Outlook

In the normalisation process that started after the shocks experienced in recent years, the global economy grew at a modest rate in 2023. Preliminary 2023 estimates for Italy also show a slight increase in GDP (+0.7%) compared to 2022 After growth in the first months of 2023, driven by the manufacturing sector, which benefited from the fall in energy prices and the loosening of "bottlenecks" along the supply chains, the economy slowed down in the following months, leading to a decline in GDP in the second quarter of 2023; this phase of weakness in Italian economic activity, which extended to both manufacturing and services, continued in the third and fourth quarters.

There was also a gradual decline in inflation during 2023 as a result of the more restrictive monetary policy stance and falling energy commodity prices; the decrease in inflation also extended to non-energy industrial goods and services.

The end of 2023 and the beginning of 2024 saw an improvement in business and consumer confidence and, according to the most recent estimates, this trend will continue in 2024, together with a reduction in inflation, while GDP is expected to grow at a modest rate of +0 7% in 2024 compared to 2023, broadly in line with that forecast for the other Eurozone countries in an economic scenario that continues to be dominated by a high level of uncertainty due to the prolonged geopolitical tensions and the risk of a further crisis in the Middle East.

Against this backdrop, the Poste Italiane Group posted a new record in 2023 with EBIT coming in at €2.62 billion, hitting the upwardly revised guidance communicated to the financial community November 2023. In addition to growth in the payment and financial services businesses in particular, careful control of costs contributed to this result. The year was marked by the break-even of the Mail, Parcel and Distribution strategic Business Unit ahead of expectations and by positive retail net inflows, driven by investments and the insurance segment, with the latter continuing to outperform the market.

The solid financial performance and the increased visibility and sustainability of the liquidity and capital generation prompted management to revise the dividend upwards compared to the target originally set: the proposed dividend for the year 2023 is €0.8 per share, up 23% compared to the previous year's figure. Since the 2015 listing, a high and increasing overall remuneration of the Company's shareholders has been ensured, with performance exceeding the values recorded by the main index of the Italian stock Exchange.

On 20 March 2024, the new 2024-2028 Business Plan was presented to the market, which targets the transformation of logistics and an evolution of the customer service business model. In particular, the continuation of the Group's transformation path to become a complete logistics operator is confirmed, ensuring the financial sustainability of the Mail, Parcel and Distribution segment.

This strategy includes the integration of Plurima, acquired in 2022, with the aim of growing in the healthcare and hospital logistics sector, the renewal of the partnership with Amazon for 5 years, the partnership with DHL, for the development of international business, and the establishment of MLK Fresh at the beginning of 2024, in partnership with a specialised industry operator, a joint venture operating in the express courier service for the home delivery of food products he Group will also be engaged in further strengthening integrated Logistics by offering services to cover all stages of the customer's logistics chain.

The new service model aims to optimise customer coverage and management based on an omnichannel approach, directing advisors' efforts into "relational" rather than "transactional" activities, generating value for the Group.
The focus will remain on offering products/services that keep pace with evolving market contexts and confirm the centrality of Postal Savings in the Poste Italiane Group's offering. In insurance, the Group aims to sustain net inflows in the Life segment and confirms its ambition to reduce under-insurance in the country by offering new products and expanding penetration in the Protection segment, including by placing policies on third-party networks through the integration of Net Insurance acquired in 2023.
 

GUIDANCE & OUTLOOK

Revenues will grow steadily over the next 5 years with an annual growth of over 3%.
EBIT will grow to €3.2 billion in 2028 from our record operating profit of €2.62 billion in 2023.
Revenues will grow to reach €13.5 billion in 2028, with a positive contribution from all business segments.
The revenue composition that we are targeting envisages a changed mix, with a well-diversified business increasingly exposed to growing markets and new businesses.
In particular, the share of revenues related to growing markets will increase to 55% by 2028, whilst we will be reducing our exposure to declining markets.
By 2028 we expect over €2 billion additional revenues from higher growth businesses.

Net Profit will reach €2.3 billion in 2028, from €1.93 billion in 2023.
Our enhanced dividend policy will allow us to distribute over €6.5 billion to our shareholders over the plan, ensuring competitive remuneration as well as strong financial flexibility.
Starting from 2024, we will be looking at over 65% payout ratio over the plan, with a planned dividend of not less than €1 per share by 2026 and an average annual growth of circa 7% over the plan.

MAIL & PARCEL

We expect our revenues to increase annually by 1% over the plan, with a significantly improved mix and Mail, Parcel & Distribution becoming financially sustainable, positively contributing to the overall growth of Group revenues and EBIT.
Parcel & Logistics revenues will grow 7% annually on the back of e-commerce leadership, international and contract logistics. By 2026, parcel & logistics revenues will represent approximately 50% of the overall mail & parcel revenues.
Distribution revenues will also increase, supported by the roll out of the New Service Model.
Finally, cost discipline to mitigate inflationary headwinds will contribute to financial sustainability of this division through the plan.
 
FINANCIAL SERVICES

We see a 3% annualised revenue growth through the plan period, mostly driven by savings and investments fees deriving from resilient insurance flows and renewed commercial focus on Postal savings, all supported by roll out of new commercial service model.
Growing investment portfolio revenue benefits from proactive management actions to stabilise yields in the medium term, with a negligible contribution from capital gains and flexibility to adapt to different market scenarios.
Operating profitability will remain broadly stable as the increase in revenues will be mirrored by higher remuneration to the network due to higher productivity.

INSURANCE SERVICES

We had a strong 2022 with total revenues increasing by 7%, nearing €2 billion net of baseline adjustments.
In the life business, the investment margin increased, benefitting from higher volumes, also supported by inflation-linked bonds.
The P&C business benefitted from higher Gross Written Premiums across all product lines and improving profitability.
EBIT increased 6%, reaching a record high level since 2017.
Looking forward to 2023, higher volumes and margins will be driving underlying profitability, with EBIT increasing to around €1.4 billion. We are targeting a profitable growth of our Protection business, accelerated by the potential acquisition of Net Insurance.

PAYMENTS & MOBILE

We envisage high single digit organic growth at 9% supported by all product lines.
Payments are at the core of the business, and growth over the plan will continue to be supported by cash to card shift and our e-commerce leadership.
In Telco, revenues will continue to grow, supported by the enlarged loyal customer base and the new fiber opportunity.
The energy business will contribute positively to the division’s profitability from 2025.
EBIT is expected to grow by a remarkable annualised 9%, in line with revenue growth.

MARKET OUTLOOK

We are the largest phygital platform in the country and a strategic pillar for Italy, supporting its development.
Leveraging on our track record to overdeliver on the past two strategic plans, we are paving the way for the next step of our transformational journey, confident on our ability to adapt to potential changes in our operating context.
The New Commercial Service model will allow us to maximise the value of our platform and the transformation of the logistics business will ensure its long-term sustainability.
We are focused on delivering a sustainable strategy as a data driven and tech-enabled company, which will allow us to improve customer experience and enable cross and up selling.
We are well aware that shareholder remuneration is the cornerstone of our investment case.
Our commitment to move to a dividend policy based on a payout of at least 65% will result in a distribution of over 6.5 billion euro, leaving room for upside in case of overperformance.
Our plan is well grounded and credible, and our year-to-date results confirm that we are pointing to the right direction.