On 23 March 2022, Poste Italiane updated the financial community with the “2024 Sustain & Innovate Plus” Business Plan, in which the Group confirms its goal of accompanying the country in responsible, inclusive and sustainable growth, also through a process of digital transformation that leverages the significant investments in technology planned aimed at helping to close the country’s geographical and generational digital divide. During 2021, the Group accelerated the planned recovery trend, achieving better-than-expected results at the pre-pandemic levels of 2019.
The trend in inflation recorded mainly towards the end of 2021, the pressure on raw material prices and the recent international political events involving Russia and Ukraine introduce uncertainty and turbulence on the markets.
The Group procures supplies and competes mainly in the domestic market, does not have production units in the countries affected by the conflict or bordering countries, and has limited commercial relationships with the countries affected by the conflict. Therefore, it does not have direct repercussions that could significantly affect the various businesses or lead to significant repercussions on its profitability. The volatility of the financial markets could change customers’ investment decisions, guiding them towards more liquid products or products that are at least less exposed to the trends of the financial markets. The Group has historically demonstrated resilience in times of financial turbulence, establishing itself as a ‘safe harbour’ for savers, thanks to a portfolio of financial offers that will continue to keep Postal Savings at the centre of the strategy, also in the future. The Group’s cost structure includes limited exposure to sectors with high pressure on prices, and the price rises seen up to now have not generated significant economic effects or significant critical issues in operating processes.
The development of the insurance saving and Postal Saving segments will remain strategic, thanks also to the new agreement with Cassa Depositi e Prestiti. Investments are planned to support the growth of parcels, digital payments and protection, with offers aimed at reducing the country’s underinsurance.
The acquisition of LIS will accelerate the implementation of the Group’s omni-channel strategy, facilitating the transition to digital payments and strengthening the growth of proximity payment in the business.
In support of the economic recovery and in agreement with the Institutions, Poste Italiane will continue to purchase tax credits, which will enable the Group to increase its flexibility in managing the investment portfolio, in a persistent low-interest-rate market.
In line with the Strategic Plan, the Group intends to enter the energy market by the end of 2022, depending on the market scenario and the business opportunities, by proposing a fair, competitive and easily-understood offer and supply from ‘green’ sources.
The commitment to the ecological transformation includes important initiatives and investments, such as making properties more efficient, lowering emissions from the company fleet and photovoltaics. These actions will lead the Group towards carbon neutrality, expected by the end of 2030.
2022 GUIDANCE UPGRADE – BASED ON AN UNAFFECTED MARKET SCENARIO
STRONG 2021 RESULTS UNDERPINNING 2022 GUIDANCE UPGRADE
GUIDANCE & OUTLOOK
Poste Italiane’s solid 2021 performance and our delivery track record gives us the confidence to revise upward our 2022 guidance with an EBIT now at €2 billion.
Net profit is expected at around €1.4 billion, a 9% increase compared to the original target.
Looking forward, in an unaffected market scenario, with the boost of new initiatives such as tax credits but mostly driven by proven cost management discipline,
New projections are based on the current macro-economic scenarios and inflation expectations and given our robust and diverse business model we are well positioned to weather the inflationary pressures expected by the market.
We envisage an additional €0.2 billion upside to the original €2.2 billion target for 2024.
MAIL & PARCEL
Mail revenues increased by 10% in 2021 supported by both Nexive integration and post-pandemic organic volume recovery, mostly from higher margin products. We expect to see continuous positive contribution also in 2022.
In line with 24SI, we still expect revenues to increase by 2% annually over the plan, which translates into €3.8 billion revenues in 2022 compared to the original target of €3.7 billion. Thanks to successful industrial transformation and cost discipline, this accelerated growth demonstrates that Mail, Parcel & Distribution is becoming a sustainable business, positively contributing to the Group EBIT ahead of the plan.
FINANCIAL SERVICES
We are now upgrading our total revenue target in 2024 to €6.1 billion, €0.2 billion above the original projection.
We now expect revenues from investments to increase in 2022, supported by tax credits and interest rates fluctuations.
Over time we demonstrated our ability to effectively manage our portfolio in different market environments with returns steadily above market yields over the past years, changing the mix between NII and active portfolio management contribution.
Thanks to the upside from investment in tax credits, we expect to reach €1.5 billion of net interest income in 2022, an increase of €0.3 billion versus our original estimates.
INSURANCE SERVICES
We had a very strong 2021 with total revenues increasing by 14% and reaching an impressive €1.87 billion, driven by a successful commercial push of our multi-class business.
We are confirming our ambitious original revenue and profitability targets for the segment.
PAYMENTS & MOBILE
We expect to see revenues up to €1 billion in 2022 with the lion’s share coming from card payments.
EBIT is expected to grow to €0.3 billion in 2022, more than offsetting the structural decline of traditional payments such as payment slips and the start-up costs of our new energy business.
We can also confirm that the energy business will positively contribute to EBIT from 2025.
The strong business performance in 2021 allowed Poste Italiane to upgrade the guidance for 2022 by 9% in terms of both operating profitability and net profit.
In March 2022, the upgraded strategic plan reviewed upwards the following targets:
Our new projections are based on the current macro-economic scenarios and inflation expectations and given our robust and diverse business model we are well positioned to weather the inflationary pressures expected by the market. Of course, given the recent geopolitical situation, it is too early to assess the full impact.
MARKET OUTLOOK
Our strategy allows us to capture business trends and deliver growth across all our segments, as we intend to affirm our role as an omni-channel platform, serving evolving customers’ needs, adapting to a fast-changing world.
In fact, when comparing to the other developed markets we still have huge potential in our key business areas.
Starting from Italy’s B2C e-commerce penetration, which is well below EU’s average. The pandemic has accelerated B2C parcel growth, confirming our strategy to push on a parcel-based network.
Customers’ digital behaviour has strongly accelerated, especially in Italy, where we expect digital transactions to converge towards the EU average. PostePay’s bundled payment/telco offer will address these trends.
In the financial segment, our enhanced service model is well equipped to attract wealth and assist our customers in diversifying their portfolios, thanks to our life-insurance products. P&C penetration, in Italy, is indeed well below European average and this represents an opportunity for the business.
We assume European and Italian GDP to bounce-back where the low household-debt-ratio could also represent a significant opportunity for our business activities. We believe that, given the uncertain environment and the recent financial markets volatility, retail investors will look more and more for low risk and low volatility investment products
BETTER POSITIONED TO WITHSTAND MARKET HEADWINDS
The trend in inflation recorded mainly towards the end of 2021, the pressure on raw material prices and the recent international political events involving Russia and Ukraine introduce uncertainty and turbulence on the markets.
The Group procures supplies and competes mainly in the domestic market, does not have production units in the countries affected by the conflict or bordering countries, and has limited commercial relationships with the countries affected by the conflict. Therefore, it does not have direct repercussions that could significantly affect the various businesses or lead to significant repercussions on its profitability. The volatility of the financial markets could change customers’ investment decisions, guiding them towards more liquid products or products that are at least less exposed to the trends of the financial markets. The Group has historically demonstrated resilience in times of financial turbulence, establishing itself as a ‘safe harbour’ for savers, thanks to a portfolio of financial offers that will continue to keep Postal Savings at the centre of the strategy, also in the future. The Group’s cost structure includes limited exposure to sectors with high pressure on prices, and the price rises seen up to now have not generated significant economic effects or significant critical issues in operating processes.
The development of the insurance saving and Postal Saving segments will remain strategic, thanks also to the new agreement with Cassa Depositi e Prestiti. Investments are planned to support the growth of parcels, digital payments and protection, with offers aimed at reducing the country’s underinsurance.
The acquisition of LIS will accelerate the implementation of the Group’s omni-channel strategy, facilitating the transition to digital payments and strengthening the growth of proximity payment in the business.
In support of the economic recovery and in agreement with the Institutions, Poste Italiane will continue to purchase tax credits, which will enable the Group to increase its flexibility in managing the investment portfolio, in a persistent low-interest-rate market.
In line with the Strategic Plan, the Group intends to enter the energy market by the end of 2022, depending on the market scenario and the business opportunities, by proposing a fair, competitive and easily-understood offer and supply from ‘green’ sources.
The commitment to the ecological transformation includes important initiatives and investments, such as making properties more efficient, lowering emissions from the company fleet and photovoltaics. These actions will lead the Group towards carbon neutrality, expected by the end of 2030.
2022 GUIDANCE UPGRADE – BASED ON AN UNAFFECTED MARKET SCENARIO
STRONG 2021 RESULTS UNDERPINNING 2022 GUIDANCE UPGRADE
| 2019 | 2020 | 2021 | 2022 Original 24SI Target |
2022 GUIDANCE UPGRADE |
2022 GUIDANCE UPGRADE VS: ORIGINAL 24SI TARGET |
2024 | CAGR 19-24 | |
|
REVENUES |
11.0 |
10.5 |
11.2 | 11.6 | 11.7 | +1% |
12.7 |
+3% |
|
EBIT |
1.8 | 1.5 |
1.7 |
1.9 |
2.0 | +9% |
2.2 |
+5% |
|
NET PROFIT |
1.3 |
1.2 |
1.4 |
1.3 |
1.4 | +9% | 1.6 |
+6% |
|
DIVIDEND PER SHARE (€) |
0.463 |
0.486 |
c. 0.55 |
+7%
|
+7% |
|||
GUIDANCE & OUTLOOK
Poste Italiane’s solid 2021 performance and our delivery track record gives us the confidence to revise upward our 2022 guidance with an EBIT now at €2 billion.
Net profit is expected at around €1.4 billion, a 9% increase compared to the original target.
Looking forward, in an unaffected market scenario, with the boost of new initiatives such as tax credits but mostly driven by proven cost management discipline,
New projections are based on the current macro-economic scenarios and inflation expectations and given our robust and diverse business model we are well positioned to weather the inflationary pressures expected by the market.
We envisage an additional €0.2 billion upside to the original €2.2 billion target for 2024.
MAIL & PARCEL
Mail revenues increased by 10% in 2021 supported by both Nexive integration and post-pandemic organic volume recovery, mostly from higher margin products. We expect to see continuous positive contribution also in 2022.
In line with 24SI, we still expect revenues to increase by 2% annually over the plan, which translates into €3.8 billion revenues in 2022 compared to the original target of €3.7 billion. Thanks to successful industrial transformation and cost discipline, this accelerated growth demonstrates that Mail, Parcel & Distribution is becoming a sustainable business, positively contributing to the Group EBIT ahead of the plan.
FINANCIAL SERVICES
We are now upgrading our total revenue target in 2024 to €6.1 billion, €0.2 billion above the original projection.
We now expect revenues from investments to increase in 2022, supported by tax credits and interest rates fluctuations.
Over time we demonstrated our ability to effectively manage our portfolio in different market environments with returns steadily above market yields over the past years, changing the mix between NII and active portfolio management contribution.
Thanks to the upside from investment in tax credits, we expect to reach €1.5 billion of net interest income in 2022, an increase of €0.3 billion versus our original estimates.
INSURANCE SERVICES
We had a very strong 2021 with total revenues increasing by 14% and reaching an impressive €1.87 billion, driven by a successful commercial push of our multi-class business.
We are confirming our ambitious original revenue and profitability targets for the segment.
PAYMENTS & MOBILE
We expect to see revenues up to €1 billion in 2022 with the lion’s share coming from card payments.
EBIT is expected to grow to €0.3 billion in 2022, more than offsetting the structural decline of traditional payments such as payment slips and the start-up costs of our new energy business.
We can also confirm that the energy business will positively contribute to EBIT from 2025.
The strong business performance in 2021 allowed Poste Italiane to upgrade the guidance for 2022 by 9% in terms of both operating profitability and net profit.
In March 2022, the upgraded strategic plan reviewed upwards the following targets:
- EBIT: original 2022 24SI target of €1.9 billion raised to €2 billion (compared to 2021 EBIT of €1.85 billion)
- Net profit: original 2022 24SI target of €1.3 billion raised to €1.4 billion (compared to 2021 Net profit of €1.33 billion - excluding Nexi stake revaluation (closing price of €13.99 per share as of 30/12/2021) and positive tax one-offs.
Our new projections are based on the current macro-economic scenarios and inflation expectations and given our robust and diverse business model we are well positioned to weather the inflationary pressures expected by the market. Of course, given the recent geopolitical situation, it is too early to assess the full impact.
MARKET OUTLOOK
Our strategy allows us to capture business trends and deliver growth across all our segments, as we intend to affirm our role as an omni-channel platform, serving evolving customers’ needs, adapting to a fast-changing world.
In fact, when comparing to the other developed markets we still have huge potential in our key business areas.
Starting from Italy’s B2C e-commerce penetration, which is well below EU’s average. The pandemic has accelerated B2C parcel growth, confirming our strategy to push on a parcel-based network.
Customers’ digital behaviour has strongly accelerated, especially in Italy, where we expect digital transactions to converge towards the EU average. PostePay’s bundled payment/telco offer will address these trends.
In the financial segment, our enhanced service model is well equipped to attract wealth and assist our customers in diversifying their portfolios, thanks to our life-insurance products. P&C penetration, in Italy, is indeed well below European average and this represents an opportunity for the business.
We assume European and Italian GDP to bounce-back where the low household-debt-ratio could also represent a significant opportunity for our business activities. We believe that, given the uncertain environment and the recent financial markets volatility, retail investors will look more and more for low risk and low volatility investment products
BETTER POSITIONED TO WITHSTAND MARKET HEADWINDS
AN ANTI-FRAGILE PLAYER - UNCHANGED SECULAR MARKET TRENDS UNDERPINNING 24SI
| POTENTIAL RISK FACTORS | |
|---|---|
| CONFLICT IN EASTERN EUROPE |
Negligible Russia and Ukraine direct exposure |
| INCREASED MARKET VOLATILITY |
Safe harbour products for customers, 93% of TFAs not exposed to market fluctations |
| PERSISTING INFLATION |
Non-HR costs: jet fuel and corporate energy costs hedged until December 2022 |
| PROVEN RESILIENCE AND FLEXIBILITY, INCLUDING COST MANAGMENT | |
