TRANSFORMING From one world to another THE POSTAL WORLD AND AN POST - - PowerPoint PPT Presentation

From one world to another TRANSFORMING

THE POSTAL WORLD AND AN POST

MAIL DECLINE

5–10% 8%

PARCEL GROWTH

10–14% 20%

TURNOVER 2017

€392bn €900m

NUMBER OF EMPLOYEES

2,780,000 9,500 GLOBAL

POSTAL SECTOR

IRISH

POSTAL SECTOR

€

AN POST CAN PLAY A MAJOR STRATEGIC ROLE FOR THE IRISH GOVERNMENT

> Provider of essential services to citizens including ~2m letters each day delivered to 2.2m delivery points > Backbone for Irish business in a world where E-Commerce is a huge part of the economy with 30m parcels delivered last year > Financially signifjcant enterprise Revenue of >€800m > Large employer for the state with ~9,500 employees (FTEs) > Major player in Financial Services with €20bn

• f State Savings administered

AN POST CONTINUES TO FACE VERY SIGNIFICANT CHALLENGES

Significant challenges include:

1. Headwinds from trends in postal industry continued digital substitution of mail and decline in cash 2. Challenging starting-point given structurally higher cost base than competitors 3. Fundamental economic challenges in Ireland including low mail volume, high number of delivery points and high cost per FTE

CFO ROLE

PART OF A TEAM IDENTIFY PROBLEMS AND OPPORTUNITIES, PROPOSE SOLUTIONS UNDERSTAND ORGANISATION AND CHANGE IDENTIFY VALUE UNDERSTAND OTHER FUNCTIONS AND SUPPORT CONSTRUCTIVE INVESTMENT RESULTS

FROM ONE COMPANY TO TWO WORLD CLASS STRATEGY-LED BUSINESSES

Peter Quinn

Chief Financial Offjcer Pat Knight Human Resources Director Debbie Byrne Managing Director An Post Retail David McRedmond Chief Executive Offjcer Aoife Beirne Chief of Staff Garret Bridgeman Managing Director An Post Mails & Parcels

CFO ROLE

PART OF A TEAM IDENTIFY PROBLEMS AND OPPORTUNITIES, PROPOSE SOLUTIONS UNDERSTAND ORGANISATION AND CHANGE IDENTIFY VALUE UNDERSTAND OTHER FUNCTIONS AND SUPPORT CONSTRUCTIVE INVESTMENT RESULTS

OVERALL WE PROJECT THE ADDRESSED MAILBAG WILL DECLINE BY 33% BETWEEN 2017 AND 2027, AT A CAGR OF -4.0%

Addressed Mail volume forecast between 2018 and 2027, millions > We expect an overal decline of -4.0% per annum between 2017 and 2027 for total inland addressed mail volumes. > Ceadunas letters, which constitutes more than half

• f total mail volumes, is expected to decline at
• 3.4% per annum over the forecast period.

> Stamped letter is expected to decline at

• 3.1% per annum.

> Metered letter is expected to decline at -5.7% per annum, driven by e-substitution and product substitution into stamped and Ceadunas letters. > Other segments continue to decline due to e-substitution and price increases. Period Growth Rate CAGR 2001–07 CAGR 2007–16 2016–17 2017–18 2018–19 CAGR 2017–27 3.2%

• 4.3%
• 13.9%
• 0.4%
• 5.7%
• 4.0%

Source: An Post RMS data, PwC forecasts

MAILS AND PARCELS

KEY ISSUE – MAIL VOLUME DECLINE

CHALLENGE > Falling Mail Usage > Traditional Work Practices > Geographic Challenge OPPORTUNITY > Pricing > Add Value Service > E-Commerce

CHALLENGE > Falling Cash Transactions > Substitution with EFT > Relevance > Reducing Footfall > Expensive Infrastructure OPPORTUNITY > Franchise Model > New Contract > Financial Services > E-Commerce > Government Services

POST OFFICE RETAIL

KEY ISSUE – REPURPOSING NETWORK

CFO ROLE

PART OF A TEAM IDENTIFY PROBLEMS AND OPPORTUNITIES, PROPOSE SOLUTIONS UNDERSTAND ORGANISATION AND CHANGE IDENTIFY VALUE UNDERSTAND OTHER FUNCTIONS AND SUPPORT CONSTRUCTIVE INVESTMENT RESULTS

EVOLVING IRISH OPERATIONAL CONTEXT

FROM GOVERNMENT DEPARTMENT TO SEMI-STATE P&T An Post RTÉ Telecom Eireann Semi-State and private companies An Post RTÉ eir Next Phase

?

P&T Bookkeeper Semi-State and private companies Financial Controller Next Phase Strategy and Economics

ORGANISATION STRUCTURE ROLE OF CFO

COMMERCIALLY SUSTAINABLE

Operators who have delivered operational transformation and/or diversifjcation

LOW PERFORMING

A large number of operators with mail volume decline directly translating into profjt erosion, while alternative business model not yet found or not yet yielding

SAME SECTOR – RADICAL DIFFERENT PERFORMANCE

GLOBALLY, ONLY A FEW COMMERCIALLY SUSTAINABLE OPERATORS ARE GENERATING CONSISTENT POSITIVE EBIT

CFO ROLE

PART OF A TEAM IDENTIFY PROBLEMS AND OPPORTUNITIES, PROPOSE SOLUTIONS UNDERSTAND ORGANISATION AND CHANGE IDENTIFY VALUE UNDERSTAND OTHER FUNCTIONS AND SUPPORT CONSTRUCTIVE INVESTMENT RESULTS

BUSINESS OPPORTUNITIES

2009 BOUGHT

€9m

2018 SOLD

€105m

G i f t C a r d

UK based Postal Sector Specialist Insurance Intermediary based in Athlone

OTHER BUSINESS OPPORTUNITIES

Data

POWER OF BRAND ASSOCIATION

CFO ROLE

PART OF A TEAM IDENTIFY PROBLEMS AND OPPORTUNITIES, PROPOSE SOLUTIONS UNDERSTAND ORGANISATION AND CHANGE IDENTIFY VALUE UNDERSTAND OTHER FUNCTIONS AND SUPPORT CONSTRUCTIVE INVESTMENT RESULTS

BRAND EVOLUTION

INVESTING TO GROW FROM ONE WORLD TO COMPETING IN MANY

FROM TO

A mails company that ‘does’ parcels

>

An expert FS and E-Commerce services company Peripheral

>

Central, inclusive, of the people Part of Irish life

>

Part of my life, customer centred Staid, of the past

>

Contemporary, progressive, innovative Average, passive

>

Expert, confjdent, decisive Only choice, monopoly

>

Preferred choice, competitive

CFO ROLE

PART OF A TEAM IDENTIFY PROBLEMS AND OPPORTUNITIES, PROPOSE SOLUTIONS UNDERSTAND ORGANISATION AND CHANGE IDENTIFY VALUE UNDERSTAND OTHER FUNCTIONS AND SUPPORT CONSTRUCTIVE INVESTMENT RESULTS

Accounts and budget

>

Economic strategy and 5–10 year plans Measuring performance

>

Identifying value Business plans

>

Strategy Finance

>

Economics Function

>

Competence Own competency

>

Financial skills teacher for rest of team Internal perspective of control

>

External perspective

FROM TO

SKILL SET OF THE CFO

KEY CHANGES IN MIND SET

– Value add – Capital Markets – Stakeholder Role

€25m €10m €40m

STRATEGY LEADS TO SUSTAINABLE PROFITS

€10m €35m €25m €25m €25m

Profjt Wage Infmation Price New Products Mail Decline Do Nothing Effjciency Profjt