TRANSFORMING From one world to another

Transcription

1 TRANSFORMING From one world to another

2 The Postal World and An Post Turnover 2017 Number of Employees Mail Decline Parcel Growth GLOBAL Postal Sector 392bn 2,780, % 10 14% Irish Postal Sector 900m 9,500 8% 20%

3 AN POST CAN PLAY A MAJOR STRATEGIC ROLE FOR THE IRISH GOVERNMENT > Provider of essential services to citizens including ~2m letters each day delivered to 2.2m delivery points > Backbone for Irish business in a world where E-Commerce is a huge part of the economy with 30m parcels delivered last year > Financially significant enterprise Revenue of > 800m > Large employer for the state with ~9,500 employees (FTEs) > Major player in Financial Services with 20bn of State Savings administered

4 AN POST CONTINUES TO FACE VERY SIGNIFICANT CHALLENGES Significant challenges include: 1. Headwinds from trends in postal industry continued digital substitution of mail and decline in cash 2. Challenging starting point given structurally higher cost base than competitors 3. Fundamental economic challenges in Ireland including low mail volume, high number of delivery points and high cost per FTE

5 CFO ROLE Part of a Team Identify Problems and opportunities, Propose Solutions Understand Organisation and Change Identify Value Understand Other Functions and Support constructive Investment Results

6 FROM ONE COMPANY TO TWO WORLD CLASS STRATEGY-LED BUSINESSES Peter Quinn Chief Financial Officer Pat Knight Human Resources Director Debbie Byrne Managing Director An Post Retail David McRedmond Chief Executive Officer Aoife Beirne Chief of Staff Garret Bridgeman Managing Director An Post Mails & Parcels

7 CFO ROLE Part of a Team Identify Problems and opportunities, Propose Solutions Understand Organisation and Change Identify Value Understand Other Functions and Support constructive Investment Results

8 Overall we project the addressed mailbag will decline by 33% between 2017 and 2027, at a CAGR of -4.0% Addressed Mail volume forecast between 2018 and 2027, millions > We expect an overal decline of -4.0% per annum between 2017 and 2027 for total inland addressed mail volumes. > Ceadunas letters, which constitutes more than half of total mail volumes, is expected to decline at -3.4% per annum over the forecast period. > Stamped letter is expected to decline at -3.1% per annum. > Metered letter is expected to decline at -5.7% per annum, driven by e substitution and product substitution into stamped and Ceadunas letters. > Other segments continue to decline due to e substitution and price increases. Period CAGR CAGR CAGR Growth Rate 3.2% -4.3% -13.9% -0.4% -5.7% -4.0% Source: An Post RMS data, PwC forecasts

9 MAILS AND PARCELS Key Issue Mail Volume Decline Challenge > Falling Mail Usage > Traditional Work Practices > Geographic Challenge Opportunity > Pricing > Add Value Service > E-Commerce

10 Post Office Retail Key issue repurposing network Challenge > Falling Cash Transactions > Substitution with EFT > Relevance > Reducing Footfall > Expensive Infrastructure Opportunity > Franchise Model > New Contract > Financial Services > E-Commerce > Government Services

11 CFO ROLE Part of a Team Identify Problems and opportunities, Propose Solutions Understand Organisation and Change Identify Value Understand Other Functions and Support constructive Investment Results

12 Evolving Irish Operational context From Government Department to Semi-State Organisation structure P&T An Post RTÉ Telecom Eireann Semi-State and private companies An Post RTÉ eir Next Phase? Role of CFO P&T Bookkeeper Semi-State and private companies Financial Controller Next Phase Strategy and Economics

13 Same Sector Radical Different Performance Globally, only a few commercially sustainable operators are generating consistent positive ebit Commercially sustainable Operators who have delivered operational transformation and/or diversification Low performing A large number of operators with mail volume decline directly translating into profit erosion, while alternative business model not yet found or not yet yielding

14 CFO ROLE Part of a Team Identify Problems and opportunities, Propose Solutions Understand Organisation and Change Identify Value Understand Other Functions and Support constructive Investment Results

15 Business Opportunities Power of Brand Association 2009 Gift Card Bought 9m 2018 Sold 105m Other Business Opportunities UK based Postal Sector Specialist Insurance Intermediary based in Athlone Data

16 CFO ROLE Part of a Team Identify Problems and opportunities, Propose Solutions Understand Organisation and Change Identify Value Understand Other Functions and Support constructive Investment Results

17 Brand Evolution Investing to grow from one world to competing in many From A mails company that does parcels Peripheral Part of Irish life Staid, of the past Average, passive Only choice, monopoly To > An expert FS and E-Commerce services company > Central, inclusive, of the people > Part of my life, customer centred > Contemporary, progressive, innovative > Expert, confident, decisive > Preferred choice, competitive

18 CFO ROLE Part of a Team Identify Problems and opportunities, Propose Solutions Understand Organisation and Change Identify Value Understand Other Functions and Support constructive Investment Results

19 SKILL SET OF THE CFO Key changes in mind set From To Accounts and budget > Economic strategy and 5 10 year plans Measuring performance > Identifying value Business plans > Strategy Finance > Economics Function > Competence Own competency > Financial skills teacher for rest of team Internal perspective of control > External perspective Value add Capital Markets Stakeholder Role

20 Strategy leads to sustainable profits Profit Profit Price Efficiency New Products 25m Mail Decline Wage Inflation Do Nothing 25m 25m 10m 35m 40m 10m 25m