CTT - Correios De Portugal, S.A.

Welcome to CBT's 9 months, 2024 results conference call. Please note that this conference is being recorded. For the duration of the call, your microphones will be disabled. However, analysts will have the opportunity to ask questions at the end of the presentation. To do so, simply click on the button to raise your hand and we will give you access to the microphone. If you are dialing from a phone line, press star 9 to raise your hand and star 6 to unmute yourself. I will now turn the call over to Mr. João Bento, CEO.

Good morning, everyone. Welcome to our third quarter results presentation. Q3 was a transition quarter towards what we believe going to be a great final quarter since financial services now normalizing and expressing parcels will keep beating all time records. So if we concentrate, I'm with slide number four. If we look at the charts on the left and if we set aside financial services, we've observed in the quarter 17.3% growth on revenues that then is amplified to a 28.6 growth on EBIT. Looking into more detail on the right-hand side to each business area and starting with the logistics bucket, we see Express and Parasols achieving record volumes. Since we have during this summer volumes above last year's peak season, And then this very high growth of 46% year on year delivering up to now represents more than 98 million euros. And I recall that we've celebrated last year the first time that CDT has distributed 100 million parcels. We have achieved almost that in the first nine months of the year. We have also improved our EBIT margin in the quarter up to 8.7%. And we have a very sound outlook for another record-breaking big season in the fourth quarter. Moving to mail and others, we've seen price increases in the mix compensating softer volumes. This happened mostly in August and September. But we are expecting a strong fourth quarter, given that it has almost 7% more working days. We expect some mail backlogs, especially from the state agencies, to recover. We will also benefit from increased cost sharing from financial services that will perform, and is performing already, much better. And we've seen good early signs in October, as you will see later on. Moving to the bank and financial service bucket, we would like to call your attention to the wide adoption of our app, for subscription of savings certificates that was inaugurating during this quarter. It represents now almost 5% of all placements. on a daily basis. And the fact, the most significant fact in the quarter in terms of financial services was postponed to October, but we've seen a very significant increase in limits, sorry, a very significant increase in placements since the limit for each account was increased in early October. Moving to the bank, we've seen a continued client growth with 29,000 new clients this year. And the focus on client engagement produced significant growth in business volumes. And I will illustrate that with a 46% year-on-year growth on deposits, which is a very high bit of the market growth that was just under 8%. And all in all, the bank produced a record return on tangible equity at 12.4% in the first nine months of the year, which is already above the target that we have announced in the Capital Markets Day. Moving to slide number five to give you a little bit more detail on the problems of parcels. We have observed a 34.2% growth vis-a-vis the same quarter last year. And since we had also a slight 4% improvement in revenue per item, this puts us in a very good position. for a very strong peak season in the last quarter, but moving to slide number six leads to an even higher growth on revenues of 36.2% vis-a-vis the third quarter of last year, and with an improved EBIT margin reaching almost 9%, which confirms our claim that volume growth would produce operational leverage and therefore for the simple fact that we are improving volumes. We are also improving profitability of this business. And with that said, I would move to slide number seven and pass the floor to my colleague, João Sousa.

Thank you, João. Good morning, everyone. As you can see on slide seven, this quarter address mail traffic fell by 7.5% compared with the same period of last year. However, the average price per item increased 10.1% offsetting the decline traffic through the pricing and also the type of product that we are selling to the customers. Going for the slide eight, where we see the revenues of mail, address mail revenues, we see we reached in this quarter 82.4 million euros, marking an 8.9 increase of the revenues year over year. But what we like to say here is we see a positive outlook for the fourth quarter. Why? For two main reasons. More working days. So in the fourth quarter of 2024, we're going to have 6.8% more working days than the previous year. And also the first days of October show us an October momentum. with an increasing of the dress mail revenues per working day, mainly coming from the backlog of the public administration, like Joan already was saying, that we're expecting on the third quarter and was postponed for this fourth quarter. So with this, we see a positive outlook in mail for the fourth quarter of this year. On mail and others, just additional notes, that business solutions and payments are performing well in this segment, with an year-over-year growth of 13% and 90.1% respectively. Coming, as you know, on this mile, costs, it's on slide nine, costs, it's an important matter. So inflection, elections, and the lower financial service increase the costs. of setting the cost savings that we are implementing on this area, reaching 2.8 million in the first nine months of the year in EBIT. But if you look for a normalized public debt placement, we could add more 2.8 million recurring EBIT. On slide 10, you can see a little bit detail what we are doing since the beginning of the year on the cost size. We are seeking for additional gains on the distribution model. We are increasing focus on revenues per employee on our stores. And we continue the cost reduction program that already exceeding the 20 million target we designed in the beginning of the year and communicated on the Capital Markets Day. And we also understand for the future that we have to leverage. One is the pricing formula that enables us to recover in the past inflation. And also with the outlook we have for public debt, with the normalization of the public debt that helped to managing these fixed costs on mail. Coming for slide 11. Unfortunately, like Joan was saying, the postponement of the changing of the cap Like we were expecting, it was postponed from the third quarter for October. And as you can see, after October 7, we saw more than 120% of increasing in a daily public death placements following the cut adjustment. So that's like we expected. And even so, on the third quarter, we saw an agro on the placements already grow by 33%, comparing with the second quarter, supported by marketing efforts. So explain to the market the advantages of this solution for savings and also the introduction of the app that was well received in the market in the summers. So with this, I'd just like to leave two positive notes also in the public placement for the fourth quarter, that with the change of the cap and also we believe that this is going to increase the competitiveness of this product for this quarter. And we also expect in November to launch the last feature of the app that the customer can now subscribe and and and and do all the all the process in our app so that allows that with more than 500 stores we had in the and the and the digital app uh give more flexibility and accessibility for the customer to to to adopt this product and now i pass to you thank you joan uh so starting with the bank apis on page 12 where we can see