From Making elephants dance to Shooting for the moon

ADM January 24, 2019 Faculty Club 2

Agenda

The company at a glance How to make elephants dance The Strategy going forward The Moonshot 3 is an efficient mail operator transitioning towards global eCommerce logistics 2017 Revenues: €3,024m Revenues: €3,024m Revenues: €3,024m Regulated/ International Commercial Parcels & Logistics Contract related1

26% 33% 46% Mail & 54% Retail 67% 74% Domestic

EBITDA Letters per day (BE) Parcels per day (BE) FTE Point of presence € €598m 8.1m 190k 26,908 ~2,5002

Main subsidiaries (Revenue €m)

~9003 282 132

1 Including revenues from Universal Service Obigation (USO) and Invoice To The State (ITTS, Direct and indirect) 2 Includes 662 post office, 674 Postpoints, ~1000 Kariboo 3 $1082m in 2017 FY. Only €203m (only for 6 weeks in Q4 2017) were attributed to bpost (consolidation of the results as of Q4 2017)

SOURCE: Domestic includes Domestic mail, domestic parcels, other sources of revenues (excl. International mail) and ITTS 4

Agenda

The company at a glance How to make elephants dance The Strategy going forward The Moonshot 5 Continuous improvement is in our DNA. We have a proven transformation track record

2017 2004 2009 2011-2020 Launch • Building of new Implemen- Strategic ‘Vision 2020’ New sorting centres tation of new program in mail service Brussels • Transformation of distribution operations to further increase X sorting the network 2007 structure efficiency facility Automated with reduced round number of 2003 sorting and buildings mail Start of sequencing continuous optimization of

delivery rounds Transformation journey

Normalized1 EBIT 2008 2003 2006 Danish Post 2013 New management CVC and Danish Post sells its IPO in June at € 14.5/share & start of the enter into the capital stake to CVC CVC sells 30% in IPO and transformation for 50%-1 share remaining 20% in December period (split 50/50), government holds Key events 50%+1 share

1 Normalized figures are not audited 6 bpost has delivered distinctive financial performance compared to peers An EU leader in mail volume per FTE2 EBITDA margin 2017 Thousand items, 2017

bpost 137 19.8% EU top 25% 134 8.8% EU average 100

7.4% EU bottom 25% 62

7.3% Corporate EBITDA margin3 7.2% 2017

bpost 20% 3.9%

EU top 25% 14% 3.5%

EU average 9%

EU bottom 25% 4%

2 Based on outside-in view bpost, Posten Norge, PostNL, , Austria Post, , CTT, , , 3 Peers include Post Nord, Posten Norge, PostNL, Swiss Post, Austria Post, Royal Mail, CTT, Deutsche Post, La Poste. EU average includes bpost SOURCE: bpost annual reports 7

Agenda

The company at a glance How to make elephants dance The Strategy going forward The Moonshot 8 Multiple trends disrupt the postal industry, requiring postal operators to transform

Fast- changing Consumers and consumer businesses receive more require- & more electronic ments & communication & behavior, services, thus causing a are driving decline in mail volume disruptive trends in the postal Consumers’ needs 82% all consumers landscape in parcel delivery have shopped are changing – online over the demanding for past 3 months, faster, more driving an increase flexible, low in parcel volume priced services

New technologies e.g., self-driving cars, will help deliver convenience & flexibility

SOURCE: Company (annual) reports, SPF Economy 9 A mail volume decline of 19% over last 5 years puts pressure on bpost’s large fixed cost base

bpost’s cost base is mainly fixed and hence cannot easily adjust to mail decline and reduced drop density: ▪ Collect (e.g., large number of red boxes) ▪ Sorting (e.g., 5 sorting centers with ~150 sorting machines) ▪ Transport & Distribution (e.g., large fleet, fixed mail rounds) -19% ▪ Etc. cumulative volume1 decline in last 5 years

-6.6% In 2018Q12 vs. -3.5% in 2012

-266m€ Loss in domestic mail revenue in last 5 years3 1 indexed 2013; Assuming revenue-weighted average volume decline 2 Underlying mail volume decline 3 excluding price/mix effect SOURCE: Annual reports; SPF Economy 10 The promising development of domestic parcels is not sufficient to compensate mail decline

Though eCommerce sales are booming… €bn, EU … it is not sufficient to compensate mail decline

Volume change, % +14% p.a. 2013-17, -19% +81% domestic 109 ~224

Revenue change, €m ~133 2013-17, domestic

-266

2013 2017 Mail Parcels

SOURCE: Forrester 11 Developing into an e-commerce logistics player in Belgium & beyond is a natural next step for bpost

2016 Scale-up in 2014-15 e-commerce logistics 2013 Climbing the e-commerce Entry in value chain e-commerce 2009 logistics 2006 e-commerce Developing takes of in parcels Belgium 1980-90 offering in The missed bpost opportunity 12

Agenda

The company at a glance How to make elephants dance The Strategy going forward The Moonshot 13

Vision for 2022

Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium”

Share of revenues generated in EBIT Efficient parcels & logistics provider

~60% Progressive profit of mail universal, generation retail & public services 14 bpost will deliver on 3 strategic aspirations

1 Mail services to citizens 2 Drive profitable growth in and State remain core and parcels in BeNe and will continue to e-commerce logistics in generate profit with a Europe more adapted distribution model CASH GENERATION & DIVIDENDS

3 OptimizeFix Radial Radialinto theto deliver on thepromising investment North thesis American in the promisinge-commerceNorth market American and ehelp-commerce deploy profitable market solutions in Europe PROVIDE UNIVERSAL AND PUBLIC SERVICES TO BELGIAN STATE AND CITIZENS 15 bpost will evolve towards a differentiated offering to accommodate changing customer needs

Acceptance for D+3-41 Optimizing drop density

1 Based on a bpost study with 1,000 households & 500 businesses (<200FTE) interviewed in Feb 2015 PROVIDE UNIVERSAL AND PUBLIC SERVICES TO BELGIAN STATE AND CITIZENS 16 The alternative distribution model will only reduce delivery frequency of non-prior mail Mail Parcel Prior mail Newspaper

Round A, e.g. Knokke Round B, e.g. Heist

Monday

Tuesday

Mail Wednesday center

Thursday

Friday Parcel center Saturday

Sunday

• D+1 only for prior 1 Δ vs. Today • No change • D+2/3 for non-prior 1 Until end of 2020 D+1; for 2021 on, negotiations are on-going with Government (Cleopatra 2 project) for which there are two options: D+1/2 at higher cost as periodicals will have to be delivered in dynamic rounds or D+2/3 at more economic cost as it can be included in CouReg rounds. 2 Except if specified otherwise in SLAs BECOME A LEADING eCommerce LAST MILE AND LOGISTICS PLAYER IN BENE 17

New partnership with DHL Parcels NL will allow to cover the full BeNe region and to capture important cross-border flows

Purchasing behavior • NL is the most important Large NL-based e-commerce players import country to BE (~25% of import flows) • Looking for a BeNe wide offering with regards to last mile • BE consumers mainly buy from NL players such as • Benchmarking prices on a BeNe Bol.com (7%) and Coolblue (6% level of BE online sales)

Competitive offering Very competitive & dynamic region Launched in June 2018 • with many large players such as PostNL, DHL, DPD, FedEx BECOME A LEADING eCommerce LAST MILE AND LOGISTICS PLAYER IN BENE 18 Supported by acquisitions, bpost has initial assets in Europe along the entire value chain of e-commerce logistics

E-commerce logistics operations in Europe E-commerce logistics offering

Order

• Order management • Payment Cold chain facility Fulfilment sites Personalized logistics Customer services, tax care services and fraud prevention • Phone, 1 email, social Realtime media & 4 technology The chat Netherlands support 2 • Advanced UK analytics 3 Poland Germany Belgium • Hybrid transport Delivery network for high- Fulfilment end and urgent ~€130m pro forma1 9 fulfilment centers / delivery • Order 2 • Last mile delivery reception in 2017 revenue facilities warehouses in 5 countries >600 employees the proximity of clients • Preparation for shipment 1 Assumes FY17 revenue from new acquisitions (Radial, Leen Menken); excludes Active Ants as only acquired in 1Q18 2 Including Leen Menken and Active Ants, excluding bpost sorting centers BE A LEADING INDEPENDENT ECOMMERCE LOGISTICS PLAYER IN NA 19 In 2017, bpost acquired Radial, an integrated eCommerce logistics solutions provider… High-level description Key numbers Origin 2016 merger of employees (FTEs) ▪ eBay Enterprise active in web services 6,700 of which 6,100 US ▪ Innotrac active in order processing & fulfilment, call centers alternative work 25,400 force hires Strategy Radial is repositioning itself during peak ▪ From a large webstore provider to an integrated eCommerce logistics solutions provider 2017 revenue 1,082 ($m) ▪ With a particular focus on mid-size customers ▪ And a push on cross-selling across the value chain 2017 EBITDA 57 ($m)

fulfillment centers 24 (13 million sqf.)

million units 295 shipped (1m/d during peak)

billion in orders $6.2 processed

SOURCE: Company website; Press; Management presentation BECOME A LEADING eCommerce LAST MILE AND LOGISTICS PLAYER IN BENE 20 Radial offers multiple services across the entire e-commerce logistics value chain

Customer Order care ▪ Order ▪ Phone, email, management social media and 1 ▪ Payment chat support services, tax ▪ Advanced services, and analytics fraud Realtime prevention 4 technology

2

3 Fulfilment ▪ Order reception in warehouses in the proximity of clients Delivery ▪ Hybrid transport network for high-end and ▪ Preparation for shipment urgent delivery ▪ Last mile delivery BE A LEADING INDEPENDENT ECOMMERCE LOGISTICS PLAYER IN NA 21

Radial North America market dynamics and competitive landscape

Online revenue e-tailers, US Addressable e-commerce logistics sector $ 27-37bn addressable e- commerce logistics

Radial’s target audience $ 2,000m Radial’s target e-commerce revenue audience $ 150-155bn ($ 20m – 2bn ~$ 460bn total revenues) US online Retail • Mid-market e-commerce segment ($ 20-200m online revenue) Independent e-commerce logistics providers • Enterprise segment Revenue per e-commerce logistics provider Year of $m, 2016-17 acquisition ($ 200-600m) Owner $ 20m 2015 • Some selected Genco 1,524 key accounts DHL e-commerce 1,385 ($ 600m-$ 2bn) OHL 1,350 2015 Radial N. America 1,014 2017 Digital River 309 2015 Ingram Micro 194 Newgistics 164 2017 $ 460bn1 expected Speed commerce 120 2016 US online retail revenue in 2017 Trade Global 86 2015 Jagged Peak 74 2015

1 Source: Forrester Data, Online Retail Forecast, 2017 22

Agenda

The company at a glance How to make elephants dance The Strategy going forward The Moonshot 23

Vision for 2022

Beyond mail, be an efficient global e-commerce logistics player anchored in Belgium”

Share of revenues generated in EBIT Efficient parcels & logistics provider

~60% Progressive profit of mail universal, generation retail & public services 24