-7.9	206.2	-3.7%
Domestic mail	Advertising mail	67.4	-3.9	63.4	-5.8%
	Press	75.0	-2.3	72.7	-3.1%
Parcels	Domestic parcels1	52.4	10.9	63.3	20.8%
	International parcels	53.3	1.5	54.8	2.9%
	Logistic solutions	34.0	198.0	232.0	-
	International mail	42.1	13.9	56.0	32.9%
Additional	Value added services	26.0	0.8	26.9	3.3%
sources of revenues	Banking and financial	46.6	-2.9	43.7	-6.2%
	Distribution	26.1	-2.6	23.5	-10.0%
	Retail & Other	70.7	-2.4	68.4	-3.4%
	Corporate	13.7	-8.4	5.3	-61.4%
TOTAL		721.5	194.8	916.2	27.0%

¹ Defined as domestic and Belgian in- and outbound

1Q18

Domestic mail underlying volume trend at -6.6% driven by weak advertising mail & continued e-substitution

9

Total operating income (revenues), € million

Continued outstanding domestic parcels performance, growth in Logistic Solutions driven by Radial

Total operating income (revenues), € million

• Consolidation of Radial as of 16 November 2017 (revenues are reported under Logistic Solutions), revenues slightly below last year.
• Reported volume growth of +28.3% driven by thriving e-commerce and the online C2C product offering.
• Price/mix of -6.1%: price increase fully offset by product & client mix effect.
• Growth driven by higher revenues from Europe and US (despite negative FX impact), slight decrease in revenues from Asia.
• Mainly Leen Menken consolidated as of January 2018.

¹ Defined as domestic and Belgian in- and outbound

Additional sources of revenues driven by acquisitions

Total operating income (revenues), € million

¹ M.A. I.L., Inc. 1Q18 contains January & February 2018. Consolidation of March figures deferred to a later quarter.

Opex influenced by acquisitions (€ +212.5m), payroll & interim impacted by higher parcels volumes, wage drift & absenteeism

Operating expenses excl. depreciation and amortization, € million

Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc.

• Excluding scope change, driven by evolution of the international activities.
• Average reported FTE & interim increase of 7,022 leading to € +91.0m additional costs and explained by the integration of FTE & interims from new subsidiaries, higher parcels volumes and absenteeism.
• Favourable FTE mix of € -3.1m driven by the recruitment of auxiliary postmen.
• Price effect of € +6.0m mainly explained by salary indexation, CLA and merit increases only partially compensated by the impact of the tax shift.
• Excluding scope change, increase in rent and rental costs (mainly new Brussels sorting centre) and project related costs.
• Excluding scope change, decrease driven by higher recoverable VAT and lower material costs.

Lower operating FCF1 mainly due to decreased operating results

€ million	1Q17	1Q18	Delta
Cash flow from operating activities	+255.6	+229.9	-25.7
Cash flow from investing activities	-89.3	-78.6	+10.8
Operating free cash flow	+166.2	+151.3	-14.9
Financing activities	-0.3	-3.9	-3.6
Net cash movement	+165.9	+147.4	-18.6
Capex	-13.0	-14.4	-1.5
• Operating results: € -23.6m • Changes in working capital: € -2.1m
Proceeds from sale of buildings: € -8.7m • • Higher capex: € -1.5m • Cash outflows related to acquisitions: € +21.0m, mainly DynaGroup acquisition cash outflow in 1Q17 vs. contingent consideration • in 1Q18: € +8.2m
• LGI shares in 1Q17: € +31.7m New acquisitions: € -19.1m • • Transactions with minorities: € -0.3m
• Payments related to borrowings and leasing liabilities: € -3.3m

13

Strong balance sheet structure

€ million

Dec 31, 2017 Mar 31, 2018

Mar 31, 2018 Dec 31, 2017

Outlook for 2018¹

Normalized EBITDA at the low end of the € 560 to 600m range Dividend payment at least at the same level as 2017

Revenues

Increase driven by:

• Growth in domestic parcels: volume double digit, price/mix effect between -3% and -6%
• Continued growth in international parcels supported by newly acquired businesses
• Stable Radial revenues
• Partly offset by volume decline in domestic mail2 up to -7%, average domestic mail price/mix effect of +4%
• Continued decline in Banking & Financial revenue

Operating expenses

Increase driven by:

• Increase in transport cost (reflecting growth in International Parcels & Mail)
• Consolidation of acquired businesses
• Salary indexation expected as of November 2018
• Radial costs impacted by phase out webstore business and higher than expected opex (medical benefits & inflation) not fully compensated by productivity improvements
• Partly compensated by continued productivity improvements and optimized FTE mix and
• Continued cost optimization

Capex

• Recurring & Vision 2020 investments and business development investments for new subsidiaries (Radial, Ubiway and Dynagroup) for an estimated total amount of ~ € 140m

¹ Outlook for 2018 includes the acquisitions of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc. and Active Ants

² 2Q18 will count 1 working day less on stamps, 3Q18 will count 1 working day more on franking machines and 2 more on stamps and 4Q18 will count 2 working days more on franking machines vs. the same quarters of 2017.

Key contacts

Baudouin de Hepcée Director External Communication, Investor Relations & Public Affairs	• Email: baudouin.dehepcee@bpost.be Direct: +32 (0) 2 276 22 28 • • Mobile: +32 (0) 476 49 69 58 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Saskia Dheedene Manager Investor Relations	• Email: saskia.dheedene@bpost.be Direct: +32 (0) 2 276 76 43 • • Mobile: +32 (0) 477 92 23 43 Address: bpost, Centre Monnaie, 1000 Brussels, Belgium •