CTT - Correios De Portugal, S.A.

Hello and welcome to CDT First Quarter 2024 Results Conference Call. My name is Sergei 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 lives will be in a listen-only mode. However, you will have the opportunity to ask questions at the end of the presentation. 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 0 and you will be connected to an operator. I'll now turn the call over to Mr. João Bento, CEO. Please go ahead, sir.

Thank you, Sergey. Good morning, everyone. Welcome to our first quarter results call. If you join me on page number four of the presentation, I would start to call the attention to the fact that we had revenue growth in all business areas except the financial services, mostly as a result of market expansion and share gains. both from parcels and the bank. In fact, the decline in financial services was more than offset in revenues, although not yet in margin, given the performance that we can see on the right-hand side, if you follow me, on excess in parcels first, with an amazing triple-digit volume growth in Spain, and also double-digit growth in Portugal. That produced margin expansion, leveraging our increased scale. Then on mail and others, we are benefiting from a very decent press increase, also good mix and the effect of the elections that led to higher mail volumes. And we, of course, remain very focused on cost efficiency measures, given the fact that we believe that the mail business will perform better than before going on. Going forward, our financial service in detail, the commercial focus is now on distribution of insurance and related products, mainly insurance programs, and it's finally gaining traction. While public debt placements remain still in low levels, although we have a positive outlook for that. Finally, the bank performed with a strong client engagement and therefore growth in the business resources and operational leverage driving significantly profitability in the quarter. Moving to slide number five and with a bit more detail on the passive business, we have seen volumes in Spain close to peak season levels. The peak season, well, continued throughout the quarter. This real rapid growth on revenues, as we said, more than doubling year on year, if you compare the first quarter of last year with the first quarter of this year, both on volumes and on revenues, and also a very decent performance in Portugal with the growth from, again, in volumes and revenues with the significant growth. So we have the path of business on path for certainly another record here in Nigeria. And if you follow me on slide six, we can then look at the margin, which is significantly driven by operational gearing. We have, in fact, an impressive progress on the EBIT generation in Spain. We came from minus 1.5 million to plus 2.9 million, a very decent EBIT margin, already reaching 4.5%. And, in fact, we are benefiting from our prior investments on capacity and the resulting operational leverage when now volumes are as high as they remain being. In Portugal, likewise, we had an improvement on the EBIT margin from 6.5% to 7.4%. quarter to quarter or year to year for the first quarter with the continued improvement on the absolute value margin growing almost 38% from 2.1 to 2.7 million. And here, again, grabbing market share and leveraging on the fact that we keep performing very well in distributing parcels using also the mail network. We see a continued investment in expansion of capacity, since we are positive about the volume growth and the trend that we are feeling, to enable future growth and, of course, improve the profitability. And with this, I would invite you to follow my colleague, Jean Sosa, to guide you through mail and retirements.

Thank you, João. As you can see on slide 7, the increase of price and the type of needs are helping to offset some of the dropping volumes. We had a 10.5% drop in address mail volumes. If we take the effect of elections, it's minus 11.8 against the previous year. But the average revenue per item growing 18%. versus the previous year. It's also very important to mention that the price increase of 9.49% that was made in February is not fully reflected in the quarter, and we also have information from part of our customers, mainly the public sector, that was a delay of the production in March, mainly because of mid-election, so the election allowed us to have better traffic and more traffic in this quarter, but also was a backlog of production in May. that we are already seeing in . These allow us to achieve €107 million in revenue in this first quarter. That compares plus 5.9% against the third quarter in the last year. As you can see on slide 8, the elections allow us to have a positive effect in traffic and price per item, but they also brought an increase in costs in this period. We have 180.3 million euros of costs in this quarter that compares with 111.7 million euros with the quarter of last year, more 6.7 million, which results in 2 million euros in EBIT in this quarter that compares with 2.7 million euros in the quarter of last year. However, the cost-efficient program that we talked about in the last quarter is still ongoing and we expect results in this year. Also, the effect of the pricing quiz, we believe that when fully reflected, will help to stabilize the margins in this business area. On cloud nine, on the retail and financial service, we saw in this quarter a weak performance in the placement of public debt. mainly justified by the 50,000 euros caps that these figures have per saver, and because the markets feel out of the perception that the conditions are not yet very attractive compared with the other offers in the markets. We believe that the levels of public debt should improve and revert to normal, mainly for two main reasons. The first one is the conditions. We believe that it's better than the market at the perception. And in that way, for the first time, IGCP allowed us to do communication campaigns, and we are doing right now. And we already see, it's fairly great, but we already see a positive path when we explain to the market that the conditions are more competitive than the market at the perception. And the second reason is we also believe that in the future the other offers in the market are going to lose competitiveness and with that this series of public tech is going to gain competition and allow us to increase the balance of public tech. At the same time, and in association with the retail strategy that we have for CPP, that we already say wants to be the largest and the best service platform in Portugal, we have greatly boosted insurance and health plans with very positive results, with a lot of attraction in the market. As you can see in the graph on the right side, we are looking for the health plans with very good attraction. And with this, we believe that we are creating a serious alternative for the future for retail business of CPP, and with performance control by CPP. That's going to be with also these services have a guaranteed revenue model that help us to control this business area. And with that, I pass for Pacheco.