Earnings Release • Jul 31, 2017
Earnings Release
Open in ViewerOpens in native device viewer
Results Presentation
CTT – Correios de Portugal, S.A. 31 July 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 1 st half 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: The strategy to grow the Express & Parcels and the Banking / Financial
Services businesses was actively pursued in 1H17, accelerating in 2Q17
Governing Bodies for the 2017/2019 term of office
Treasury certificates contract renewal with IGCP simplifies the CTT remuneration structure and guarantees a more stable flow of revenues in the future
€ million, except when otherwise indicated
| Quarterly results | Half-yearly results | |||||||
|---|---|---|---|---|---|---|---|---|
| 2Q16 | 2Q17 | Δ€ | Δ% | 1H16 | 1H17 | Δ€ | Δ% | |
| Recurring revenues | 171.5 | 175.2 | +3.7 | +2.1% | 349.4 | 352.1 | +2.8 | +0.8% |
| Recurring revenues excl. Altice | 169.0 | 175.2 | +6.2 | +3.7% | 344.4 | 352.1 | +7.8 | +2.3% |
| Recurring operating costs | 144.2 | 150.6 | +6.4 | +4.4% | 286.9 | 299.5 | +12.6 | +4.4% |
| Recurring EBITDA | 27.3 | 24.6 | -2.7 | -10.0% | 62.5 | 52.6 | -9.8 | -15.8% |
| Recurring EBITDA excl. Altice |
24.8 | 24.6 | -0.2 | -0.9% | 57.5 | 52.6 | -4.8 | -8.4% |
| Reported net profit | 11.0 | 7.4 | -3.6 | -32.7% | 31.7 | 17.7 | -13.9 | -44.0% |
| Addressed mail (million items) |
Parcels (million items) |
FS savings flows 1 (€ billion) |
# Banco CTT current accounts (thousand) |
Banco CTT deposits (€ million) |
|
|---|---|---|---|---|---|
| 1H17 | 388.1 | 15.0 | 3.3 | 147.4 | 424.3 |
| 1H17 vs. 1H16 | -5.6% | +14.8% | +35.1% | +631.0% | +658.1% |
KEY HIGHLIGHTS: Higher than €10m increase in revenues from growth businesses in
1H17 fully offset the decline in Mail revenues and the Altice 1H16 impact
Mail revenues decline was primarily due to a temporary suspension of lottery sales in the Retail network (-€2.0m impact). The impact of 5.6% addressed mail volumes decline was largely offset by strong mix effect (6.0% registered mail volumes growth) and 1.3% average price increase in the period. The addressed mail volumes decline in 2Q17 was -7.6%, accelerating due to the impact of Easter in the quarter, but it is expected to conform to guidance range in 2H17
E&P was the main driver of revenues growth, resulting from strong parcels volumes in Portugal & Spain and the Transporta acquisition (+€2.3m impact in 2Q17)
Banco CTT on target to achieve guidance of high-single digit (€7m to €9m) revenues in FY17
1Including income related to CTT Central Structure and Intragroup Eliminations amounting to -€14.8m in 1H16 and -€16.7m in 1H17. 2 Excluding Altice 1H16 revenues.
KEY HIGHLIGHTS: The increase in operating costs was driven predominantly by Banco CTT,
the integration of Transporta, and increase in variable costs as a result of volumes growth
KEY HIGHLIGHTS: The trend of gradual improvement continued in 2Q17, with recurring
EBITDA (excl. Altice) declining only 0.9%, supported by acceleration in the growth levers
The 2H17 comparisons in Mail, E&P and Banco CTT are expected to ease, due to an estimated 2.5% effective price increase (in 2H17), projected Tourline break-even (in EBITDA terms) in 4Q17, and growth of the recently launched mortgage offer
€ million; % change vs. 1H16
| Reported | Adjusted 1 | |||
|---|---|---|---|---|
| 1H17 | ∆ % | 1H17 | ∆% | |
| From operating activities |
296.7 | 57.9% | 182.7 | >> |
| Cash flow excl. Banco CTT |
159.4 | 12.3% | 45.3 | >> |
| Banco CTT cash flow | 137.4 | >> | 137.4 | >> |
| From investing activities | -117.9 | -54.2% | -117.9 | -54.2% |
| Capex payments | -24.7 | -17.2% | -24.7 | -17.2% |
| of which Banco CTT | -4.1 | 47.8% | -4.1 | 47.8% |
| Banco CTT financial assets & credit | -96.7 | -58.4% | -96.7 | -58.4% |
| Other | 3.4 | -38.8% | 3.4 | -38.8% |
| Operating free cash flow | 178.8 | 60.5% | 64.8 | << |
| From financing activities |
-73.8 | -4.5% | -73.8 | -4.5% |
| of which Dividends | -72.0 | -2.5% | -72.0 | -2.5% |
| Other 2 | -3.6 | - | -3.6 | - |
| Net change in cash |
-101.5 | >> | -12.5 | 85.1% |
| Cash at end of period | 720.3 | 11.8% | 282.8 | 45.1% |
Reflects the growth of Banco CTT deposits in the past 12 months
1Cash flow from operating activities excluding changes in net Financial Services payables of +€124.9m (1H16) and +€114.0m (1H17), respectively. Cash at the end of the period excluding net Financial Services payables of €449.6m (Jun-16) and €437.5m (Jun-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 increase in cash and cash equivalents on the Balance Sheet was a
result of the seasonal growth in FS and the continued expansion of Banco CTT activities
The company's strong liquidity (93%) and own cash position (€144m) was maintained
1 Including Financial Services receivables of €8.6m and €5.3m as at Dec-16 and Jun-17, respectively, and Banco CTT current financial assets of €69.2m and €115.3m as at Dec-16 and Jun-17, respectively.
2 Including Banco CTT non-current financial assets of €98.5m and €178.8m as at Dec-16 and Jun-17, respectively.
12
BUSINESS UNITS: Product mix effect (registered mail volumes growth of 6.0% in 1H17)
and pricing impact largely offset the addressed mail volumes decline
Mail volumes 1 by type
| Metric | Avg. mail prices | Addressed mail | Transactional | Advertising | Editorial | Unaddressed mail |
|---|---|---|---|---|---|---|
| 1H17 | N/A | 388.1 | 331.0 | 35.4 | 21.6 | 234.8 |
| 1H17 vs. 1H16 | +1.3% | -5.6% | -5.4% | -8.1% | -4.4% | +0.0% |
BUSINESS UNITS: Strong organic parcels volumes growth in Portugal and Spain and the
Transporta acquisition drove mid-single digit revenues increase in E&P
+13.1%
+6.3%
+17.1%
1 Including internal and other revenues, and internal transactions with Spain and Mozambique.
2 Including Transporta revenues in 1H17 (€2.06m in Parcels and €0.28m in Logistics).
1H17 vs. 1H16 +14.8%
3 MT 56.4m in 1H17 (+MT 4.8m; +9.3%).
4 Million items.
-18.6%
BUSINESS UNITS: The contract renewal with IGCP (simplified structure, no stock fees)
led to revenues growth in 1H17; revenues are expected to stabilise along the year
| Metric | Savings placements (€bn) |
Payments (m ops) |
Money orders & transfers (m ops) |
Credit (excl. Banco CTT) (€m) |
|---|---|---|---|---|
| 1H17 | 2.3 | 26.3 9.0 |
4.2 | |
| 1H17 vs. 1H16 | +12.3% | -8.8% | -4.3% | -12.7% |
1Including factoring (€27.5m in 1H17), mortgage (€4.9m in 1H17) and overdraft (€0.1m in 1H17).
2Amount outside Banco CTT's Balance Sheet. The value represents the outstanding balance in BNP Paribas Personal Finance (Cetelem) from the partnership with Banco CTT – consumer credit and credit cards.
BUSINESS UNITS: Banco CTT on track to achieve high-single digit FY17 revenues while
recurring operating costs declined sequentially (vs. 2H16)
Banco CTT financial indicators
| Equity (€ million) / |
|||||
|---|---|---|---|---|---|
| Metric | Cash & cash equivalents |
Financial assets & investments |
Credit to clients | Other assets | CET 1 (%) |
| 30-Jun-17 | 197.4 | 261.6 | 32.6 | 31.5 | 87.5 / 49.9% |
| 31-Mar-17 | 135.4 | 204.6 | 24.6 | 26.8 | 52.0 / 29.9% |
1Includes a commission of €0.8m from the insurance provider in 2Q17.
18
| € million |
||||
|---|---|---|---|---|
| 1H16 | 1H17 | ∆ | ||
| Reported EBITDA | 57.0 | 45.7 | -11.3 | |
| Non-recurring items affecting EBITDA | 5.4 | 6.9 | +1.4 | |
| Revenues | -1.7 | - | +1.7 | |
| Staff costs | 2.3 | 2.9 | +0.6 | |
| ES&S & other op. costs | 4.9 | 4.0 | -0.9 | |
| Recurring EBITDA | 62.5 | 52.6 | -9.8 | |
| Reported EBIT | 47.4 | 30.6 | -16.9 | |
| Non-recurring costs affecting only EBIT | -3.4 | 1.0 | +4.4 | |
| Provisions (reinforcements / reductions) |
-3.8 | -0.1 | +3.7 | |
| Impairments and D&A (losses / reductions) |
0.4 | 1.1 | +0.7 | |
| Non-recurring items affecting EBITDA & EBIT | 2.0 | 7.9 | +5.9 | |
| Recurring EBIT |
49.5 | 38.4 | -11.0 |
€1.7m from recognised deferred gain due to early termination of vacant building lease contract
Non-recurring costs of €6.9m in 1H17 include:
| € million |
Reported | Recurring 1 | Banco CTT under equity method |
||||
|---|---|---|---|---|---|---|---|
| 1H16 | 1H17 | 1H16 | 1H17 | 1H16 | 1H17 | ||
| Revenues | 351.1 | 352.1 | 349.4 | 352.1 | 351.1 | 349.3 | |
| Operating costs | 294.1 | 306.4 | 286.9 | 299.5 | 282.7 | 292.0 | |
| EBITDA | 57.0 | 45.7 | 62.5 | 52.6 | 68.4 | 57.3 | |
| EBITDA margin | 16.2% | 13.0% | 17.9% | 14.9% | 19.5% | 16.4% | |
| EBIT | 47.4 | 30.6 | 49.5 | 38.4 | 59.4 | 43.4 | |
| Gains / (losses) in subsidiaries, associates and joint ventures |
0.2 | - | 0.2 | - | -9.3 | -10.1 | |
| Earnings before taxes (EBT) | 44.9 | 28.2 | 47.0 | 36.0 | 47.4 | 30.9 | |
| Income tax for the period | -13.4 | -10.5 | 13.0 | 9.7 | -15.8 | -13.2 | |
| Net profit attributable to equity holders | 31.7 | 17.7 | 34.1 | 26.4 | 31.7 | 17.7 |
| € million |
CTT | Banco CTT under equity method |
|||
|---|---|---|---|---|---|
| 31-Dec-16 | 30-Jun-17 | 31-Dec-16 | 30-Jun-17 | ||
| Non-current assets |
452.6 | 525.0 | 393.2 | 412.7 | |
| Current assets | 864.1 | 1,022.8 | 669.9 | 708.3 | |
| Assets | 1,316.7 | 1,547.8 | 1,063.1 | 1,120.9 | |
| Equity | 233.3 | 179.7 | 233.3 | 179.7 | |
| Liabilities | 1,083.4 | 1,368.2 | 829.8 | 941.3 | |
| Non-current liabilities | 269.5 | 267.1 | 269.5 | 267.1 | |
| Current liabilities | 813.8 | 1,101.1 | 560.3 | 674.2 | |
| Equity and liabilities | 1,316.7 | 1,547.8 | 1,063.1 | 1,120.9 | |
Upcoming Events:
Contacts: Phone: +351 210 471 087 E-mail: [email protected]
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.