Ronde Tafel met de heer Koen Van Gerven

Wij verwelkomen u op:

De uitdagingen van Bpost in het kader van de evolutie van postale diensten in een Belgisch en internationaal perspectief

Koen Van Gerven CEO

How to make elephants dance

VlerickAlumni, November 6th, 2014

Agenda

bpost at a glance

Key figures

The journey we went through

The challenge The transformation Productivity and profits

The journey ahead of us

Focus on the core Innovate/ grow Productivity improvements Stakeholders


1BPOST AT A GLANCE

5

23182365

2416 2429

Some figures

Mass Retail & Channels

• 669 post offices• 674 post points• Others: contact center, stamp shops, e-shop …

Mail Service Operations

• ~13,200 red boxes• 5 sorting centres, 280 operational platforms• Collect and distribution 5x/week• 10,000 daily rounds• 5.3 million addresses• ~10 million mail items/day• ~105,000 parcel items/day

EBIT

bpost at a glance

EmployeesAverage FTEs

Key financial indicators (normalized)

EUR million

Total Operating income

2010 2011 2012

Total operating income (revenues)2013

85%

2010 2011 2012 2013

29,311 27,97

3 26,625

25,683

2013

319 359 404 436

Other sources of revenues

26%

Parcels10%

Domestic Mail64%

+2.3% p.a.

+11% p.a.


2THE JOURNEY WE WENT THROUGH

7

Transformation journey to turn around a challenging situation back in 2003…

Situation in 2003

• Loss making with EBIT of EUR -69m

• Quality issues with only 85% of D+1 delivery of domestic items

• Low customer satisfaction with only 75% of satisfied customers in 2004

• Low operating efficiency with ratio of operating income/FTE around EUR 53,000/FTE

Transformation efforts

2003

2004

2007

2013

2011

Started the continuousoptimization of delivery rounds

Building of newsorting centers

Transformation ofthe points of sale network

Automated roundsorting and mail sequencing

Newdistribution structure with areduced number of buildings

New strategic‘Vision 2020’ programto further increase efficiency

20092006IPO onEuronext

CVC and DanishPost enter into The capital


Employee motivationPercentage of employees rating motivation with top scores (5, 6 or 7)

11

Customer satisfactionPercent

Quality of deliveryD+1 delivery of domestic single piece items up to 2 kg, stamped at “Prior tariff”, Percent

81757466

201009082007

… resulting in an increased productivity in a context of increasing quality of service, employee motivation and customer satisfaction…

86837882828279797775

0706052004 08 13111009

9293939493929188

85

2013

94

11100908070605042003

999487

817674

7064

595853

Operating income per FTEEUR thousand per FTE (end of year)

+6.4% p.a.

2003 04 05 06 07 08 09 10 11 201312

96

1212


9

… and significant profit improvements

EBIT

EUR million

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

404359

319240222

18316082

37

-69Normalized EBIT marginPercent

13.810.79.88.07.23.9 15.2 16.71.7-3.3 18.0

2013

436


THE JOURNEY AHEAD OF US

OUR STRATEGY 3

11

Focused strategy as an answer to observed trends

Continue to focus on core mail business

Innovate/grow within

core competencies

Generatecontinued

productivitygains

Keep stakeholders on board

E-substitution

E-commerce

Services at home

Leading to value creation & rewarding of shareholders


CONTINUE TO FOCUS ON CORE MAIL BUSINESS


Continue to focus on core mail business

specific programs to support mail resilience

DM Boost RelatioMail

Telco Cie

Telco Cie à votre service:(voir au dos de votre facture)

Telco CieTelco Cie

Telco Cie à votre service:(voir au dos de votre facture)

Proves effectiveness of Direct Mail

Re-design of invoiceto add value

▪ While being impacted by e-substitution mail remains important…

–90% of customers check their mail box every working day

–73% with internet connection prefer paper

… and we run marketing programs to defend the value of mail

DMX

Letterbox touch-point combined with search


INNOVATE / GROW WITHIN CORE COMPETENCIES


Innovate/grow within core competenciesbpost has an established position in parcels…

Dom

esti

c

parc

els

Inte

rnati

on

al

parc

els

B2C/C2X segment B2B segment

Offer the best last mile and broadest delivery options through: Flexible at home delivery 6

days/week (incl. Saturday delivery)

Densest network of pick-up and drop-off points in Belgium (1,100)

~100 bpack 24/7: all-time accessible pick-up locations

Unique selling proposition

Others Others

~50% ~5%

Market size: ~€ 150-200m 2010-12 growth of 5% p.a. Capture share of

e-commerce growth

Market size: ~€ 750-800m 2010-12 growth of 3% p.a. Double market share by

2017

Originated to protect Belgian home market by: Offering US and Chinese e-

trailers solutions to ship products into Europe and other parts of the world

Ensuring last mile delivery into Belgium and injection into other postal operator’s delivery network for other countries

The rationale…

We offer direct access to international postal networks and rates

Asset-light business model: outsourcing of air and road transport as well as last mile delivery outside of Belgium

Dedicated international sorting center Strategic presence in North America (Landmark) and Asia

(Beijing, Hong Kong, Singapore) driving flows towards EU Integrated service range: customs clearance, warehousing, pick

& pack and last mile delivery

How we do it

Dom

esti

c

parc

els


Innovate/grow within core competencies … and several other sources of revenues besides mail and parcels

Inte

rnati

on

al

mail

Valu

e a

dd

ed

serv

ices

Ban

kin

g &

Fin

an

ce

Payment services, cash at the counter, public finance solutions

Continuous development of innovative products and services

Direct offering50% of revenue

Associate 50/50 with BNP Paribas Fortis (bpost is sole retail agent) Basic retail, investment and insurance products Established footprint in Belgium through the bpost retail network

Agent of bpost bank50% of revenue (commissions)

Mail coming into Belgium from abroad Mail originating from a foreign country and passing through Belgium on its way to

another foreign countryWhat?

Asset-light business model and fully variable costs Active in the US, Europe and Asia

Business model

Collect and handling services

Meter readings at home (gaz, water, electricity)

Customer specific solutions which leverage our key assets: last mile, retail network and financial backbone

bpost won the tender to deliver the European license plates in Belgium

bpost is piloting delivery of groceries at home

outsourced in-house


ACHIEVE CONSTANT PRODUCTIVITY IMPROVEMENTS


18

Systematic objectivization

• Systems and metrics in place to “objectivize” workload

• Enabling accurate assessment and capture of productivity gains

• In every part of the organization (e.g., mail operations, retail network)

No interruptionin the process

• No interruption in the process of identification, preparation, testing, implementation and capture of improvement opportunities

• Critical improvement initiatives are shaped as a permanent and iterative cycle of successive waves every 18 months, e.g., Georoute

• Optimized employment plans to keep average salary increase under control

Ahead of the curve

• All improvement programs prepared well in advance (3-5 years planning) so as to

• Leave sufficient time for piloting and testing before roll-out of stable solution

• Perform “change management” in the organization

+ +

Natural attrition as key enabler to effectively and efficiently

capture the gains while maintaining social dialogue

Constant dialogue with social partners and key stakeholders to avoid “surprises” hence manage

timing of implementation

+

bpost has a proven track record and plans for further productivity gains


bpost has a proven track record and plans for further productivity gains

Historic FTE evolution

End of year FTEs, ‘000

05 0706042003

40

-4.7% p.a.

2013

25

11100908 12

Age PyramidHeadcount per age, 31/12/2013

8,469 8,911 10,407

37% of bpost’s

employees are above 50 years

old

0-39 40-49 50+

Statutories Baremic Contractuals

Non Baremic Contractuals

bpost has a systematic, well-rounded approach to identify and capture cost improvements across the entire organization

bpost has plans for further productivity gains supported by natural attrition and Vision 2020


KEEP STAKEHOLDERS ON BOARD


2121

We want to keep stakeholders on board…D

istr

ibu

tion

qu

ality

Cu

sto

mer

sati

sfa

cti

on

En

vir

on

men

tEn

gag

ed

em

plo

yer • Engagement

• Well-being

20132012

-15%# work accidents

Recognize experience:

first 45 people graduated

2013

2009 #14

#1

2011 #8

2012 #2

1ston the IPC

Environmental Ranking

81/100

20132004

+1175

862012 to 13:

+3

+1185

962

20132003

2012 to 13:+2

Percent

Percentage letters in D+1


Continuous dialogue with all stakeholders

No compromise on ambition but flexibility on timing

▪ Pilot and roll out simple programs▪ Keep the direction and overall ambitions, but be flexible on timing▪ Adapt solution to local specificities without compromising the

overall objectives by being creative in case by case basis

▪ Alignment between shareholders on need to transform the company▪ Adapt structure / status of the company accordingly▪ Right mix of true “Postiers” and external talents hired

Alignment at the top

▪ Role modeling of leadership involvement with high visibility action (e.g., Management “on the floor” to explain the strategy, participating in delivery rounds, etc.)▪ Build compelling case for change (liberalization, volume decline

etc.)▪ Build skills required for change by investing in capability building

of the change agents during the pilot phase before the roll out

Win the hearts and minds of the whole organization

▪ Visibility for the Unions on the strategy of the company, no surprise▪ Need for continuous change concept shared with and understood

by the unions▪ Continuous and transparent dialogue in the context of the

implementation with unions and employees

Constructive dialogue with social partners


We thank our partners for their continuous support: