Poste Italiane: 1Q19 Results

POSTE ITALIANE: 1Q19 RESULTS

•NET PROFIT AT €439M IN 1Q19, CONFIRMING DELIVER 2022 TARGETS. NET PROFIT ADJUSTED AT €231M (+5.3% Y/Y)

•FOCUS ON DISTRIBUTION LEADING TO BETTER QUALITY REVENUES AND PROFITABILITY WITH REDUCED RELIANCE ON CAPITAL GAINS

•STRONG FINANCIAL SERVICES PERFORMANCE; SOLID INSURANCE, PAYMENTS & MOBILE CONTRIBUTIONS DRIVEN BY POSTE ITALIANE'S POWERFUL DISTRIBUTION NETWORK

•PARCEL REVENUES UP, SUPPORTED BY ONGOING INDUSTRIAL TRANSFORMATION; MAIL REVENUES DOWN, IN LINE WITH THE SECULAR DECLINE EMBEDDED IN DELIVER 2022

•CONTINUING FOCUS ON COST DISCIPLINE IN LINE WITH DELIVER 2022 TARGETS

•ONGOING WORKFORCE TRANSFORMATION WITH c. 2,000 AVERAGE NEW HIRES

•GROUP CAPEX CONTINUE TO SUPPORT SIGNIFICANT AND TARGETED INVESTMENTS, FOCUSED ON MAIL & PARCEL AUTOMATION AND IT

1Q19 Group Financial Highlights

•Revenues at €2,842m (-1.5% y/y); adjusted revenues1 at €2,569m (+3.5% y/y) with improving revenue quality and reduced reliance on capital gains

•Total Operating Costs at €2,225m (+2% y/y) in line with expectations; HR cost increase mitigated by lower FTEs; higher variable costs supporting revenue growth; value added per capita increased

•EBIT at €617m (-12.2% y/y); adjusted EBIT2 increased by €20m to €351m (+6% y/y) with strong progression of underlying operating profitability on track with 2019 targets

•Total Financial Assets (TFA) of €525bn (+€11bn from December 18) driven by positive market performance and improving inflows from all products: deposits +€6.6bn, with a seasonal effect from Public Administration accounts; insurance +€1.5bn thanks to multiclass offering; mutual funds +€0.2bn

•PosteVita Group Solvency II Ratio at 214% as of March 2019; ongoing managerial actions to protect against market volatility; Ancillary own Funds approved by the Regulator in 1Q19

•Group Capex at €65m (+15.7% y/y) well on track with 2019 guidance

1Excluding capital gains and IFRS 9 impact of Visa

2Excluding capital gains, IFRS 9 impact on Visa and early retirement incentives, capital losses, hedging Visa derivatives and fair value change

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1Q19 Segment Financial Highlights

•Mail, Parcel & Distribution: Revenues at €880m (-2.1% y/y); Parcel revenues up 15% with B2C up 35% y/y to €86m; Mail Revenues down vs strong 1Q18 featuring positive one-off items; volumes for higher value mail items (e.g. corporate clients) in line with expectations, confirming visibility on future trend; adjusted operating profit down to -€53m, in line with expectations and on track with our 2019 target

•Payments, Mobile & Digital: Revenues at €140m (+7.3% y/y); thanks to Card Payments and strong progression of transaction volumes; Telecom revenues resilient in a competitive market; Operating profit in line with last year and up 11% excluding VAT provision for €6m

•Financial Services: Revenues at €1,485m (-3.1% y/y); all distribution related

revenues contributed positively: higher fees from postal savings placement, increasing third party loan and mortgage as well as asset management revenues; operating profit up 9.3% actively substituting capital gains down 31%. EBIT up €28m on an adjusted basis

•Insurance Services: Revenues at €337m (+4.3% y/y) supported by Life and P&C growth; Life revenues up 2% supported by higher volumes thanks to multiclass products; P&C revenues up 28% thanks to improved welfare and CPI product offer

1Q19 Segment Operational Highlights

•Mail, Parcel & Distribution: 64% of progress on Joint Delivery Model for Mail & Parcel; Bologna new hub for parcel sorting now operational at 125,000 parcels daily with a full capacity of 250,000 parcels/day; MoU signed with European digital start-upsennder to optimize long-haul transportation logistics; alternative delivery expansion with 1,400 locations beyond post offices

•Payments, Mobile & Digital: Positive impact from Postepay Connect integrated offer with over 1,600 daily average sales, driving average daily sales of Postepay Evolution cards to 6,600 and SIM cards to 3,300 in 1Q19

•Financial Services: Third party loan and mortgage distribution revenue up supported by commercial initiatives

•Insurance Services: Ongoing diversification with positive contributions from both Life and P&C businesses; successful results from new multiclass products with €1.9bn net inflows in 1Q19; P&C benefitted from welfare products and CPI products (linked to third party loan and mortgage distribution)

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Rome, 8 May 2019, yesterday, the Board of Directors of Poste Italiane S.p.A. ("Poste Italiane" or the "Group") chaired by Maria Bianca Farina approved First Quarter 2019 Financial Results (unaudited).

Commenting on the results, Matteo Del Fante, Poste Italiane Chief Executive Officer

and General Manager, said: "First quarter results demonstrate ongoing Deliver 2022 progress, with sustainable recurring revenue growth, cost discipline, as well as a continued reduction of Poste's reliance on non-recurring items such as capital gains.

We continue to accelerate our industrial transformation in 2019 to capitalize on future growth opportunities. The new, state of the art, parcel sorting centre in Bologna will add daily capacity of 250,000 parcels, while we continued to expand alternative delivery options for our customers. Our Joint Delivery Model is now running in 64 percent of delivery centres and we are well on track to reach full implementation by year end.

Efforts to maximize the potential of our extensive distribution network improved net inflows across all financial products in the first quarter, with positive contributions from Life and P&C insurance as well as payment and mobile activities.

Our workforce transformation also continues, with new hires in key areas like last-mile delivery, customer relationship management and digital to drive Deliver 2022."

1Q19 RESULTS

Wednesday 8 May 2019 - 11:30am CEST

WEBCAST https://www.posteitaliane.it/en/index.html

CONFERENCE CALL DETAILS

Italy: [phone] (Conference ID 7067447)

For more information:

Poste Italiane S.p.A Investor Relations

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Mail: [e-mail]

Poste Italiane S.p.A. Media Relations

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CONSOLIDATED FINANCIAL RESULTS SUMMARY

€m	1Q18	1Q19	Y/Y%
GROUP
Revenues	2,884	2,842	-1.5%
Adjusted Revenues	2,482	2,569	+3.5%
EBIT	703	617	-12.2%
Adjusted EBIT	331	351	+6.0%
Net Profit	485	439	-9.5%
Adjusted Net Profit	220	231	+5.3%
MAIL, PARCEL & DISTRIBUTION
Revenues	899	880	-2.1%
EBIT	263	148	-43.7%
Adjusted EBIT	(38)	(53)	-39.4%
Net Profit	174	101	-41.9%
PAYMENTS, MOBILE & DIGITAL
Revenues *	130	140	+7.3%
EBIT	57	57	+0.1%
Net Profit	43	42	-0.5%
FINANCIAL SERVICES
Revenues *	1,532	1,485	-3.1%
Adjusted Revenues	1,130	1,212	+7.3%
EBIT	239	261	+9.3%
Adjusted EBIT	169	196	+16.3%
Net Profit	174	190	+9.5%
INSURANCE SERVICES
Revenues	324	337	+4.3%
EBIT	144	151	+4.9%
Net Profit	95	105	+10.7%

*1Q18 results have been reclassified according to new segment perimeters for Payments Mobile & Digital

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In addition to the standard financial indicators required by IFRS, Poste Italiane discloses alternative performance indicators to provide a better understanding of business performance and financial position. These indicators are described in the Interim Report for the three months ended 31 march 2019, in line with the ESMA/2015/1415 Guidelines of 5 October 2015.

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CONSOLIDATED STATEMENTS

Reported EBIT at €617m in 1Q19 vs €703m in 1Q18, down by €86m y/y. On an adjusted

basis, EBIT increased from €331m to €351m, up by €20m thanks to the positive contribution from Financial Services (+€28m y/y) and Insurance Services (+€7m y/y) more than offsetting

the reduction in Mail Parcel & Distribution (-€15m y/y).

Adjustments on a segment basis relate to capital gains and other one-off items, that only apply to Financial Services and Mail Parcel & Distribution, as detailed in the table "Explanatory notes to adjusted figures".

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MAIL, PARCEL & DISTRIBUTION - STRONG B2C PARCEL PERFORMANCE MITIGATING SECULAR DECLINE OF MAIL, SUPPORTED BY ONGOING TRANSFORMATION

€m	1Q18	1Q19	Y/Y%
SEGMENT REVENUES	899	880	-2.1%
INTERSEGMENT REVENUES	1,370	1,331	-2.8%
TOTAL REVENUES	2,268	2,211	-2.5%
EBIT	263	148	-43.7%
Adjusted EBIT	(38)	(53)	-39.4%
EBIT Margin (%)	11.6%	6.7%	n.m.
NET PROFIT	174	101	-41.9%
KPI's
Mail Volumes (#m)	804	717	-10.9%
Parcel Volumes (#m)	29	35	+19.4%
B2C Revenues (€m)	63	86	+34.9%

Mail revenues were down 5.1% in the first quarter, in line with the secular decline embedded in Deliver 2022. Poste Italiane continues to manage the decline of mail, with volumes for lower margin items such as unrecorded mail, decreasing at a faster rate than higher margin products such as corporate related mailings that are in line with expectations, confirming visibility on future trend. Average prices in mail were up 6% in 1Q19 thanks to the positive volume-mix-effect as well as repricing on several products effective from July 2018.

Parcel revenues strongly increased in the first quarter, up 15%, with B2C parcels increasing by 35% as Poste Italiane continued to capitalize on eCommerce growth. Parcel volumes strongly increased in 1Q19, up 19.4%, boosted by a 31% increase in B2C volumes. B2B revenues increased significantly by 17% with relative volumes up 18% compared to 1Q18. Average prices for parcels were down 4% in 1Q19, as result of a changing volume mix to B2C while tariffs were broadly stable for B2B and up for both B2C and C2C.

Industrial transformation continued in the period. Approximately 80% of 1Q19 group capital expenditure was focussed in the segment, while 64% of targeted delivery centres are now operating under the Joint Delivery Model, in line to reach 100% coverage by the end of 2019. A new advanced parcel sorting facility is now operational in Bologna and currently running at 125,000 parcels daily. The official inauguration is planned by 2Q19 with full capacity of 250,000 parcels per day. This plant also offers an improved environmental performance thanks to energy efficiency measures and self- generated solar energy.

During the period Poste Italiane signed a memorandum of understanding to establish a joint venture with a European digital freight forwarder company, sennder, focussed on driving efficiency across the long-haul road transport through load optimization, reducing costs and CO2 emissions.

Poste Italiane's agreement with the FIT network is accelerating the development of alternative delivery points of the PuntoPoste network. There are now 1,400 active alternative delivery points (up by 1,000 since December 2018) additional to post offices, while FIT locations are now operational as a delivery option on the Amazon marketplace.

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