Q1 2010 Results Analyst Presentation Henk van Dalen, CFO 3 May 2010
Overall trading conditions continue to improve GROUP • Operating income € 251 million (€ 163 million in Q1 2009); quarter benefited from four extra working days • Profit attributable to shareholders € 143 million (€ 76 million in Q1 2009) • Net debt stable versus year-end 2009 • Vision 2015 implementation as per AGM announcement progressing EXPRESS • Development of Express volumes continues to improve • Negative year-on-year yield development shows early signs of stabilisation • Underlying* operating income € 59 million (€ 23 million in Q1 2009) MAIL • Addressed mail volumes in the Netherlands declined by 9.7% (corrected for working days and one-off mailings) • Good performance improvement Emerging Mail & Parcels • Underlying* operating income € 159 million (€ 149 million in Q1 2009) * The underlying figures are at constant currency and exclude the impact of more working days in 2010 and the impact of various one-off charges in 2009 2
Consensus ‘pauses for breath’ Development of forecast consensus GDP growth (%) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10 10 US 2010E consensus Europe 2010E consensus 3
Statement of income Underlying* Actual Underlying* Actual € millions Q1 2010 Q1 2010 Q1 2009 Q1 2009 Revenues 2,747 2,569 2,444 2,444 EBITDA 329 287 248 245 Operating income (EBIT) 251 213 166 163 Net financial (36) (40) (expense) / income Income taxes (71) (47) Effective tax rate 33.0% 38.5% Profit for the period 144 75 EPS (in € cents) 38.6 21.2 * The underlying figures are at constant currency and exclude the impact of more working days in 2010 and the impact of various one-off charges in 2009 4
2009 - 2010 impact of one-off charges and fx Q1 2010 Q1 2009 € millions Express Reported EBIT 77 20 Working days (16) Restructuring related costs 3 Fx (2) Underlying EBIT 59 23 Mail Reported EBIT 178 149 Working days (19) Underlying EBIT 159 149 5
Express Q1 underlying Volume growth strong; yield pressure continues Improved year-on-year underlying operating margin Core consignments +6.6% (day-count adj); cost per consignment -5.6% Q1 2010 * Q1 2009 * Organic € millions Acq Total Revenues 1,488 1,364 7.0% 2.1% 9.1% EBITDA 107 75 41.4% 1.3% 42.7% Operating income (EBIT) 59 23 160.8% -4.3% 156.5% Operating margin 4.0% 1.7% * The underlying figures are at constant currency and exclude the impact of more working days in 2010 and the impact of various one-off charges in 2009 6
Express 2010 volumes near 2007 levels Volume development Core kilos, year-on-year change, in % 140% 60% 130% 50% Road 120% 40% Air 30% 30% 20% 20% 10% 10% 0% 0% -10% -10% Weeks 1, 2 Weeks 3-13 Weeks 1, 2 Weeks 3-13 2010 versus 2009 2010 versus 2007 Volume development improving, however: • Yield pressure • Cost inflation Core volumes exclude Special Services, Hoau, Mercúrio, Araçatuba and LIT Cargo 7
Express yield remains negative year-on-year but stabilising Core revenue quality yield (excluding fuel surcharge) Year-on-year development at respective FX 2% 0% -2% -4% -6% -8% Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 8
Express yield development Core revenue quality yield trend (excluding fuel surcharge) Development rebased to Q1 2007 at respective FX 102 100 98 96 94 92 90 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 9
Mail Q1 underlying Four extra working days, good performance Emerging Mail & Parcels Drop in volumes: -9.7% underlying (corrected for working days and one-off mailings) Master plan savings € 18 million Q1 2010 * Q1 2009 Org € millions Acq Total Revenues 1,022 1,026 -0.2% -0.2% -0.4% EBITDA 185 176 4.0% 1.1% 5.1% Operating income (EBIT) 159 149 5.4% 1.3% 6.7% Operating margin 15.6% 14.5% * The underlying figures over 2010 are at constant currency and exclude the impact of more working days in 2010 10 10
Mail NL; addressed mail volumes Volume decline -5.7% or Total -9.7% (corrected for working 0% days and one-off mailings) -2% -4% -6% Positive mix change – bulk -8% -10% versus single item mail -12% Q1 Q2 Q3 Q4 Q1 Actual 2009 Actual 2010 2010 corrected for working days and one-off mailings 11 11
Positive legal outcome on sector labour agreements Towards level playing field • Court case Sandd and SelektMail against Ministry of Economic Affairs • Ruling that 3.5 years after liberalisation at least 80% of employees must have a labour agreement TNT Post CLA Agreement Sector CLA implying TNT Post agreed average Sector CLA + wage per hour Administrative Decree Sandd SelektMail April 2009 + 3.5 years 12
Net cash generated, free cash flow € million Q1 2010 Q1 2009 FY 2010 remarks Changes in working capital (176) 6 Working capital outflow Cash generated from operations 79 195 Interest paid (12) (22) Taxes paid € 300 million, Income taxes paid (36) (16) including delayed payment of € 175 million Net cash from operating activities 31 157 Interest received 4 11 Net capex (33) (54) Capex around € 400 million Free cash flow 2 114 13
Net debt development Q1 2010 Net debt € millions Net cash from operating 28 Mar 2009 31 Dec 2009 activities Net Capex Acquisitions Other 3 Apr 2010 (1,127) (1,106) (1,722) 31 (33) (5) (14) 14
Dividend 2009 € 0.53 Interim dividend € 0.18 + Final dividend € 0.35 In ordinary shares or In cash Premium 2.21% above cash dividend • Shareholders who elected a final dividend in shares will receive one new TNT N.V. ordinary share for every 65 dividend rights • 51.9% of outstanding capital has elected for dividend to be paid in stock • 48.1% of outstanding capital has elected for dividend to be paid in cash 15
Volcanic ash disrupts air traffic over Europe, outstanding performance road networks Air traffic severely curtailed Contingency plans put in place relying on a specific road network to replace our air line hauls Priority agreement with Eurotunnel enabled connection to UK Little to no backlogs in TNT locations in Europe, but backlogs experienced outside Europe since there was no alternative to air uplift Extra costs limited 16 16
Growing Emerging Platforms Third B747-400ERF freighter between Europe and Asia Operational Q2 2010 Outbound from China utilisation virtually 100% Europe Europe Increased demand for Asia Asia intercontinental service Uplift goods from factories Direct feed into TNT’s networks around the world 17
Vision 2015 next steps Develop detailed implementation plans for four focus areas DDD Implement growth plans Focus on cost leadership Initiate an internal carve out of Mail business and develop equity story Obtain clarity on Mail regulatory position on the Universal Service Obligation in the Netherlands Mail Conduct a full review of alternatives for the Mail business to ensure best positioning for company and stakeholders Seek required approvals and advice from various stakeholders Assess organisation and structure Group Optimise overhead 18
Outlook 2010 Overall Modestly improving business environment Global economic recovery remains fragile – caution is warranted Focus on costs and cash will continue Express Continuing volume growth with some recovery of weight per consignment and lower cost per consignment Revenues and results expected well above 2009 levels The extent of possible pressure because of price/mix, wage increases and cost inflation will influence the magnitude of the improvement Mail Addressed volume decline in the Netherlands of 7-9% Master plan savings of € 75 million targeted Results expected to be below 2009 levels 19
Warning about forward looking statements Some statements in this presentation are "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. 21
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