Financial Statements 2017 March 1, 2018 Agenda Highlights of - PowerPoint PPT Presentation

Posti Group Corporation Financial Statements 2017 March 1, 2018

Agenda • Highlights of 2017 • October-December 2017 • Year 2017 • Segments • Mail, Parcel and Logistics Services • Itella Russia • OpusCapita • Strategy 2 Posti Group Corporation March 1, 2018

Highlights of 2017 3 Posti Group Oyj 1.3.2018

Year 2017 in a nutshell Posti in figures Operational highlights Other key events • Parcel and Logistics Services exceeded the • Parcel volumes rose to record levels Net sales Postal Services for the first time in the third thanks to strong growth in e-commerce and 1 647.0 (EUR million) quarter. improved economic climate. • On September, the Helsinki Court of Appeal Adjusted EBITDA • Posti is expanding its network by installing 118.6 issued a positive ruling for Posti in a case (EUR million) up to 1,000 new Smartpost parcel lockers. concerning the compensation of value added • The amount of addressed letters taxes. Adjusted operating decreased by 10%. 42.4 result (EUR million) • Restructuring continued: • Posti’s new strategy has four key goals. Personnel • The sale of OpusCapita’s Finance and 20 316 • New two-year collective agreement for the on average Accounting Outsourcing business. postal industry entered into force on • The acquisition of the personal November. Share of USO assistance business of SOL 5.5% deliveries • The Postal Act reform was approved on Henkilöstöpalvelut Oy and HR Hoiva Oy. Septemeber and entered into force on 15th Countries of • The acquisition of the early morning of September, 2017. It applies to universal 11 operation delivery operations of Kaakon Viestintä service products (USO). Oy. • Restructuring of OpusCapita continued and • Posti and Solemo Oy established Flexo, the segment now consists of the Buyer- a joint venture. Supplier Ecosystem business. The Group’s adjusted operating result is expected to remain on par with 2017 or decrease slightly. 4 Posti Group Corporation March 1, 2018

Business Environment • Posti’s business environment is still undergoing a dramatic • Posti is prepared for changes in the business environment transformation. Digitalization is accelerating the shift from paper through a renewed strategy. At the core of the strategy are four to online communications, which in turn creates opportunities for main objectives that will see Posti emerge as a winner through new services. this period of transformation: win e-commerce play, keep mail relevant to customers, renew service culture, and securing • According to the Bank of Finland, economic growth accelerated digitally powered service delivery. and Finnish GDP increased by 3.1%. Domestic demand has remained strong as the employment rate and consumer purchasing power have improved. • The growth of e-commerce accelerated toward the end of the review period, which was reflected favorably in Posti’s parcel volumes. Posti’s services, especially parcel lockers, match Posti’s goal is to evolve consumer preferences. into a customer-oriented and profitable logistics • Competition in delivery of addressed letters has increased. The and postal service Postal Act reform entered into force on 15th of September, 2017. company by 2020. • The new collective agreement for the mail communications and logistics industry entered into force on November. Achieving a two-year agreement is very significant for Posti in the current period of major transformation. 5 Posti Group Oyj 1.3.2018

Parcel services keep growing October-December and 2017 The number of parcels going The number of parcels going B2C parcel volume growth in B2C parcel volume growth in through Posti Parcel Lockers through Posti Parcel Lockers Finland and in the Baltics Finland and in the Baltics 2017 10–12 2017 2017 10–12 2017 +47% +36% +12% +18% 6 Posti Group Oyj 1.3.2018

Parcel volumes (million units) in Finland and the Baltics combined 2016 2017 40.1 37.0 12.0 10.8 9.5 9.4 9.3 8.9 8.7 8.6 +11% +8% +4% +10% +9% Q1 Q2 Q3 Q4 Year 7 Posti Group Oyj 1.3.2018

Letter volumes declined by 10% Y ear 2017 Letter volumes, million units Volumes of Posti’s 1st and 2nd class letters, rolling 12 months 773 800,0 693 600,0 400,0 -10% 200,0 0,0 2016 2017 Source: Posti 8 Posti Group Oyj 1.3.2018

Freight volumes grew by 8% Y ear 2017 Freight volumes, million units Heavy traffic volume on main roads, change, 12 months 2013/01=100 2,3 2,5 2,1 2,0 1,5 +8% 1,0 0,5 0,0 2016 2017 * The reported figure for domestic freight excludes food logistics Source: Finnish Transport Agency 9 Posti Group Oyj 1.3.2018

October-December 2017 10 Posti Group Corporation March 1, 2018

Net sales and adjusted operating result October-December Net sales by quarters, EUR million 457 452 500 433 431 414 409 402 386 389 376 376 379 400 300 200 100 0 Q1 Q2 Q3 Q4 2015 2016 2017 Net Sales Adjusted EBITDA Adjusted operating result EUR million and change, % EUR million and % EUR million and % 43.0 600 40.9 456.5 452.3 50 23.0 30 22.7 9.4% 9.0% 5.4% -0.9% 500 5.1% 5.0% 40 400 20 30 300 20 200 10 10 100 0 0 0 10-12 2016 10-12 2017 10-12 2016 10-12 2017 10-12 2016 10-12 2017 11 Posti Group Corporation March 1, 2018

Key figures October-December • The Group’s net sales decreased by 0.9%. In 10-12 2017 % 10-12 2016 % Finland the decrease was 0.2% and in other countries 5.4%. Net sales, EUR million 452.3 456.5 • Net sales of Parcel and Logistics Services exceeded Adjusted EBITDA, EUR million 40.9 9.0% 43.0 9.4% those of the Postal Services. • The growth of adjusted operating result was mainly EBITDA, EUR million 22.9 5.1% 38.6 8.4% due to improved result in Postal, Parcel and Adjusted operating result, EUR million 23.0 5.1% 22.7 5.0% Logistics Services. • A provision of EUR 18.2 million related to warehouse Operating result, EUR million 5.0 1.1% 14.2 3.1% lease agreements was recognized. Result before taxes, EUR million 2.3 0.5% 14.7 3.2% • Parcel volumes kept growing. Christmas season has a significant impact on the number of deliveries. Result for the period, EUR million -2.1 -0.5% 10.4 2.3% • Strongest growth came from B2C parcels (18%). Gross capital expenditure, EUR million 20.4 23.3 • Main items covered by the universal service obligation accounted for 9.4% of all of Posti’s mail items. • Operations under the universal service obligation amounted to 12.0% of the Group’s net sales. • The number of working days in October–December was lower by one day. The number of working days affects the Group’s net sales and result. 12 Posti Group Corporation March 1, 2018

Year 2017 13 Posti Group Corporation March 1, 2018

Net sales and adjusted operating result Y ear 2017 Net Sales Adjusted operating result EUR million and change, % EUR million and % 58.6 1,977 2,500 70 1,867 50.5 3.1% 47.6 47.1 1.5% 1,649 1,647 1,608 60 -5.5% 42.4 2.6% 2,000 2.9% 2.9% -11.7% 2.5% -2.5% 50 2.6% 1,500 40 30 1,000 20 500 10 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Net Sales Adjusted EBITDA Adjusted operating result EUR million and change, % EUR million and % EUR million and % 47.1 1,647.0 1,607.6 126.7 42.4 2,000 2.9% 118.6 150 50 2.5% -2.5% 7.9% 2.6% 7.2% 125 1,500 40 100 30 1,000 75 20 50 500 10 25 0 0 0 1-12 2016 1-12 2017 1-12 2016 1-12 2017 1-12 2016 1-12 2017 14 Posti Group Corporation March 1, 2018

Key figures Y ear 2017 • The Group’s net sales grew by 2.5%. In Finland 1-12 2017 % 1-12 2016 % the growth was 2.4% and in other countries 3.0%. Net sales, EUR million 1,647.0 1,607.6 • International operations acocunted for 14.5% of net sales, remaining on the same level as in Adjusted EBITDA, EUR million 118.6 7.2% 126.7 7.9% 2016. EBITDA, EUR million 83.7 5.1% 116.0 7.2% • Net sales of the Parcel and Logistics Services exceeded those of the Postal Services in the Adjusted operating result, EUR million 42.4 2.6% 47.1 2.9% third quarter. • The combined parcel volume of Finland and the Operating result, EUR million -27.5 -1.7% 30.7 1.9% Baltic countries increased by 9%, with 12% of Result before taxes, EUR million -36.9 -2.2% 29.5 1.8% this growth coming from B2C parcels. • Special items weighed down the result, i.e. Result for the period, EUR million -44.3 -2.7% 23.2 1.4% provisions related to warehouses in Russia and the impairment of OpusCapita’s goodwill. Cash flow from operating activities, EUR million 96.0 63.1 • Mail items covered by the universal service Return on equity (12 months), % -8.0 3.9 obligation amounted for 5.5% of all of Posti’s mail items. Return on invested capital (12 months), % -4.5 5.1 • Operations under the universal service obligation Equity ratio, % 48.8 54.9 amounted to 8.3% of the Group’s net sales. • The number of working days in 2017 was lower Gearing, % -8.8 -13.6 than in the previous year by two days. The number of working days affects the Group’s net Gross capital expenditure, EUR million 73.3 100.4 sales and result. 15 Posti Group Corporation March 1, 2018