The Group Strategy

The 2024 Sustain & Innovate Plan aims to achieve responsible growth and accompany Italy’s path to sustainability and social inclusion.

The health emergency has pushed the conditions of survival of businesses to the limit, having a significant impact on a large part of the national economy and causing great social hardship. This situation requires companies to act quickly, to rethink not only products and services, but also the business models themselves, capable of connecting
people, technology, organisation and all other forms of capital within a flexible and interactive system, in which interaction itself generates value.

Companies that place sustainability at the heart of their strategies will be able to emerge better and faster from the Covid-19 crisis. This is particularly true for those companies that have always sought a balance between growth and respect for social and environmental balances in the past. Those who have integrated the creation of shared value with the territory into their business models will have a greater chance of recovery and success than those who have not.

In particular, innovation and digitisation will play a decisive role in the recovery of the economy and the social fabric.
The pandemic has, in fact, accelerated the ongoing changes that characterise the so-called “fourth industrial revolution” with the rapid expansion of e-commerce, online education, digital health and remote work. The effects of these changes – which will persist for a long time, even after the pandemic has ended- are bringing great benefits to companies. However, they also risk creating or worsening inequalities, especially in situations of digital divide, which today represents one of the greatest risks at global level – along with environmental ones, as also highlighted at this year’s World Economic Forum.

Sustainability and innovation become, therefore, the pillars from which to start the recovery. In fact, the Group’s new Strategic Plan “2024 Sustain & Innovate” has been based on these pillars. In line with the previous one, whose objectives were successfully achieved, the new Plan aims to bring about responsible growth and drive Italy’s sustainability and social integrity through innovation and digitisation by setting financial, operational and sustainability objectives. Among the latter, particular importance is attached to the Group’s objectives in fighting climate change in the short, medium and long term, aiming at becoming carbon neutral by 2030, thus contributing in advance to European objectives in this area.

Compared to what happened in 2020, due to the Covid-19 pandemic, the country found itself facing completely unexpected situations and in this particularly challenging scenario, with flexibility, responsibility and resilience, the Group renewed its support for the territory and the community, guaranteeing continuity of services and making its logistics network available to the entire national fabric. Despite the health emergency, in 2020 Poste Italiane
confirmed its leadership position in the financial, insurance and payment services sectors, as well as being the largest Italian company in the logistics sector.

Over the years, the Group has undertaken a path of constant growth that has made it stand out, above all, thanks to its ability to adapt its operating structures to the needs of the market, demonstrating, even in the most critical 6 Poste Italiane – 2020 Annual Report
phases, that it can count on a widespread presence throughout the territory and transversal skills capable of reaching the entire Community and intercepting the needs of stakeholders. The 2020 results highlight this ability to know how to manage risks and seize opportunities, generating value not only for the Company, but for all stakeholders, through a structured business model and a clear strategy.

Since its establishment, the Group has played an important role in the life of the country, positively influencing its economy in terms of Gross Domestic Product, tax revenue, employment and household income, generating revenue of approximately €10.5 billion in 2020.
The results achieved derive from the correct use of financial and non-financial capital enabling Poste Italiane to generate economic, environmental and social outcomes, thus contributing to the achievement of the United Nations Sustainable Development Goals (SDGs). The process of value creation goes through the adoption of a sustainable business model that allows the optimisation of all the above mentioned capital, integrating in a synergistic way the Business Plan with ESG objectives. In this way, the Company is able to be competitive in a constantly changing economic and social context.

POSTE ITALIANE’S SUSTAINABILITY STRATEGY 
Poste Italiane has adopted a Sustainability Strategy consisting of a set of Sustainability Policies and an ESG Strategic Plan, which contributes to the achievement of national and supranational social and environmental development objectives. Within the broader strategic framework defined by the Group, this strategy is consistent with Poste Italiane’s activities and business criteria.
The policies adopted incorporate all the principles, qualitative objectives and different management methods, regulating in a synergistic manner the various issues that emerged from the materiality analysis and the areas required by Legislative Decree no. 254/2016. The ESG Strategic Plan, on the other hand, includes all the specific quantitative and qualitative objectives and targets that the Group has set itself with a view to continually improving its sustainability performance.

STRATEGIC HIGHLIGHTS

• Plan leveraging on emerging new trends across all businesses
• Achievable financial targets and KPIs thanks to revenue growth and renewed focus on operational performance: revenues up 3% (CAGR 2019-2024)
• Enhanced and sustainable dividend policy based on solid cash generation: DPS +14% in 2021 Y/Y and +6% every year over the plan horizon
• Become the single point of entry for all Italians’ daily needs and maximise the value of the powerful omnichannel network
• Shifting from a mail centric operator into a parcel driven business, leader in the B2C segment
• Half of over 11 million daily customer interactions generated from new channels (digital and third-party network), representing 12% of relevant revenues (up to 20% by 2024)
• Cultivating a culture of innovation, with the new Digital Technology and Operations division to accelerate Group digitalisation, upgrading the IT architecture and migrating to Italy’s largest proprietary cloud
• A financial services model based on People (dedicated training), Products (enhanced product range, responding to wider customer needs) and Platform (data-driven customer profiling)
• Confirming Poste Italiane’s support to Italy’s digitalisation, connecting the country in the new hybrid world
• Delivering responsible growth, supporting Italy’s transition to a sustainable low carbon economy and social integrity through innovation and digitalisation
• Continuing investments in transformation and business innovation as an enabler for future growth.

FINANCIAL HIGHLIGHTS

• Sustainable and competitive dividend policy linked to Group performance: baseline of €0.55 DPS for 2021 (60% pay-out ratio1, +14% vs. 2020), increasing by 6% per annum (2019 – 2024)
• Group Revenue up by 3% CAGR (2019 – 2024) to €12.7bn in 2024 with positive contributions from all business segments
• Operating Profit up by 5% CAGR to €2.2bn (2019 – 2024), driven by operational efficiency
• Net Profit up by 6% CAGR to €1.6bn (2019 – 2024)
• Customers’ Total Financial Assets growing to €615bn in 2024 (2020: €569bn), supported by a changing investment product mix
• Capital expenditure: record €3.1bn between 2021 and 2024 supporting transformation, with more than 60% of investments being ESG related
• Steady net financial position in Mail, Parcel & Distribution -€1.9bn in 2020 to -€1.8bn in 2024, with operating cash generation supporting capex & dividend distribution.

SUCCESSFULLY EXECUTING DELIVER22

Resilient in 2020 – dividend confirmed in a challenging year

Poste Italiane has indeed delivered what was promised. Every single year over the course of the last 3 years we overachieved Net Profit targets set in 2018.
In 2020 Net Profit reached €1.2 billion, exceeding the target of €1.1 billion.
We distributed over €1.8 billion to shareholders, confirming our dividend policy even in 2020.

REVENUES

EBIT

NET PROFIT

DIVIDEND PER SHARE (€)

Deliver22 operational achievements

A customer centric business model

n the last three years we successfully transformed Mail & Parcel, shifting from a pure mail, which faces a secular decline, to a parcel driven business, becoming market leader in B2C.
In Financial and Insurance, we built a comprehensive open platform for savings, insurance and investment products, to meet all clients’ needs which we now understand better thanks to a wider-spread profiling of all our clients.
With more than 8,000 financial advisors and 30,000 tellers, we served all our clients, with increasingly targeted, financial, insurance and payment products.
On Payments & Mobile, since PostePay’s foundation in 2018, our vision proved successful, affirming Poste as the key player in the Italian payments’ market, also by offering a unique platform, integrating payments and telcos.
Over the last 3 years we have constantly renewed our offer, introducing innovative services and products, which have further consolidated our brand. And we continue to look ahead, with new value-added services.

POSTE ITALIANE GROUP

The first half of 2020 was a defining moment in the history of the country and the Company. The benefits of business diversification and operational resilience were confirmed in the emergency of the environment created by the Covid-19 pandemic.

Thanks to its business model, Poste Italiane has been able to guarantee operational continuity, ensuring an uninterrupted service to its stakeholders and showing a strong ability to adapt even in a critical and unfavourable scenario such as the current one.

In this context, the extensive collaboration with national institutions continued, making the Company’s operational know-how available to support the logistical activities of the Civil Protection, which are fundamental in the emergency scenario.

Poste is an important engine of innovation and digitalization of Italy, connecting the country in a NEW HYBRID WORLD.

In more than 150 years our Postine and Postini and our Post Offices, have been the main physical connections in the country. Now, we aim to become the single point of entry for all Italians daily needs. Along this path, we are the only company able to link Italian SMEs, Public Administration and citizens.
We further strengthened our partnership with Microsoft to provide innovative digital services to Italian companies and public administration, supporting and facilitating SMEs growth in Italy.
We play a primary role in transforming the e-commerce landscape. In 2020, 37% of overall B2C deliveries went through our network, with 210 million parcels delivered and almost 400 million e-commerce transactions via our payments tools.
We are also committed to reinforce the relationship between individuals and Public Administrations, with over 15 million public digital identities – SPID – with a national market share of above 80%.

Commenting on the new plan, Matteo Del Fante, Chief Executive Officer and General Manager, said:

“With our ‘24 Sustain & Innovate’ (‘24SI’) Plan, we are able to build and grow on the solid foundations put in place with Deliver22 with achievable targets across all our four businesses. Revenues will grow steadily throughout the plan, with EBIT and Net Profit increasing 5% and 6% CAGR respectively, generating €0.4 billion of incremental EBIT between 2019 and 2024. After a step up of 14% in 2021, the dividend per share will benefit from a 6% annual growth. The turnaround in mail and parcels is fully underway and it is the first time parcels will represent a higher revenue proportion than mail, while we will become a fully-fledged logistics player with a sustainable business. In financial and insurance services, the priority is to become the main reference point for all customers’ needs, from savings to insurance and loans, attracting them with data driven advisory across all Poste’s distribution channels. We will leverage cross and up selling expertise in Payments & Mobile, confirming the leadership in digital payments, introducing broadband connectivity and entering the power and gas market in 2022 with a fair, competitive and customer friendly offering.

Our strategic foresight in creating a cloud-based architecture, leads the Group to be Italy’s number one cloud services user. We are delivering new products and services that will help our customers, businesses, the Public Administration and the country as a whole for years to come, with the commitment in creating significant value for all stakeholders.

Confirming the relevance of the environmental topics for our strategy, Poste Italiane will become a net zero emission company by 2030.

Our people have proved to be a cornerstone of our success and we will continue to invest in their skills. We are proud of our key role in the countrywide vaccination plan, with about 2 million vaccine doses already delivered supporting the Italian Army’s operations thanks to our cloud native technological platform.

The ’24SI’ plan transforms challenges into opportunities thanks to the robustness and flexibility of our strategic approach to business. We will confirm with a ‘yes’ our promise to achieve our 2024 targets.

Poste Italiane is the Italy’s most valuable engine of innovation and digitalisation, linking customers, citizens, businesses and the Public Administration physically and digitally.”

The engine of innovation and digitalisation

Connettere l’Italia nel nuovo mondo “ibrido”

Integrating Sustainability within Poste Italiane’s Strategy

To be sustainable for Poste Italiane means defining a clear strategy on ESG issues and struc­turally incorporating them within the strategic objectives set in the “2024 Sustain & Innovate Plan¹. Over the period of the plan, €3.1 billion of investment is envisaged in strategic assets, in order to achieve financial objectives.

^{1 The financial and operating objectives shown in the tables refer to 2024.}

“2024 Sustain & Innovate” Strategic Plan

Mail, Parcel and Distribution

Payments and Mobile

Financial Services

Insurance Services