PostNL N.V.

Thank you, operator. And thank you for joining us today.

As usual, Herna Verhagen and Pim Berendsen, will take you through the presentation that you can find on our website, after which we will open up for your questions. Herna, over to you.

Thank you, Jochem, and welcome to you all. I would like to start on Slide #4, in which we, of course, look back to 2021, which was an exceptional year, of course impacted by the pandemic.

Key takeaways of the year is that we of course, recognized and rewarded the efforts and hard work of our people, partners and retailers. And for retailers, we did again over the lockdown, end of December and also at the beginning of the year 2022.

We saw strong performance, and we'll do a deep dive on the performance of the units in Q4 and full year, strong performance in Parcels and Mail in the Netherlands. As we already said in our Trading Update, our free cash flow and our cash flow performance was better than expected and further strengthened, of course, our already solid financial position.

And that also has led to a share buyback program which we announced in January and which will start tomorrow. Going forward, we will have continued focus on value creation for all our stakeholders.

And of course, this is with the fact that we look into a war in the Ukraine, which makes it a little bit of a mixed feeling to bring good numbers and a good perspective for PostNL going forward knowing what's going on in the world. On Slide #5, we summarize the financial highlights.

Our earnings were at the high end of the guidance range, which we had set last year between €280 million and €310 million, and we outperformed on cash flow. Q4 was a busy quarter and accelerated already strong performance of the first three quarters.

The good performance in the last quarter was mainly driven by Mail in the Netherlands, and Parcels in line with expectation, that has led to good financial metrics for the year 2021. A plus of 6.5% in revenue, a plus of 23.6% in normalized EBIT, which brought us to a number of the 308.

And I think important and we'll come back to that in some of the next slides, there's a non-recurring COVID effect in it of €82 million. Free cash flow came in €288 million, which is a plus of 54.8%.

And our normalized comprehensive income, which is of course the basis for our dividends, came in at €285 million, which has led to a proposed dividend per share of €0.42. In our view, strong financial results for the year 2021.

And that's important to understand, and that is on Slide #6, what the COVID impact is on our normalized EBIT. And that's what you see over here, normalized EBIT €308 million in 2021.

The two COVID effects around €40 million Parcels, which is splits between €26 million Parcels in the Netherlands and €15 million with Spring and Logistics. And in the bullets of course we provided also the number of parcels which are in our view, non-recurring.

And in Mail in the Netherlands, an impact of €42 million, of which we do think that 67 million mail pieces, are assumed to be non-recurring. And there you can think about all the mailings we did for the vaccination programs to boost the mailings, but also for example, the elections, which we had in March last year were people older than 70 had the possibility to do their voting by mail.

We assume the revenue impact is €85 million in 2021 and that's compared to €53 million in 2020. Good results and of course also helped by the non-recurring effects in Parcels, Spring, and of course, Mail.

I think those good results for the year 2021 are based on important progress we've booked in the execution of our strategy. And let's give a short update on our strategy.

We won't do that too long, because that's what we've already presented a few times and gave you some details on examples we have, and how we, of course, follow the progress. Our purpose is deliver special moments.

And that's with the ambition to be your favorite deliverer, and clear strategy to be the leading logistics and postal service providers into and from the Benelux region. The latter, gives a clear view on where we think we want to be active, which is the Benelux region, but it also gives clarity on the fact that parcels do come in and go out from the Benelux and that's, of course, our Spring entity, which is important to PostNL.

On Slide #9, you find the value creation model, which we already shared with you, which is also part of course of our Annual Report, which is also published today. We have three very clear elements in our value creation proposition.

The first one is Parcels and we manage Parcels for profitable growth. For example, by enhancing our customer interaction but also customer satisfaction by capturing future e-commerce growth where we do think e-commerce growth will continue but also delivering smart logistics solutions.

Mail in the Netherlands is managed for value. We position Mail as still very important to keep contact between people and that's what we saw happening, of course, in COVID time as well.

The Mail remains to be an important element in having people contact with each other, and we want to keep it accessible, reliable and affordable. And that was, of course, delivering stable and predictable normalized EBIT and cash flow, the main reasons behind the consolidation.

And a third important element in that value creation proposition is Digital Next. And there are a few slides.

In the next few slides, I will spend some more attention to the progress in the Digital Next program. I think important to mention in our strategic objective is, of course, what we do is we work for our customers and help them grow their business.

So Net Promoter Score of customer satisfaction are crucial for us. We want to secure a sustainable Mail market, as just explained, attract and retain motivated people, very important, especially in 2021 and also in 2022.

With, of course a tightened labor market, we want to improve our environmental impact where we, in the extra investments we announced last year, there was also an extra amount taken up for, of course, improvement in our CO2 emissions. And in the end, that should create and generate, of course, profitable growth and sustainable cash flow, which is important to create value for all our stakeholders and also shareholders.

There are two elements I would like to give you a short highlight on. The first one is ESG.

And you find on Slide #10, what is important in our ESG. Of course in Environment, it's about clean kilometres, it's about network efficiency, but also about sustainable buildings where we made progress in 2021.

In Social, it's strengthening our employee engagement, unfortunately, also over the 2021, we had a very high employee engagement, staying safe and healthy that helped us enormously over the last two years to keep our network running and to make sure that we were able all of the days to deliver mail and parcels, and of course realize the change in workforce optimization. In Governments, there's nothing new to tell, but these are the elements in governments, which create transparency, which keep us responsible and accountable.

On Slide #11, you find some of the highlights when it comes to the important elements. Customers, the highly satisfied customers decreased slightly to 34%.

In Social asset we see in our employee engagement, we see the 84%, which is in line with 2020, which is a very strong score. It's higher than the score in the normal logistical industry, and it's around market average.

Slightly higher absenteeism and that's what we'll come back when we talk about 2022 because we did see higher absenteeism in the month of January because of Omicron. In Environment, we had a good year, 18% reduction in our carbon emission.

And I think important, as of January 1, we are net zero through offsetting any remaining carbon emissions. And we were recognized for our ESG leadership, as you can see on the right side of that slide.

A few examples on our progress in our environmental initiatives you find on Slide 12. The first one is our light electric freight vehicles on which we are very proud of.

And why? Because these vehicles have the possibility to put roll-containers in it which is much more efficient.

So you can fill a roll container and therefore and then put it into those vehicles, which is more efficiency in of course preparing the vehicle but also more efficiency in delivering the vehicle. These LEFVs will help us to get the inner cities of the 25th biggest cities in the Netherlands, emission free in the year 2025.

And because of their size, they also reduce congestion. And we put lots of efforts in renewable fuels as a transitional solution.

As we have discussed earlier, many of our big trucks, there are not yet big trucks in the market who are fully electrical. And we of course tested one of - in a pilot, one of the first ones, but they're still not available in big amounts.

And that's the reason why we use HVO100 which is a solution that gives us the possibility to reduce 90% of our CO2 emission. The second important element where we would like to give you some highlights on our progress is our digital transformation.

We, of course communicated our digital transformation or Digital Next program to the market last year, February. There are three important value drivers in that program.

The first one is transforming our commercial engine. The second one is of course transforming our core logistics and the third one is scale of the platform we have, for example, with our app.

And to be more quick in our digital transformation, we have to strengthen our IT foundation and data foundation and of course drive the digital DNA of our organization to make sure that people do understand why it is crucial for PostNL. The shift takes place, is what you can see on Slide #14.

Here you find the enormous growth in online visitors for more than 1 billion visitors last year and 90% via mobile, almost 7 million consumers using our PostNL app. The talks with chatbot Daan, slight decrease, which has to do with the fact that we had much more calls in the year 2020 because of Corona in that year.

Self-service preparations did show an increase same as of course stamp codes. Important for us on our business sites is of course the business portal users, also there an increase and the external API's which connect the network of PostNL with the networks of other companies.

In other words, in these changes, we do see that we do make progress in our Digital Next program on the one hand, and secondly, that we're of course making - that we are improving and increasing the KPIs which are important in the Digital Next program. Also, here are two examples and those you'll find on Slide #15.

Two examples of where we see progress, the first one is that we - with the elections in the Netherlands last year March, we put information, we did put information into MyPostNL app, which meant that people had a pre-announcement of the fact that they would receive the candidates list and their voting cards. And that helped, of course, creating much more attention for the elections on the one hand, and on the other hand, giving also people the ability to see when they should receive their voting cards and candidate lists.

The second one is the customer journey received from outside the EU, which of course became very important after the introduction of the VAT as of July 1 in 2021. Also they are - we changed the app, which made it possible for consumers to do customer clearance costs and payments in the PostNL app which made it more easy for them to order from outside the EU.

I think examples underpinning our strategy of value creation via Parcels, Mail, and Digital Next. Let's move to Slide #17, in which we give you a more insight in our business performance of Q4.

And again, of course, we'll start with the COVID impact in our cross-border in Q4. Introducing VAT, as of July 1, 2021 did have big impact on volumes coming from Asia to Europe.

And that's what you see over here. You find here normalized EBIT in Q4 2020 and the impact it had, of course, on our normalized EBIT Q4 2021.

In the first part, you find the Q4 delta assumed non-recurring impact related to COVID-19, which is €38 million. And the second one is the impact of cross-border activities, which is €11 million more or less, equally divided over Mail and Parcels, which did have, of course, huge impact on our businesses in Mail in the Netherlands and in Parcels.

And as you will see, when we talk about 2022, the impact on our cross-border volumes, probably continues in the first half year of 2022. A little bit more insight when it comes to cross-border volumes is shown on Page 18.

And there you do see that we, of course, when we were in summer and VAT was introduced, the blue line gives you a view on our expectations. And those expectations were based on, for example, many customer interviews.

And in the orange line, you find what it actually was till the end of December. And that meant a drop in volumes of 50% to 60% by the end of the year.

The global supply chain disruptions do cause, of course, a delay in the recovery. That is partly because of the impact of COVID on transport from and to Asia, but also the increased freight costs and transit times.

And last but not least, limited supply due to raw material shortages. So there are a few reasons behind the fact that you did see a much steeper decline in the amount of parcels coming from Asia than earlier, expected.

Then let's move to Parcels. That's what you find on Slide 19.

Solid business performance in Parcels. You find of course, here the results of the fourth quarter together and as the last line, the full year results within parcels.

We did see a normalized EBIT in parcels of €55 million. Last year it was €75 million, that was of course, including COVID.

If you take that out, we still see an increase in normalized EBIT within our Parcel division. Volumes minus 5.3 compared to last quarter which is much - which was much more heavy in corona.

If you take that out, we still see a growth of 9%. If you compare the amount of volume to the fourth quarter of 2019, the last quarter where there was no COVID, we see a growth of 21%.

All the numbers do lead to our expectation that the growth in e-commerce will continue going forward. We didn't see any recovery in the last quarter of our international volumes.

And that's also what we take with us, at least in the first half year of 2022. What we also do see within Parcels is the growth in our cost, for example through energy and fuel cost, but also the utilization of our small parcel sorting centers impacted by the fact that we have less international volumes, which are generally small volumes, and were partly, of course, very well applicable for the small parcel sorting center.

On Slide #20, you find a few examples of what we did when it comes to enhancing our customer interaction, which was part of course of our strategy to create profitable growth in parcels and what we did operationally. In our customer interaction and service offering, we put much of attention to improving our NPS and therefore we also started quite some customer journeys and one of those journeys is, 'I manage returns.'

We also started to expand the amount of parcel lockers. By the end of 2021, we had 214, our own track to have around 1500 parcel lockers in 2024.

It was also not quiet in the area of expanding our capacity. Of course, we opened our small parcel sorting center in HoogTij.

We opened the 26th parcel sorting center in the Netherlands. And we opened two new distribution depots in Willebroek.

What we also did in to support our Digital Next program is, we tracked 85% of our roll containers, which gives us real time information, which is going to help us to have a better equal flow, but also to have a better understanding of what the amount of parcels is that come to our sorting centers. And I think the left part of this slide gives a little bit of a background on why we do think that e-commerce growth will continue, going forward.

On Slide 21, we look, of course to the strong performance of Mail in the Netherlands. The strong result is partly related to COVID-19.

Volume declined in the fourth quarter was 8.9%, which was partly because of our fewer working days, partly because we had more COVID in Q4 2020 and partly because there is still substitution. Also here an impact from international volume and less export mail.

I think good to understand when it comes to revenue, in Q4 2020, we still had Cendris in our revenue numbers, which accounted in the Q4 2020 for €20 million. The CLA for postal operators and deliverers, which is an important CLA for us, is still ongoing.

I think, an enormous strong performance of Mail in the Netherlands in the fourth quarter of the year 2021. Also for Mail in the Netherlands, a few examples on the progress they make in managing the mail company for value.

I think important, first of all, is here of course the full volume development we expect for the 2022. It is 8% to 10%, taking to account that this is including the COVID effect.

And we saw of course in 2021 an effect of 0.3% which was mainly because of all the volumes we had from vaccinations, boosters, etc., etc. In Mail in the Netherlands, we remain to be focused on creating the value for mail, for example, direct mail.

And also there we did see that customers we did not have before 2021 started mailing in 2021 because physical mail still gives lots of attention. Sustainability plays an important role in Mail in the Netherlands as well.

Although 90% of the network is already emission free, CO2 emission free, is what we try to do is of course to make the last 10% emission free as well by, for example, electrical bikes. In adapting the organization, we made a big step in 2021 by reducing the number of products we have.

This is an important program on the Digital Next. And we came from 2200 product codes and we brought it to 200.

And of course we improved our sorting and preparation process by introducing the new mail sorting units. It's an important program because it's one of the programs that will deliver our cost savings going forward.

Also here progress has been made on making sure that Mail Netherlands remains to be a unit which is managed for value. On Slide #23, we give some specific attention points for the year 2022.

The year 2022 remains to be on executing on our strategy. In Parcels that means contribute to the development and growth of our customers where the Net Promoter Score still plays a very important role, expansion capacity to accommodate further increase in volumes which we expect in 2022, and further developing of a future proof, effective, and sustainable delivery model which needs to contribute to the aim of the 25 inner cities to be emission free in 2025 and last mile emission free in 2030.

Mail in the Netherlands is managed for value. It needs to remain a strong nationwide network.

Cost savings remain to be important in Mail in the Netherlands because that's the way to, of course, adapt and balance volume decline, and safeguarding on-time delivery. Quality 2021 was 49%, by law it needs to be 95, so there's work to do in 2022.

To speed up progress on ESG, I think, already set quite some elements around those ESG targets and what we're going to do. Further accelerate our digital transformation, we will switch to Net Promoter Score.

The year 2022 will be a transition year, we will increase our customer journeys and also make them as tailored as possible and accelerate our agile operating model. That will lead to a normalized EBIT outlook of € 210 million to €240 million and a free cash flow outlook of €110 million to €140 million.

Take into account that in year 2022, of course, we have - we expect almost zero COVID effects. That's one, what we took into account already is an increase in our organic cost upon which fuel and energy and of course, the geopolitical political.

The geopolitical changes we see in the last - over the last few days will have their impact as well. Although as far as we can see, at this moment in time, not impacting the normalized EBIT range we give for the year 2022.

Much more to tell about 2021 and of course, also the outlook of 2022. And I would like to hand over to Pim, to give you more background on it.

Thank you, Herna. And indeed, let's look at more of the financial details for '21 and '22.

But before we do that, I would like to point you towards and that's kind of strange, the appendix. But that's there because I think you can find our additional reconciliations that can help you fine tune your model and/or use in comparison to peers.

So there's, I think, reconciliation of the income statement and EBITDA per segment; there's the results development bridge per segment, but also reconciliation of the profit versus normalized comprehensive income; and as usual, a breakdown of pension expense versus cash contribution on pensions. So look at those.

And if there's questions, you'll know where to find us. I'll move on to Slide 25.

The Q4 Parcels bridge. Well, certainly we talked about the margin of parcel for the end of Q3 being 5.3% and as we indicated, and basically promised, we would expect an improvement of margins.

And you can see this realized in Q4, moving towards a 9.1% margin in the Parcel segments. All in all, it's €20 million down in comparison to Q4 last year, but €25 million down as a consequence of lower COVID, €5 million down as a consequence of cross-border developments being less favorable, which means underlying an improvement of the Parcels business and such a good results.

If we then move towards Mail in the Netherlands for Q4, we see a €82 million profit in 2022 to a €66 million profit number in the fourth quarter '21. And that gap can be explained by €13 million less non-recurring COVID effect in 2021 and €6 million less contribution from cross-border that all in all leads to a minus €19 million and improved by €3 million underlying business performance improvements within Mail in the Netherlands segment.

And that's on the back of 8.9% volume decline in the quarter on reported for this reported numbers. On Slide 27, you'll find a new slide which basically gives you the insight on how to get from normalized or from reported EBIT to normalize EBIT and to reported EBITDA.

And if I look at some of the comparisons I see with peers in terms of valuation metrics, I felt the need to add this slides and here we make a reconciliation from the reported EBITDA. We'll then make the correction for the non-cash pension expense that is part of the reported EBITDA which is almost €70 million in 2021.

So a corrected EBITDA for the non-cash pension expense would be €542 million. And if you think about valuation metrics, you need to make sure that you at least understand what the IFRS 16 impact only bit is.

In PostNL's case, that's been €62 million. So if you were to correct those as well, you end up with an EBITDA ex non-cash and the IFRS 16 expenses of €480 million and there also on the IFRS impact, clearly, there is a difference between our balance sheet and these uses in comparison to some of our peers.

So I think an important slide for you to look at, in case you want to make comparisons on EBITDA with our peers. Slide 28 is the bridge on cash flow.

From Q4 2021, €93 million normalized EBIT as we've seen turned into a free cash flow of €65 million. Key part there are obviously slightly higher CapEx in comparison to last year, a lower result obviously driven by non-recurring COVID delta's, lease payments more or less in line, a positive change in working capital which we'll see revert into an investment in working capital going into 2020.

Change changing pension liabilities, we just talked about those, and we didn't pay corporate income tax in the fourth quarter 2020. And we did do so on the back of our higher profits for 2021, already in 2021.

The full year cash flow bridge is on Slide 29. And there I think, to start off with, it indicates a free cash flow yield and that is a unlevered free cash flow yield of 15% basically calculated as free cash flow divided by the market cap, so the equity value.

And then you'll see the bridge from €308 million normalized EBIT towards €304 million, free cash flow before exceptionals. And then you need to take out one of the installments related to the soft pension transitional plants of €16 million, and you'll end up with €288 million as the free cash flow number for 2021.

There's, within that bridge, a big gain on the sale of Cendris and Herna already talked about it in terms of the revenue developments. And you see CapEx numbers of €140 million, including the acceleration of digitalization; the expansion of our capacity; change in working capital, a positive one driven by positive working capital developments, closely monitoring our DSOs, DPOs and what have you; change of pension liabilities of €69 million in comparison to €34 million last year; change in provisions and cash outs in 2020 relating to Cendris sale, and we talked to about the cash flow on the tax.

The proceeds related to the sale of Cendris are reported under disposals and all in all, a very, very strong cash flow over 2021. That then, obviously leads to a balance sheet that also moved favorable.

You can see that back in the development of the adjusted net debt on the left hand side of the graph or of the other slide, I should say, from €407 million by the end of 2020, towards €203 million adjusted net by the end of 2021, which is aligned with a leverage ratio of 0.4 times, which is also well within the ranges of how we have defined properly financed. If you talk about our invested capital and the returns we make on the capital that we do employ and the return on invested capital for 2021 turns out to be 16.4%, which is very attractive and more than 2x WACC.

Now, you will also see the graph on the right hand side that indicates the key drivers that have improved the working capital or the return on invested capital. Clearly the step up in results but also the investments we've made.

We do expect, obviously, to be above WACC threshold in all the years that we're planning for. Certainly the return will come down a bit given the non-recurring COVID effect that we do not expect to see back in 2022 and forwards.

The share buyback program that we've announced will positively contribute to the return on invested capital, roughly speaking, 1% to 3% over the next years. And there is on Slide 32, the share buyback.

Clearly we've announced that program of a maximum of €250 million in two tranches. First tranche to be executed as of tomorrow with €160 million to €170 million, with a maximum of €51 million shares to be bought back, and I said, will start tomorrow.

A second tranche to neutralize the 2023 expected dividends, share dividends will follow in 2023. We'll use the cash and that is - that you've seen on the balance sheet of €848 million to do this.

And certainly, this share buyback program will not only have a positive impact on return on invested capital, but also a positive impact on the dividends per share of roughly three €0.03 to €0.06 per share over the period 2022 to 2024. Then, let's move towards the outlook for 2022.

And there Slide 34 basically explains the transition from a 2021 towards 2022. Well, normalized EBIT for 2021 clearly on the €308 million.

€82 million of that is non-recurring COVID. That leads to a normalized EBIT ex-non recurring COVID of €226 million.

And then we see a couple of developments. We expect a volume growth at Parcels of 3% to 5% based on reported numbers, which are around for 15%.

If you exclude for the non-recurring COVID effect that is more or less in line with the underlying growth that we've seen in the fourth quarter. Volume decline at Mail, 8% to 10% based on the reported numbers, but again, corrected for non-recurring COVID, that is a 5% to 8% decline.

We do see significantly higher organic cost development than in past years, driven by cost items around energy, transportation cost, fuel, and also labor, clearly, which we've on boarded in our outlook that we're looking at. Then startup costs of new facilities, the acceleration of our digital transformation program, and I talked about that only will be accretive as of 2023 or during 2023, and higher pension expenses, next to a cross-border element where we do not expect an improvement of the current market conditions for the first half year of 2022.

Please remember that we had a very positive first half of 2021, prior to the 1st July, value added tax threshold being abolished. Certainly, there's uncertainty about let's say the global market and developments.

As good as we could, we've taken them onboard. But everybody needs to recognize that in these times, there's going to be a fair amount of uncertainty about how prolonged these inflationary effects will last.

On Slide 35, we've indicated the development of revenue normalized EBIT and adjusted EBITDA, both in terms of reported and corrected for non-recurring COVID effects and it indicates the growth both in terms of CAGRs on the adjusted level of revenue around 4%, 4.5% normalized EBIT. On 3% adjusted EBITDA CAGR of 11.8% and again, also the expected volume developments leading up towards the outlook that we just discussed.

And they're here to indicate that we're actually very positive about the transformation that PostNL has made over the past years and also very positive about the future developments that we see given the market position that we hold and the way we steer the business towards our strategic ambitions. On the development of free cash flow in 2022, from the normalized EBIT to €210 million to €240 million, we get to a free cash flow of €110 million to 140 million.

And the key elements you can see here, so a step up in CapEx in comparison to 2021, driven by Parcels capacity acceleration of digital transformation, the introduction of more automated parcel lockers and a step up on investments on ESG that will help us reducing our CO2 emissions. These payments, slightly higher working capital in comparison to last year, in 2021, we've seen a release of working capital and in 2022 we expect an investment that is predominantly driven by our larger settlements of terminal dues, that obviously are also a function of the higher cross-border results that we've seen in 2020 and 2021 that now need to be paid for towards colleague postal operators.

Change in pension liabilities, we talked about interest and income tax €20 million to €30 million minus where we can use the liquidation losses of Italy in 2022. And that, basically, is the reconciliation from EBIT to free cash flow with an outlook of €110 million to €140 million.

On Slide 37, you see the outlook once more. We've talked about normalized EBIT and free cash flow, a normalized comprehensive income, we do expect to come in around €200 million and more for the year, which is the basis for our dividend policy.

Slide 38 is an important slide. You know that we've been transparent and consistent for 2020 and 2021 in taking out the non-recurring COVID elements of it, and certainly in the comparable number from '21 to '22, they will play a role.

This slide indicates that we're basically going back to normal from a seasonal pattern in 2022, which basically means a lower result in the first half of the year. Also driven in comparison to, let's say, relatively to the full year, I should say, higher costs as stepping capacity and acceleration of digital transformation and the impact on the utilization of the small parcel sorting center in the beginning of the year, gradually improving margins in Q3, and Q4 also on the back of partial recovery in cross-border and cost savings in Mail in the Netherlands, that are accelerating in the second part of the year.

And that brings us to the conclusion of this Analyst Presentation. I said, although clearly around us, there's a lot of uncertainty and grave concern about the situations in Europe, we do reiterate that we're positive on PostNL's perspective and PostNL's strategy, going forward and we're sure to deliver value for all of our stakeholders in these uncertain times.

And on that note, Jochem, I hand it back to you.

Thank you, Bim. Operator, please open the floor for questions.

Yes, good morning, all. Two questions, please.

First of all, on the Mail volumes, now indicate minus 5% to minus 8% ex the COVID impact, that's clearly lower than in previous years. Is this is a change in trend and what are the main drivers?

And can we also expect that going forward this kind of volume declines in Mail? And then secondly, on wage cost, what is roughly baked into your guidance on wage inflation?

And can you remind us what are your latest CLAs? Which ones are coming up for negotiations and what is the status on the CLA?

Thank you.

Frank on your first question, the minus 5% to minus 8%, is it a change in trend? I think too early to say at this moment in time.

So that's the - that's the honest answer when it comes to the volume decline. We do see of course, for example, new interest in direct mail, that's one of the examples I gave in the presentation.

But too early to say that this is a trend, which also continues in the year 2023 to 2024. Nevertheless, we're of course, glad that we do see a decline of minus 5% to minus 8% in the year 2022.

When it comes to wage cost, currently, we're in negotiation for the CLA for postal deliverers. That is, of course, still in negotiation, so no announcement from our side, from what we are thinking that the correction or the increase of salaries will be.

Normally we take into account on wage costs around 2% increase. We did do, of course, and I think that's what Pim already referred to when we talked about an increase in organic cost in the year 2022.

We do foresee that the increase of wages or wage cost will be above the 2% in 2022.

Yeah, certainly, we've taken that into account. Obviously, we cannot be too specific given the fact that there are still negotiations going on.

But significantly more than 2% is included. And maybe to add on the first point, I think we've also said that we strive to get to a Mail results, that overtime is going to be more or less stable.

From '21 to '22, we actually do realize that if you take out the non-recurring COVID effect, basically the volume decline and cost savings, including the price developments will lead to a result from Mail in the Netherlands which is more or less comparable than the result in 2021 excluding the non-recurring COVID.

Okay, that's [indiscernible]. Thank you very much.

Yes, good morning everyone. A couple of questions from my side.

First, Bim, on the CapEx you're guiding now for a number slightly higher than last year. But if you look at the step up from maybe 2019 levels, and then also looking to your outlook for '24 the max €450 million extra investments, it seems that we're running quite a bit on the lower run rate towards that €450 million.

I know it's a maximum but is it fair to assume that maybe it can end up as high as €350 million, given the current run rate? Or should I expect the acceleration of the '22, again, in CapEx?

That's my first question. So I will take one more.

Yeah, whatever you prefer Marc.

Yeah, that's okay.

I'll take this one first. And then you've got time to think about the question two and three if not already on your piece of paper.

On the CapEx, indeed, there's a step up. We've talked about the €450 million as the combination of step up in CapEx and lease additions.

And here clearly the cash flow element is only here on the lease payments and the CapEx additions and not so much on the lease addition. So that is one of the elements we might be tracking a little bit slower.

But that's also a consequence of, for instance, shortages on some of the materials that we've ordered, and did expect to get in '21 but haven't and they now are obviously included in the €160 million €170 million CapEx numbers. Some of the CapEx is related to the capacity expansion are gradually moving sometimes between the years by the end of '22, maybe into the beginning of 2023.

But all in all, we were not looking at this moment in time in a significant step down on that €450 million number. But what we said clearly is that is a function also of the growth expectation.

So it's not one investment decision that we need to take. We're flexible, and that can also mean that over the years, it can move a bit.

That is the answer on this point.

So the CapEx in '23, '24 should go up a little bit in combination with lease payments, that's how we should see it?

Yeah.

Okay, clear. Then on the parcel volume guys, is it a plus 3% to plus 5% for this year's reported numbers?

Can you give us an indication of the start of the year January, perhaps to get a bit of a feel for what is already in, so to speak, for a year?

Yeah, well, maybe one step further back. If you look at the Q4 numbers, we're basically trading on that around about 14% growth rate.

If we look at the first weeks, months of the year, we're running in accordance with our expectations. So on track so far.

You mean the plus 3% to plus 5%, is that what you mean or?

Yeah, which is a full year number and taking to account the quarterly split, that was one of the last slides to discuss, but let's say in comparison to the expectations that lead to the 3% to 5%, running in line.

That could imply that the goals are different from the plus 3% to plus 4%, 5%, in the beginning of the year, just to understand each other correctly?

Well, last year, around that period in time, we did have non-recurring COVID volume, so you need to make sure that you do that right. For the full year, it's 3% to 5% growth.

And together, obviously, we need to make our own expectations month after month, and so far so good.

Okay, clear. Then on the dividends, looking to the 2022 already, I know it's early, we still have a year to go but given the still very solid free cash flow generation in outlook and your reported results, is it fair to assume that your dividend will at least be in line with a dividend you paid over 2021, the €0.42?

No, I think that is too bullish. Obviously, what I said is let's say, if you compare normalized comprehensive income for 2021, it's €285 million.

The expectation for 2022 is around about €200 million. And obviously, that is because of the fact that we don't have the non-recurring COVID element anymore.

So that is too much of an ask, I would say.

And let's say [indiscernible]?

And yeah, we - its yes. But do the math, then even then.

So there will be a bit of accretion element, obviously on dividend per share on the back of the share buyback program of a couple of cents. But I don't think you'll be able to, whatever the calculation is going to be, go beyond the €0.40.

And we said earlier Marc that we do not expect the dividend in the year '22, assuming the numbers will be like we presented them today, that that will be exact number which we had as dividend for the 2021. That's already what we did say in Q2 and Q3.

Yeah, that's correct. I was doing the math that I just got through the €0.42 or €0.43.

So that's why I was asking. That's -

Slight hoping in your question.

Yeah.

That's, as well. On the back of the outlook, and almost comprehensive income expected of €200 million will not get to the same level as 2021.

Okay, fair enough. And then lastly, on the - on Parcel volumes, we see now that Amazon is also opening up in Antwerp and that is in the [farmers] region.

With Brussels also, they might even move cross-border, I don't - we don't know but can you give us maybe a bit more color what you expect from Amazon in the Belgian region, for your volumes? And the other one then related to the other big customer you have in bol.com.

They already went to a multivendor, would you expect them because they bought this company that also does last mile. Do you expect them to go that same route as Amazon and they start to do more of the last mile delivery themselves?

On the first one, Amazon in Belgium is - we're not distributing volume for Amazon in Belgium. So that's an easy answer.

And in the Netherlands, we already, of course explained it earlier that we followed and still follow a clear strategy that we do not want to distribute more than 30% of the Amazon volume in the Netherlands and that also limits, of course, our exposure in case they want to do much more of their own distribution than they do today. On the second part of your question, do we expect volume impact because of the multivendor or the acquisition done by bol.com?

The answer is no. We do not expect that.

And that's also because if you truly look into the network, they bought it, cycle network which delivers within a certain amount of hours. And the volume which can be distributed via that network is not that high.

So we do not expect that to impact the volumes we distribute for Bol.

But you also do not expect Bol to maybe go a bit more the Amazon route to do more themselves and to build out the network or do it yourself network a bit?

It's not what we - that what we forecast at this moment in time based on the discussions we have with the company. And I do not have a crystal ball for the next coming 10 years but that's where we are today.

Yeah, now that's very clear. Thank you very much.

Hi. Good morning, everybody.

Thank you for taking my questions. First of all, you give a lot of detail on the COVID impact split between Parcels and Mail and Parcel split in Parcel Netherlands and Spring Logistics.

But I was wondering, maybe I missed it, do you now also provides the EBIT of Parcels Netherlands and Spring and Logistics separately? That's my first question.

Then secondly, on the Spring, does your outlook for 2022 assume a recovery? And you said that you had anticipated the recovery based on customer interviews, why would Spring recover?

Why would those volumes come back after the VAT increase? And then third question, maybe looking out a bit further towards your 2024 ambition, you expect more or less stable, normalized EBIT for 2022.

But then, in order to get to at least €330 million by 2024, you need an acceleration in earnings momentum. What's driving that?

And particularly the outlook for stable EBIT for Mail in Netherlands, you have I think increasing labor cost pressures, increasing energy cost, whereas stamp prices are expected to remain relatively stable this year. How can you mitigate those effects and get to a relatively stable EBIT in your 2024 ambition?

Thank you very much.

And well, let's say also side questions in relation to the three. So remind me if I've missed some.

So on the COVID impact, we do make that split and we make that split consistently over the quarter of 2020 and 2021. We do split out revenues in the segment but we do not give out the specific EBIT numbers of Logistics, Spring and domestic parcels.

That is the question or the answer on question one on Spring, we do expect Spring's performance within the year will be lower than in the full year 2021. But we do expect on the trade line Asia to China in the second part of the year, some improvements.

Asia to Europe.

Sorry, Asia to Europe, yeah, that's kind of silly. And why do we expect them?

Obviously, the low value threshold is abolished. At the same time we see that all the Chinese web shops that we serve have now the right connections and the solution to enable customers, consumers to easily buy their products.

The reason why we've not seen the recovery that we expected in the fourth quarter was much more driven by increase in trade costs in combination with higher transit times that has made the relative competitive position of these Chinese web shops in comparison to domestic web shops but also domestic retailers significantly less attractive, and that is one of the most important drivers behind the developments. In the fourth quarter, we do expect freight costs to be remaining at a higher level not so high as in October, November time for the first part of 2022.

But we do expect gradually an improvement there. On the -

2024 trajectory.

Yeah, well, that was one and but that was also indicated on the back of Mails performance. So we're still trending towards the same ambitions that we've earlier indicated.

The reason why we believe in that acceleration of earnings momentum is obviously also driven by our Digital Next program, which we're doing the investments for that currently lead to negative impact on cost and results, will bring returns as of 2023 and onwards. So that's part.

Next to that we have more additional network expansion costs in the year 2022 as well on the Parcel side, which will not continue that way going into '23 and further. A third element is that even though in 2022, there is no increase in stem prices, we're able to get to a Mail in the Netherlands results, which is more or less stable in comparison to last year.

And that is obviously because the slightly more favorable volume development within the year and a step up in cost savings from 2021 towards 2022. It's not to say clearly that stem prices cannot increase from 2020 towards 2023.

We do expect that to be positive possible as well.

Well, thank you very much Pim, very clear. And regarding the stem prices, you do have some inflation in 2022, right?

Yeah, we do. Definitely do have inflation and that is countered by the cost savings element and some other developments we just talked about.

If you look at the full outlook bridge, the impact if you talk about segment split of Digital Next and expansion of capacity and cross-border, they have impact on the Parcel segments, predominantly and not so much on the Mail segment.

Yeah, okay, thank you very much.

Good morning, all. Thanks for taking the questions.

I have a few. First one is on fuel cost.

Is it fair to assume that the higher fuel bill indicator parts can be passed on to the companies you're working for, you're delivering for? And if so, can you say something about, is it lagging?

How much is this lagging? Into what extent can you pass on these costs?

That's my first question. The second question, you already spoke about your expectations with regard to the volumes in Mail.

So in Parcels, can you say anything about the expectation with regard to the mix as well? Is the mix or have the mix been changing in the first few months of this year?

Certainly on Digital Next, you're getting more and more, yeah, IT driven company, which is something we're all happy with, I guess. But at the same time, certainly with the war going on with Ukraine, the risk of cyber warfare is increasing and to what extent are you protected against this?

I know the HANA used to have a committee on cyber security. So I guess its okay but perhaps you can say something about it.

And last question, perhaps the most relevant question, if I look at the slide, how you expect earnings to be phasing through the year, what is the biggest challenge that you might be facing as the year progresses? Perhaps you can say something about that too.

Those were my questions.

Thanks, Henk. Clear questions.

I will take one, two and four and leave the third one to Herna, I would say. Fuel costs, yeah, certainly we've included them.

Maybe not on the level of under $30 the barrel that was this morning's price. They can be passed on by customers in general, but it is lagging.

So clearly if you talk about contract renegotiations and indexation in commercial contracts, they have started on the 1st January on the back of indexation levels for the full year 2021. And as such don't take into account the spiky developments over the last months.

The 2023 indexation is then a function of the inflationary impact on 2022. So there's a lagging element to it.

And it's not always 100% complete, the coverage of indexation. It is a function of also how commercial contracts are agreed upon.

But in the year 2022, it is a dilutive impact on margins in the Parcel segment, because we cannot pass on within the year, the higher fuel costs that we currently see.

Okay.

On the second question, let's say the volume development at this point in time. We do not see fundamental changes in the mix.

So we still see bigger customers growing slightly faster than smaller ones. So as such that will have an impact on price mix but not a different trends than the one we reported in last year.

What are the challenges in relation to the phasing? Let's say from an execution point of view, we know what to do, we have clear plans for 2022.

And the preparation of new network extensions within the year as well as preparation everywhere for the holiday seasons, that were there. The challenge is clearly reported to report numbers, those will be down in the first quarter of the year.

That in itself, should not be a surprise and that's clearly also why we've been consistently transparent on the non-recurring COVID impact on our numbers, so at least to make sure that everybody understands the underlying trend that we are looking at. I think that is that is an important element.

And then thirdly, fourthly, there was a question on cyber.

Yes, you're correct there. PostNL is more and more an IT driven company.

That's not something of the last year that I think it changed over the last five years. We do have a separate and dedicated cyber and cyber security unit in our own company.

There are close links with the other companies in the Netherlands and close links to the NCTV in the Netherlands. And that means that we have a dedicated team at this moment in time for - to protect us for possible cyber attack from Russia or the Ukraine.

So yes, it does have lots of attention. It needs also lots of attention because as you do know, those risks develop much faster than you sometimes can imagine.

And it has specific attention at this moment in time because of what's happening geopolitically.

Okay, thank you very much.

Thank you.

Thank you, Henk.

Yes. Good afternoon.

One follow up question about the outlook for Mail in Netherlands and also a bit for the longer term. You mentioned still cost savings plans for the year will be higher than last year.

Could you give us a bit of an update what the trend is and maybe some quantitative impacts on that and what kind of savings you anticipate for the years after 2022? And what trends we can expect there because the story will not be different from previous years that it is an important factor for realizing your goals.

Thank you.

I think that's correct. It is important and remains to be important also going forward after 2022 to realize of course, stable value out of our Mail operations.

To update you on plans, an important value driver and cost savings driver going forward is, for example, the product code reduction we did from 2200 to 200 codes, that helps, of course, not only in being more customer friendly, but also helps on the site where we have people which have to do the administration, but also accept every evening mail coming from customers. A second important program going forward is a program in which we talk about the new mail route that enlarges our mail routes.

That's also one of the reasons why you see more and more electrical vehicles for mail deliverers, that creates efficiency. They can take up more mail items in the mail route without using more time for it.

And the last one, which remains to be important going forward is, of course, the reduction of the amount of locations we work in. I don't - you probably do remember that we started four years or five years ago with an amount of 240 or 250 locations for now, as you've seen in the in the presentation around 30, we think we can further reduce.

So that is important in our cost savings program as well. The step up we will create from 2021 to 2022.

That is that is an important step up which is from around €25 million to around €35 million. And that remains to be a level which we need going forward as well.

Just for clarification, the €25 million to €35 million that's a step up in the annual cost savings you have or should I interpreted that differently?

It's roughly speaking the step up from 2021 realization to 2023 to numbers included in this outlook.

Okay, thanks.

Thank you very much. This concludes the conference call about our full year results.

Thank you all for joining in for your questions. If you have any remaining questions for us and let us know through the usual channels at IR.

We look forward to see you again. I'll meet you again later on in the year.

And hope you have a good day. Thank you.

Bye-bye.