Poste Italiane – Deliver 2022

Poste Italiane launches five-year strategic plan – Deliver 2022 – to unlock the value of Italy’s leading distribution network.

Mail & Parcel turnaround coupled with expanded Financial & Insurance offering and accelerated convergence of Payments, Mobile & Digital underpins sustainable dividend growth.

Strategic Highlights

  • Vision built on strong business fundamentals and evolving customer needs and behaviours
  • Achievable financial targets and KPIs thanks to revenue growth and renewed focus on operational performance
  • Improved operational excellence supported by significant investments in core activities
  • Sustainable dividend growth based on solid cash generation

Financial Highlights

  • Group Revenue up by 1% CAGR to €11.2bn by 2022 with improved quality mix
  • Operating Profit up by 10% CAGR to €1.8bn in 2022, driven by operational efficiency
  • Net Profit up by 13% CAGR to €1.2bn in 2022, delivering a solid 13% ROE (+3.4p.p.)
  • Customers’ Total Financial Assets growing by 3% CAGR to €581bn in 2022 (2017: €506bn), in line with market
  • Capital expenditure: €2.8bn between 2018 and 2022 supporting digitalization, automation and the reshape of the service model
  • Net financial position increase from 0.8bn in 2017 to 1.7bn in 2022
  • Dividend policy baseline of €0.42 DPS for 2017, increasing by 5% per annum up to 2020, and a minimum payout of 60% from 2021 onward

Milan 27th February 2018: The Board of Directors of Poste Italiane S.p.A (or “the Group”) on 26th February 2018, late evening, approved Deliver 2022, a five-year strategic plan designed to unlock the value of Poste Italiane’s unique distribution network, already recognised as Italy’s most effective and trusted.

The plan will be presented to the financial community at Poste Italiane’s first Capital Markets Day, held today at Borsa Italiana in Milan.

Poste Italiane’s unrivalled Mail & Parcel distribution network covers 100 per cent of the Italian territory, with over 2,000 distribution centres, over three billion of pieces of mail and more than 100 million parcels delivered last year. With more than 34 million customers, the Group’s 12,800 post offices are core to the successful distribution of Poste Italiane’s market leading financial and insurance products.

Poste Italiane is also Italy’s number one payment and digital operator serving the evolving needs of the customer base thanks to its integrated physical and digital approach, processing over €100 billion in card payment transactions in 2017. Poste Italiane has issued 25 million payment cards and its apps having been downloaded over 15 million times.

Deliver 2022 is built on strong business fundamentals and a deep understanding of the evolving needs of Italian consumers in Poste Italiane’s four core areas of activity:

  • Mail, Parcel and Distribution
  • Payments, Mobile & Digital
  • Financial Services
  • Insurance Services

The plan includes a group-wide transformation program focused on Poste Italiane’s employees and key technology systems. It has pragmatic and achievable financial targets and clearly defined KPIs, including mid-plan 2020 objectives.

Operating profitability will improve significantly from €1.1 billion to €1.8 billion by the end of the plan, supported by revenue growth and cost efficiencies in all business segments. Targets are built on granular and diverse initiatives, with a low execution risk.

As outlined in the 2017 Preliminary Results announcement, Poste has also carried out a full review of its segmental organization to enhance the visibility and transparency of key value drivers for each business segment.

Commenting on the new plan, Matteo Del Fante, Chief Executive Officer of Poste Italiane said: “This plan is based on conservative assumptions with a very low execution risk. Revenue will grow steadily throughout the plan, but the real impact will be seen at EBIT and Net Profit levels with an increase of 10 per cent and 13 per cent CAGR respectively with EBIT growth of €0.7 billion. This is thanks to both revenue and operational improvements and most importantly includes contributions from all of our business segments. The dividend will grow over the plan period in line with the improvement of the profitability of the Group. Each of our segments will take many small steps forward which together will make a giant leap for Poste Italiane.

“Deliver 2022 will allow us to fully unlock the value of our unique network and confirm our position as Italy’s most trusted and effective distribution business. We are transforming to seamlessly meet the evolving needs and behaviours of our more than 34 million customers. Mail & Parcel is at the heart of our business and we are already seeing positive results from the actions we have taken, in particular the introduction of our new innovative Joint Delivery Model recently agreed with our unions. We also benefit from owning Italy’s leading financial and insurance digital platforms, creating additional opportunities of cross-selling and enhanced revenues. In addition, we will leverage our 12,800 Post Offices to help bridge the digital divide by selling more online products in-branch thanks to assisted-digital customer journeys. Our people are core to our success and we are proud to be the largest employer in Italy. Over the Deliver 2022 plan period, we will hire around 10,000 skilled professionals, as well as train current staff to provide them with the skills, tools and incentives to help deliver our transformation.”

2022 Group Financial Targets

  • Group Revenue: €11.2bn (2017: €10.6bn) organic growth with improved quality mix
  • Operating Profit : €1.8bn (2017: €1.1bn) improved contributions from all segments
  • Net Profit: €1.2bn (2017: €0.7bn) group-wide cost efficiencies and revenue growth
  • Net Financial Position: going from 0.8bn in 2017 to 1.7bn in 2022
  • Dividend Policy: baseline of €0.42 DPS, increasing by 5 per cent per annum up to 2020, and a minimum payout of 60 per cent in 2021 and 2022

Mail, Parcel & Distribution

2022 Financial Targets

  • Segment Revenue: €3.5bn (2017: €3.6bn) with increased parcel revenues offsetting mail decline
  • Parcel Revenue: €1.2bn (2017: €0.7bn) with growth sustained by expanding B2C market
  • Revenue/Employee: to increase from around €60,000 in 2017 to about €68,000 in 2022

2022 Operational objectives

  • Implementation of Mail & Parcel new Joint-Delivery Model
  • Parcels delivered by mailmen: over 100m (2017: 35m)
  • B2C Market share: 40 per cent (2017: 30 per cent)

In Mail, Parcel & Distribution, Poste Italiane is launching an innovative joint mail and parcel delivery model with a new approach based on population and volume density which includes afternoon and weekend deliveries. This follows the signing of two major Union agreements which will allow the Group to implement new ways of working and capitalises on the fast-growing e-commerce related B2C parcel market where it already has a 30 per cent market share.

Poste Italiane will also invest in new sorting and automation technology, redefine delivery areas to increase productivity and optimise delivery flows using cloud based technology to create a fully integrated mail and parcel network.

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Source: Poste Italiane

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