CTT-Correios de Portugal

Investor Presentation • Nov 2, 2023

9M23 results presentation

Disclaimer

DISCLAIMER

This document has been prepared by CTT – Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the presentation of the 9 months 2023 results (9M23). As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity, for any other reason or purpose without the express and prior written consent of CTT. This document (i) may contain summarised information and be subject to amendments and supplements, and (ii) the information contained herein has not been verified, reviewed nor audited by any of the Company's advisors or auditors.

Except as required by applicable law, CTT does not undertake any oblicly update or revise any of the information containedinthis document. Consequently, the Company does not assume liability for this documentif it is used for a purpose other than the above. No express or implied representation, warranty or undertaking is made as to, and no reliance shall be placed on, the accuracy, completeness of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, directors, employees or advisors assume liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this document or its contents. Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement.

This document has an informative nature and does not constitute, nor must it be interpreted as, an offer to sell, issue, exchange or buy any financial instruments (namely any securities issued by CTT or by any of its subsidiaries or affiliates), nor a solicitation of any kind by CTT, its subsidiaries or affiliates. Distribution of this document in certain jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and observing any such restrictions. Moreover, the recipients of this documentare invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Securities Market Commission's website (www.cmvm.pt). In particular, the contents of this presentation shall be read and understood in light of the financial information disclosed by CTT, through such means, which prevail in regard to any data presented in this document. By attending the meeting where this presentation is made and reading this document, you agree to be bound by the foregoing restrictions.

FORWARD-LOOKINGSTATEMENTS

This presentation contains forward-looking statements. All the statements herein which are not historical facts, including, but not limited to, statements expressing our current opinion or, as applicable, those of our directors regarding the financial performance, the business strategy, the management plans and objectives concerning future operations and investments are forward-looking statements that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "anticipates", "will", "targets", "may", "would", "could", "continues" and similar statements of a future or forward-looking nature identify forward-looking statements.

All forward-looking statements included herein involve known risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results, performance or achievements to differ materially from those indicated in these statements. Any forward-looking statements in this document reflect our current views concerning future events and are subject to these and other risks, uncertainties and assumptions relating to the results of our operations, growth strategy and liquidity, and the wider environment (specifically, market developments, investment opportunities and regulatory conditions).

Although CTT believes that the assumptions beyond such forward-looking statements are reasonable when made, any third parties are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of CTT, what could cause the models, objectives, plans, estimates and / or projections to be materially reviewed and / or actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Forward-looking statements (in particular, the objectives, estimates and projections as well as the corresponding assumptions) do neitherrepresent a commitment reqarding the models and plans to be implemented, nor are they guarantees of future performance, nor have they been reviewed by the auditors of CTT. You are cautioned not to place undue reliance on the forward-looking statements herein.

All forward-looking statements included herein speak only as at this presentation. Except as required by applicable law, CTT does not undertake any oblicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Operational Review

Strong growth in E&P and Banco CTT coupled with solid cash-flow performance

• Portugal • Spain	• • • •
• •	• • •
• • •	• •
• • •	• •

9M23 rec. EBIT growing in all segments against a more challenging macro backdrop

	Express & Parcels		Mail & Other2		Financial Services & Retail		Banco CTT
	3Q23	9M23	3Q23	9M23	3Q23	9M23	3Q23	9M23
Revenues	€88.1m	€229.5m	€100.1m	€323.0m	€8.5m	€54.8m	€38.3m	€108.1m
	(+35.5%)	(+22.2%)	(-3.6%)	(-6.5%)	(-44.6%)	(+38.6%)	(+19.3%)	(+20.1%)
Recurring	€6.2m	€12.1m	€0.1m3	€4.9m	€4.9m	€32.9m	€8.5m	€18.2m
EBIT1	(+484.7%)	(+153.5%)	(-98.8%)	(+2.2%)	(-41.2%)	(+67.8%)	(+107.6%)	(+89.6%)

E&P in Portugal delivers resilient growth as e-commerce adoption increases

Diversified pool of clients across sectors

E&P in Portugal with a robust margin expansion

Operational leverage delivering sustainable high margins

E&P in Spain maintaining high rates of growth

High growth fueled by all client segments, with the smaller clients outperforming and improving diversification

Growth and operational leverage enabling margin expansion in E&P in Spain

Swift capacity upgrades to protect quality at much higher volumes

Softer mail volumes penalised by steeper digitalisation trends

Average revenue per item increasing, on the back of higher prices, but not fully compensating volume declines

Continued focus on profitability, including pricing and cost measures, to cope with softer volume trends

	Headcount (#)	Cost (€m)	Annualised impact in / EBIT (€m)	(Payback (years)
9M23	83	4.2	2.5	1.2
4Q23/FY24	~200	12-15	~5.0-5.5	<3

Key profitability drivers are volumes and pricing in a context where staff reduction will deliver results in 2024

Less attractive rates and stringent cap impacted placements and thus profitability

Insurance Products | CTT sales ramp up % of total CTT stores selling insurance products

Expansion towards other type of services Partnership with Prosegur, a security company

Financial Services | Revenues & rec. EBIT € million; % change vs. prior year

Steady growth towards medium-term targets

Number of Accounts Thousands, EoP

Business volumes (loans and resources) € billion; EoP

Combined healthy growth in loans and deposits

Banco CTT strategic focus is on customer deposits

Continued revenue growth driving profitability

Financial review

Continued growth of revenues and recurring EBIT coupled with healthy FCF

Key financial indicators

€ million; % change vs. prior year		Quarter			9 months
	3Q22	3023	y.o.y	9M22	9M23	y.o.y
Revenues 1	216.4	235.0	8.6%	662.8	715.4	7.9%
Operating costs - EBITDA -	180.0	199.5	10.9%	576.0	599.8	4.1%
EBITDA ²	36.4	35.5	-2.4%	86.8	115.6	33.1%
Depreciation & amortisation	16.3	15.8	-2.9%	48.1	47.5	-1.1%
י Recurring EBIT	20.1	19.7	-2.0%	38.8	68.1	75.6%
Specific items	-2.2	1.9	n.m.	-4.3	11.0	n.m.
EBIT	22.3	17.8	-20.1%	43.0	57.1	32.7%
Financial result	-2.5	-4.5	n.m.	-7.1	-11.6	n.m.
Tax	6.1	3.8	-37.4%	7.6	10.0	30.6%
Net profit attributable to equity holders	13.8	9.5	-31.1%	28.3	35.5	25.5%
Free cash flow	28.1	16.6	-40.8%	31.9	64.5	102.4%

1 Excluding Specific items; 2 Excluding Specific items, depreciation & amortisation

Strong contribution of E&P for revenue growth

Revenues 1

€ million; % change vs. prior year

Revenue 1 breakdown

€ million; % change vs. prior year; % of total

Increased business activity pulls direct costs, while focus on profitability is driving a reduction in structure costs

In 3Q23:

• E&P costs grew by €17.9m mainly due to increased business activity
• · Mail & Other costs increased C.7m (due to the squarters).headquarers).heped by cost control intrailies thamorethand from and free wage intribi
• · Banco CTT costs in creatly own to higher staff and externals envices costs which were article of see a crease in impair no ( e o visions ( 6 0 isions ( 6 0 isions ( 6

Flattish EBIT in 3Q23

Recurring EBIT 1

€ million; % change vs. prior year

U

Consistent strong cash flow generation

9M23 Cash flow

€ million; impact on cash flow vs. prior year

EBITDA		115.6 (+28.7)
Non-cash items 1	-3.2	(+4.6)
Specific items impacting EBITDA	-11.0	(-15.2)
Capex	-16.6	(+3.3)
Change in working capital	-8.6	(-4.2)
Operating cash flow	76.2	(+17.2)
Tax	1.1-	(+16.7)
Employee benefits	-12.7 -	(-1.3)
Free cash flow	64.5	(+32.7)

Net financial debt at 30 September 20232 € million

	Consolidated
(+) Cash & cash equivalents	271.0
(-) Net Financial Services & Other payables 3	196.5
(-) Banco CTT liabilities, net 3	-186.2
(-) Other 4	33.5
(=) Adjusted cash	227.2
(-) Financial debt	91.1
(=) Net cash position	136.1
(-) Lease liabilities (IFRS 16)	114.4
Net financial debt 2	-21.7

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Strong revenue growth and improved profitability in a deteriorating macro-economic environment, fuelled by E&P and Banco CTT

Continued strong growth, market share gains and margin expansion of E&P in Iberia ahead of peak season

While public debt placements normalised, focus turns to the distribution of insurance and other services

Banco CTT continues growth in clients, volumes and profitability towards 2025 targets recently set

Steady and strong cash flow, leading to improved financial flexibility

€ 20m share buyback ongoing, complementing the annual dividend (€ 0.125 per share) paid in May

As a result of the 3Q23 performance, namely E&P, we upgrade yet again our recurring EBIT guidance to >€85m

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