Earnings Release • Apr 28, 2017
Earnings Release
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Results Presentation
CTT – Correios de Portugal, S.A. 28 April 2017
This document has been prepared by CTT – Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the presentation of the 1st quarter 2017 results. 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 obligation to publicly update or revise any of the information contained in this document. Consequently, the Company does not assume liability for this document if 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 or correctness of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, affiliates, 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 document are invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Securities Exchange 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.
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. Statements that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "believes", "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 and unknown 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 with respect to 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 neither represent a commitment regarding 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 the date of this presentation. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
KEY HIGHLIGHTS: 1Q17 saw stabilisation of the top line; excluding the Altice impact on
the 1Q16 figures, the recurring revenues grew 0.9% (after declining throughout 2016)
€ million, except when otherwise indicated
| Financial indicators | ||||
|---|---|---|---|---|
| 1Q16 | 1Q17 | Δ € | Δ% | |
| Recurring revenues | 177.9 | 177.0 | -0.9 | -0.5% |
| Recurring revenues excl. Altice | 175.4 | 177.0 | +1.6 | +0.9% |
| Recurring operating costs | 142.7 | 148.9 | +6.2 | +4.3% |
| Recurring EBITDA | 35.1 | 28.0 | -7.1 | -20.2% |
| Recurring EBITDA excl. Altice |
32.6 | 28.0 | -4.6 | -14.1% |
| Reported net profit | 20.7 | 10.3 | -10.3 | -50.0% |
| Addressed mail (million items) |
Unaddressed mail (million items) |
Parcels (million items) |
FS savings flows 1 (€ billion) |
Banco CTT current accounts (thousand) |
|
|---|---|---|---|---|---|
| 1Q17 | 203.6 | 107.4 | 7.3 | 2.0 | 114.1 |
| 1Q17 vs. 1Q16 | -3.7% | -1.0% | +10.7% | +51.4% | N/A |
KEY HIGHLIGHTS: Strong Financial Services performance and growth in Banco CTT and
Tourline drove revenues increase, excluding the Altice 1Q16 impact
2 Excluding Altice 1Q16 revenues.
3 No stock fees; with better sales commissions, in line with expectations.
1 Including income related to CTT Central Structure and Intragroup Eliminations amounting to -€7.8m in 1Q16 and -€8.6m in 1Q17.
KEY HIGHLIGHTS: Excluding the increase in Banco CTT costs, expected due to its
current development stage, operating costs increased moderately (+1.6%)
KEY HIGHLIGHTS: A gradual improvement in EBITDA is projected as the comparables in
Mail, E&P, and Banco CTT are expected to ease in the following quarters
While the loss of Altice revenues will be felt throughout 2017, some of the negative impacts on recurring EBITDA are expected to diminish ─ 1.9% of price increase in Mail pertaining to 1Q17 is projected to be recovered in the following three quarters (+€2.3m in revenues), the Tourline turnaround is expected to bear fruit, and Banco CTT EBITDA comparison will become easier vs. the homologous quarters of 2016
€ million; % change vs 1Q16
| Reported | Adjusted 1 | ||||
|---|---|---|---|---|---|
| 1Q17 | ∆ % | 1Q17 | ∆% | ||
| From operating activities |
27.1 | >> | 70.6 | >> | |
| Cash flow excl. Banco CTT |
-26.9 | -57.6% | 16.6 | 3.5% | |
| Banco CTT cash flow | 54.0 | >> | 54.0 | >> | |
| From investing activities | -53.4 | << | -53.4 | << | |
| Capex payments | -14.2 | 3.8% | -14.2 | 3.8% | |
| of which Banco CTT | -0.8 | 66.8% | -0.8 | 66.8% | |
| Banco CTT financial assets | -39.8 | << | -39.8 | << | |
| Operating free cash flow | -26.3 | 13.1% | 17.2 | >> | |
| From financing activities |
-0.6 | -86.8% | -0.6 | -86.8% | |
| Other 2 | -2.5 | - | -2.5 | - | |
| Net change in cash |
-29.5 | 3.8% | 14.0 | >> | |
| Cash at end of period | 589.4 | 2.8% | 309.3 | 11.5% |
1 Cash flow from operating activities excluding changes in net Financial Services payables of -€33.1m (1Q16) and -€43.5m (1Q17), respectively. Cash at the end of the period excluding net Financial Services payables of €291.6m (Mar-16) and €280.0m (Mar-17).
2 These figures were not considered under Cash and equivalents in the Cash-flow statement. However, they are included in Cash and equivalents in the Balance Sheet.
KEY HIGHLIGHTS: The continued expansion of the consolidated Balance Sheet reflects
the growth of Banco CTT deposits; own cash remained stable, close to €200m
Liabilities & Equity 1,352 Equity Other non-current liabilities (€18m; -4%) Employee benefits Financial debt (€9m; -5%) Other current liabilities FS and Banco CTT deposits 1,352 PP&E Other non-current assets 2 Employee benefits tax asset Other current assets 1 Cash & cash equivalents Assets €589m (-5%) €281m (+14%) €76m (-2%) €202m (+21%) €205m (-2%) €618m (+5%) €267m (0%) €244m (+5%) €195m (-2%) Healthcare: €249m Healthcare: €70m Net financial debt (cash) + ST< debt: €9m + Net FS payables: €280m − Cash and cash equivalents: €589m Including Banco CTT = €(300)m Net debt (cash) + Employee benefits: €267m − Employee benefits tax asset: €76m = €(7)m + Banco CTT deposits – fin. assets: €102m Liquidity position = 104% − Net financial cash: €198m Excluding Banco CTT (own cash) = €(198)m Balance Sheet – 31 March 2017 € million; % change vs. 31 December 2016
Strong liquidity (104%) and own cash position (€198m) was maintained, as investments in Banco CTT progress well
1 Including Financial Services receivables of €5.4m at Mar-17, and €94.4m in Banco CTT current financial assets (Mar-17). 2 Including €134.8m in Banco CTT non-current financial assets (Mar-17).
BUSINESS UNITS: The impact of the 3.7% addressed mail volumes decline not felt in revenues,
mainly due to a strong mix effect resulting from registered mail volumes growth (+12.5%)
Mail volumes 1 by type
| Metric | Avg. mail prices | Addressed mail | Transactional | Advertising | Editorial | Unaddressed mail |
|---|---|---|---|---|---|---|
| 1Q17 | N/A | 203.6 | 174.6 | 18.5 | 10.5 | 107.4 |
| 1Q17 vs. 1Q16 | +0.1% | -3.7% | -3.3% | -4.6% | -8.9% | -1.0% |
BUSINESS UNITS: Strong double-digit growth in parcels volumes offset the impact of the declining legacy banking network business and the loss of Altice revenues
E&P volumes 2 by region
| Metric | Total | Portugal | Spain | Mozambique | |
|---|---|---|---|---|---|
| 1Q17 | 7.3 | 3.6 | 3.7 | 0.02 | |
| 1Q17 vs. 1Q16 | +10.7% | +8.7% | +12.9% | -19.3% |
1 Including internal and other revenues, and internal transactions with Spain and Mozambique. 13 2 Million items.
BUSINESS UNITS: Swap by the public from savings to treasury certificates was the primary driver of the 5.3% Financial Services revenues growth
| Metric | Savings placements (€bn) |
Payments (m ops) |
Money orders & transfers (m ops) |
Credit (€m) |
|---|---|---|---|---|
| 1Q17 | 1.3 | 13.1 | 4.5 | 2.1 |
| 1Q17 vs. 1Q16 | +24.6% | -8.2% | -3.7% | +1.0% |
consumer credit placement; mortgage product in launching stage
Banco CTT indicators
| Metric | Branches (#) |
Current accounts (thousand) |
Customer deposits (€m) |
Consumer credit 2 (€m) |
|---|---|---|---|---|
| 31 Mar. 2017 | 203 | 114.1 | 331.4 | 7.4 (1Q17) |
| 31 Dec. 2016 | 202 | 74.1 | 253.9 | 5.1 (4Q16) |
1 The bank was launched to the public on 18 March 2016.
2 Partnership with BNP Paribas Personal Finance (Cetelem).
16
03. Appendix
| € million |
||||
|---|---|---|---|---|
| 1Q16 | 1Q17 | ∆ | ||
| Reported EBITDA | 34.2 | 24.9 | -9.3 | |
| Non-recurring items affecting EBITDA | 0.9 | 3.1 | 2.2 | |
| Revenues | -1.7 | 0.0 | 1.7 | |
| Staff costs | 1.1 | 1.1 | 0.0 | |
| ES&S & other op. costs | 1.6 | 2.0 | 0.4 | |
| Recurring EBITDA | 35.1 | 28.0 | -7.1 | |
| Reported EBIT | 31.0 | 17.6 | -13.4 | |
| Non-recurring costs affecting only EBIT | -2.9 | 0.7 | 3.6 | |
| Provisions (reinforcements / reductions) |
-3.2 | 0.0 | 3.2 | |
| Impairments and D&A (losses / reductions) |
0.3 | 0.7 | 0.4 | |
| Non-recurring items affecting EBITDA & EBIT | -2.0 | 3.8 | 5.8 | |
| Recurring EBIT |
29.0 | 21.4 | -7.6 |
€1.7m from recognised deferred gain due to early termination of vacant building lease contract
| € million |
Reported | 1 Recurring |
Banco CTT 2 under equity method |
|||
|---|---|---|---|---|---|---|
| 1Q16 | 1Q17 | 1Q16 | 1Q17 | 1Q16 | 1Q17 | |
| Revenues | 179.6 | 177.0 | 177.9 | 177.0 | 179.5 | 176.2 |
| Operating costs | 145.4 | 152.1 | 142.7 | 148.9 | 141.3 | 144.8 |
| EBITDA | 34.2 | 24.9 | 35.1 | 28.0 | 38.3 | 31.4 |
| EBITDA margin | 19.0% | 14.1% | 19.8% | 15.8% | 21.3% | 17.8% |
| EBIT | 31.0 | 17.6 | 29.0 | 21.4 | 35.2 | 24.6 |
| Gains / (losses) in subsidiaries, associates and joint ventures |
0.2 | - | 0.2 | - | -3.1 | -5.6 |
| Earnings before taxes (EBT) | 29.8 | 16.5 | 27.9 | 20.3 | 30.7 | 17.9 |
| Income tax for the period | 9.2 | 6.2 | 7.5 | 5.4 | -10.1 | -7.6 |
| Net profit attributable to equity holders | 20.7 | 10.3 | 20.4 | 15.0 | 20.7 | 10.3 |
1 Recurring net profit excludes non-recurring revenues and costs and considers the theoretical (nominal) tax rate of CTT. 2 With Banco CTT consolidated under equity method.
| € million |
CTT | Banco CTT 1 under equity method |
||
|---|---|---|---|---|
| 31-Dec-16 | 31-Mar-17 | 31-Dec-16 | 31-Mar-17 | |
| Non-current assets |
452.6 | 482.0 | 393.2 | 380.7 |
| Current assets | 864.1 | 870.1 | 669.9 | 639.3 |
| Assets | 1,316.7 | 1,352.1 | 1,063.1 | 1,019.9 |
| Equity | 233.3 | 244.3 | 233.3 | 244.3 |
| Liabilities | 1,083.4 | 1,107.8 | 829.8 | 775.7 |
| Non-current liabilities | 269.5 | 268.0 | 269.5 | 267.9 |
| Current liabilities | 813.8 | 839.8 | 560.3 | 507.7 |
| Equity and liabilities | 1,316.7 | 1,352.1 | 1,063.1 | 1,019.9 |
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