Area for main content Area for main content 4Q13 results and Outlook strategy Tex Gunning – CEO Bernard Bot – CFO 18 February 2014
Agenda Area for main content Area for main content CEO update – 2013 Outlook – Introduction 4Q13/2013 financial review 2
2013 overview Area for main content Area for main content Group • Continued pressure on profitability • Improving trend, with better year-on-year operating results in 4Q13 • Solid capital position with € 472m net cash Segments • Europe Main: difficult trading environment continued to affect results, especially in Italy • Europe Other & Americas: benefited from positive effect of commercial measures and cost control • Pacific: significantly impacted by product mix changes and higher wage and other cost inflation • AMEA: performed better despite lower revenues • Brazil domestic: improving trend continued Profit improvement • Deliver! on track • Updated strategy Outlook announced, with further details to come in 2H14 3
Deliver! on track Area for main content Area for main content Reshape portfolio • Sale of China Domestic road operations (Hoau) completed • Brazil Domestic no longer for sale, focus on further improvements • Sale Boeing 747 freighters less attractive than continued use; reclassified as PPE Focus on distinctive • Investments made in digital sales channel service proposition • Higher growth realised in International, SME and higher weight parcels and palletised freight • Expansion of premium and express freight services in Europe and worldwide Execute better • Optimised functional organisation in place • Operational improvements and new back office activities rolled-out Invest in infrastructure • IT transformation underway, targeting outsourced operating model and IT • Several major infrastructure projects approved • Total € 240m improvements: € 35m in 2013; target € 120m in 2014 and € 85m in 2015 Financials • Total restructuring € 200m, total capex € 175m, other one-offs ~ € 50m 4
2015 ambitions confirmed Area for main content Area for main content • Full focus is given on realising the improvements from Deliver! • Assumes normal economic conditions in Europe Europe Main & Europe Other and Americas Other (Adjusted operating income margin, %) • All other reportable segments to contribute increasingly to profitability ~8 • € 240m from Deliver! by 2015, to be integrated in Outlook 4.8 • Unallocated around € (25)m • ETR around 30% • Capex 2-3% of revenues (excluding additional strategic investments) 2013 2015 • Trade working capital around 8% of revenues • Sales growth of around 2% per year (CAGR) 5 5 5
Area for main content Area for main content Outlook strategy 6
Company stabilised – ready to perform Area for main content Area for main content Perform! • Market-leading customer Define strategy: Outlook ✔ satisfaction • Strong employee engagement • Analysed strengths, weaknesses • Continuous improvement and market opportunities financial performance Address immediate priorities • Identified priorities and announced new organisation ✔ • Stabilised company following • Launched strategic initiatives prohibition UPS merger • Launched comprehensive 2013 – 2015 improvement plan • Appointed new CEO Deliver! Outlook integrates Deliver! Outlook Feb 2014 7
Outlook addresses stakeholder needs Area for main content Area for main content Customers • Competitive products and services • Perfect Transaction • Competitive prices Outlook Employees Shareholders • Improving results • Secure employment • Solid return on • Meaningful future investment 8
Start from strengths – leverage opportunities Area for main content Area for main content Opportunities Strengths • Express Economy - unique European Road • Stronger growth in most profitable Network segments Market • Strong position in automotive, industrial, • Customer interaction and interface healthcare and high-tech sectors (including digital) • Large base of SME customers • End-to-end optimisation • Integrated networks and operations Operating • Automation and mechanisation • Parcels/freight processes • Outsourcing and partnering • Express/Economy • Separate focus on domestics and on • Staff expertise and dedication Organisation integrated international express • Focus on customers • Direct accountability 9
Clear Outlook agenda – 10 initiatives Area for main content Area for main content 1. Move More by Road Focus on 2. Drive sales from four priority industries profitable growth 3. Serve more SMEs even better Targets 4. Increase profitability Domestics • Leading customer ‘Orange Experience Score’ 5. Realise the Perfect Transaction Invest in • Strong employee engagement 6. Increase efficiency and productivity performance 7. Establish superior revenue management • Continuous improvement 8. Prioritise Health & Safety practices financial performance 9. Create focused and accountable units Organise to win 10. Strengthen leadership culture 10
Move More by Road Focus on profitable growth Area for main content Area for main content “Reliability is the number one reason we’ve chosen TNT Express to manage our express transportation activities in Europe. We have a great dashboard that provides excellent visibility of return shipments to our distribution centre.” Alex Smits, EMEA DC Manager Gibson Europe Unrivalled European Road Network Actions • TNT Express faster in Economy Express on 51% of all • Invest in European Road Network to benchmarked sectors; faster or equal on 87% expand day-definite and cross-border deliveries • Day-definite or guaranteed <12:00 deliveries across Europe and up to 1,000kg • Automate road hubs • Connecting more than 40 European countries, 19 road hubs • Capture synergies domestic and and 550 depots international networks • Integrated with European air and Domestic networks 11 11
Realise the Perfect Transaction Invest in performance Area for main content Area for main content Perfect delivery – Perfect customer Perfect order Accurate and timely on time and in understanding process invoicing perfect condition People Process Systems • Empowerment and training of staff • Simplification and standardisation • Automation (functionality and ease of use) • Purpose-driven engagement • 100% compliance enabled by real-time automated service monitoring • Systems support to prevent human • Stimulate and reward proactive errors service-improving behaviours • Seamless end-to-end customer processes • 100% accurate, timely, relevant information at every step of the supply- • Lean and Kaizen standards chain 12 12
Create focused and accountable units Organise to win Area for main content Area for main content Changes CEO • Domestics cluster with separate domestic activities in France, Italy, UK as well as Brazil, Chile and Pacific Customer CFO Experience • Dedicated focus on domestic but synergies with international activities maintained • New International Europe entity, centrally-led, Network with integrated responsibility across Europe HR Operations • International Asia, Middle East & Africa entity separate but operating in close coordination with International Europe € 2.7bn revenues € 2.7bn revenues € 1.1bn revenues • New eight-member Management Board International International • Targeted implementation second half of 2014 Domestics Europe AMEA 13 * Indicative revenue numbers, Unallocated including Innight and Fashion Netherlands activities € 0.5m not shown
New Management Board Organise to win Area for main content Area for main content Chief Chief MD MD MD MD Chief MD Executive Financial Domestics & Chief International International Customer People Network Transformation Officer Officer Europe AMEA Experience Officer Operations Officer T ex Gunning Bernard Bot Marco van Ian Clough Michael Drake Chris Steven Scheers Martin Kalleveen Goossens Södergård 9 years with 25 years with 25 years industry Joined TNT in June Strategy and 20 years industry 20 years with 20 years HR TNT TNT, most experience, 2013 turnaround experience, most TNT, most experience, most recently as MD including DHL specialist recently as DHL’s recently as MD recently as Global Member of Previously: TNT Europe Other & Group Director CEO North AMEA HR Director Executive Supervisory Board Previously: Americas Global Networks America Board since member; Akzo McKinsey, Bain March 2011 Nobel, Unilever Capital The existing reporting lines will not change until second half of 2014. 14
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