CTT - Correios De Portugal, S.A.

Hello and welcome to the CTT9M 2023 results conference. My name is Karen and I'll be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Durao Bento, to begin today's conference. Thank you.

Thank you, Karen. Good morning, everyone. Welcome to the nine-month CTD results presentation. We are reporting yet again a strong revenue, sorry, a strong quarter if you follow me on slide number four, mostly on E&P and venture CTP coupled with a solid cash flow performance. So starting with parcels or with E&P, we had in Portugal a significant growth volume and we have now actually indeed volumes ahead of peak season and ready for a great peak season. While in Spain, we had a very strong growth both in large clients and in smaller clients, which is something that is also noticeable. Moving to mail, this was a quarter with softer than expected mail volumes, mostly due to digitization and this decline in volume was not enough to offset the price increases that we have given the new formula. of the construction contract. We remain focused on cost control and we believe that it's something that will somehow with the new formula, well, provide the tool for a better performance of oil. On retail and financial services, We had, as we all know, a very high level of public debt placements in the beginning of the year. Then with the re-rating of the rates, volumes came down, and came down also because we have very strict ceilings on the volumes that each account can provide. And therefore, with that, we had a decline in terms of placement. Our focus, our commercial focus now, remains on the distribution of insurance and other services as well as on revamping the digital placement that we're going to have soon. The bank has a very strong growth in deposits in line with the announced strategy. In fact, grabbing market share in terms of deposits with the resilient growth on loans and therefore is moving towards the targets for 2025 at a very strong and steady place. All in all, it was a quarter which delivered revenues up 9% year-on-year with, of course, as I said, expressing parcels in the bank accelerating. In expressing parcels, we have 36.5% growth. In the bank, almost 20%. And hence, it provided for 12% 0.7 million euros of recurring EBIT, or if you want an accumulated 68 million for the first nine months of the year, or 75%, 76% higher than last year. In fact, we have now an accumulated recurring EBIT, which is higher than the whole of 2022. And this was mostly the result of excellent performance on express and parcels and demand. With this, we have provided strong operating cash flow with roughly 29% ahead of last year, free cash flow more than doubling to 64.5 billion and it provides for a consolidated net cash position of 22 million euros or a 51 million improvement versus last year. With the bank accounted on equity account, the net debt now stands at 176 million or slightly close to 10% lower than it was one year ago. Moving to slide five, well, just a picture on how the recurring gap has grown in all segments, and it did so against a more challenging macroeconomic environment that we are all testing. We can see on the chart on the right-hand side the positive contribution of all business areas so far, and also I'll call your attention to the number on the revenues on next-person parcels at $88.1 million, getting close to revenues in this quarter for miles, which is something that will be more and more a trend in our business structure. Moving to slide number six, I'm getting into the details of expressing parcels. So as I said, the charts show a very resilient growth since e-commerce adoption increases in Portugal. And although we see declining lines in the right-hand side of the chart, these represent still very high growth, 20.5% on volumes, and 14% on revenues. And also on the basis of a very diversified pool of clients, as you can see on the pie chart on the right, which provides for some comfort in the structure of our customers in Portugal. Moving to slide number seven, we can assess the robust margin expansion that we have. with 15% growth in revenues. This then transforms on 47.5% on growth in EBITDA and 160% of growth on EBIT. Demonstrating how operational leverage delivers sustainable growth in margins, a trend that we see building up in our portfolio. Moving to slide number eight and looking at Spain, also very high rate, I would say impressive growth rate with 69% growth in volumes in the quarter, which is truly outstanding, or the 76% on smaller clients, which is an important factor. that we'd like to call the orientation, since the fact that in Spain we have very large clients, this is a very important trend, the fact that we are growing even more on smaller clients. And with this, this high grow is fueled by old segments, as I said, with the smaller ones outperforming the larger ones, and hence improving diversification of the customer base. Moving to slide number nine. we see even more so than in Portugal how the growth and operational leverage enables margin expansion. And in fact, we came to an EBIT margin in Spain of 6.1%, which is a result of a 58% growth on revenues, 190% growth on EBITDA, and a hugely positive accumulated EBIT In the chart on the right-hand side, you can see the comparison between this third quarter two years ago, 21, then last year, almost breaking even, and now with a very positive accumulated EBIT, which is, of course, very good news. So, shift capacity upgrades to protect quality. at much higher volumes. This is very important, and we believe that the quality that we are able to deliver in Nigeria, and of course in Spain, is probably one of the key success factors for the present situation on the E&P business. And with this, I will hand the floor to Françoise to guide us on the mail business unit and on financial service and retail.

Thank you, João. So as you can see on slide 10, address mail revenues decreased minus 3.9% versus last year, come to 80.9 million euros in the third quarter of 2023. This comes from a mix of average revenue per item that we can increase 9.2%, but the software mail volumes penalized the revenues when you see a decreasing of less 12% on the volumes in this quarter. We know this is a business very volatile, so in that way we're still working on solutions we have is because we want to be part of the process of the digitalization of the customers with the solutions we have in like fitting and finishing mail rooms and so on. So in that way, being part of this process and helping the customers in this path. And also in the same way we see the e-commerce growing in Portugal, we also believe that we can use mail to help the startups and the small companies using mail on this business. Saying this, on the slide 11, we continue to focus on profitability. As you can see, our costs in the third quarter comes for 100 million, and this is a decrease compared with last year. If you put here the 3.4 million coming from Baltic, even with inflation growing in this quarter, And this comes from to a recurring rate of 100K in this concept. We know that for drivers, profitability in mild is volumes and pricing. In volumes, we already speak in the slide before, and in costs, we already have the We already have taken 83 people removed from the company in the first nine months of the year. That counts for 4.2 million costs that, if you look for in the light, impact in EBIT is 2.5, and we are planning for this quarter and for the next year more 200 persons, people that we want to remove from the company. that allow us to take care about 12 to 15 million euros of costs, and we look for an impact of 5 to 5.5 million euros. Coming for slide 12, financial services and retail, we can see that less than the attractive rates and the impact in the placement and profitability of this business area. We come from 883 million euros of public debt placements in this quarter. That comes for 8.5 million euros of revenues, a decrease of 44.6%, and a recurring EBIT for 4.9 million euros. Saying this, the margin increase from 44.8 to 58.2%. I think it's important to explain in this front, we are working in two major fronts. The first one is the digital front. We are still working to have the best, we think we can have the best digital front for public placements in the future. That's something that we are working in this quarter. and grab all the new savers that wants to do this process by digital. Just to remember you that in the last quarter we already launched in the market the capability the customer to schedule in our website the visit to the store and upload all the documents that we have more than 3,000 customers. and visit schedule and we think with this bringing this process to our app it's going to help us uh to grab more market share market share in the future and also using the more than 10 000 persons that use our app in a in a daily in a daily basis saying this we are working in uh into front like someone was telling it was saying the same before insurance products. Now we see almost our stores already selling these insurance products and we see an increasing of client interactions and doing simulations that help us a lot to sell these products. And also we communicated this quarter the partnership with Prosur that we think also its services well connected with our strategic for retail In that way, we think we have two major points here. The first one is working on digital for public placements, and the second one is up more services well connected with this strategic point that we have these savings and credits we want to develop here. Now, I pass to Guido Pacheco.