CTT - Correios De Portugal, S.A. (CTT) Earnings Call Transcript & Summary

Hello, and welcome to the CTT 9M 2023 Results Conference. My name is Karen, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Joao Bento, to begin today's conference. Thank you.

Thank you, Karen. Good morning, everyone. Welcome to the 9 months CTT results presentation. We are reporting yet again a strong revenue -- sorry, a strong quarter. If you follow me on Slide #4. Mostly on E&P and Banco CTT, coupled with a solid cash flow performance. So starting with Parcels within E&P, we had in Portugal a significant growth volume and there we have now actually in the volumes ahead of fixed season and ready for a great peak season. While in Spain, we had very strong growth, both in large clients and in smaller clients, which is something that is also noticeable. Moving to Mail. This was a quarter with softer-than-expected Mail volumes, mostly due to digitization and this decline in volumes was not enough to offset in the price increases that we have given the new formula of the concession contract. We remain focused on cost control, and we believe that it's something that will somehow with the new formula, well, provide a tool for better [indiscernible] [ Mail ] going forward. On Retail and Financial Services, we had, as we all know, a very high level of public debt placements in the beginning of the year. Then with the rebating of the rates volumes came down, and came down also because we have very strict savings on the volumes that which account can provide. And therefore, with that, we had a decline to -- in terms of placements. Our focus -- our commercial focus now remains on the distribution of insurance and other services as well as on revamping the digital placement that we're going to have soon. The bank has a very strong growth in deposits, in line with the announced strategy, in fact, driving market share in terms of deposits with the resilient growth on loans, and therefore, is moving towards the targets for 2025 at a very strong and steady place. All in all, towards the quarter, which delivered revenues up 9% year-on-year with, of course, as I said, Express & Parcels in the bank accelerating. In Express & Parcels, we have 36.5% growth in the bank, almost 20%, and hence, it provided for EUR 12.7 million of recurring EBIT, or if you want, an accumulated EUR 68 million for the first 9 months of the year or 75% -- 76% higher than last year. In fact, we have now an accumulated recurring EBIT, which is higher than the whole of 2022. And this was mostly the result of excellent performance on Express & Parcels and the bank. With this, we have provided strong operating cash flow with -- roughly 29% ahead of last year. Free cash flow was more than doubling to EUR 64.5 million, and it provides for a consolidated net cash position of EUR 22 million or EUR 51 million improvement versus last year. With the bank accounted on -- equity accounted, the net debt now stands at EUR 176 million or slightly close to 10% lower than it was 1 year ago. Moving to Slide 5. Well, just a picture on how the recurring EBIT has grown in all segments, and it did so against a more challenging macroeconomic environment that we are all testing. You can see on the chart on the right-hand side, the positive contribution of all business areas so far. And also, I will call your attention to the number on the revenues on Express & Parcels at EUR 88.1 million, getting close to revenues in this quarter for Mail, which is something that will be more and more a trend in our business structure. Moving to Slide #6 and getting into the details of Express & Parcels. So as I said, very -- and the chart shows a very resilient growth since e-commerce adoption increases in Portugal. And although, we see declining lines in the right-hand side of the chart, these represent still very high growth, 20.5% on volumes and 14% on revenues. And also, on the basis of a very diversified pool of clients, as we can see on the pie chart on the right, which provides for some comfort in the structure of our customers in Portugal. Moving to Slide #7. We can assess the robust margin expansion that we have with 15% growth in revenues, as well this then transforms on -- 47.5% on growth in EBITDA and 160% of growth on EBIT, so demonstrating how operational leverage delivers a sustainable growth in margins, a trend that we see building up in our portfolio. Moving to Slide #8 and looking at Spain, also very high rates, I would say impressive growth rate with 69% growth in volumes in the quarter, which is truly outstanding or the 76% on smaller clients, which is an important factor that we'd like to call your interest since the fact that in Spain we have very large clients. This is a very important trend, the fact that we are growing even more on smaller clients. And with this, this high growth is full by all segments, as I said, with the smaller ones outperforming the larger ones and hence, improving diversification of the customer base. Moving to Slide #9. We see even more sales then in Portugal, how the growth and operational leverage enables margin expansion. And in fact, we came to an EBIT margin in Spain of 6.1% which is a result of a 58% growth on revenues, 190% growth on EBITDA and a hugely positive accumulated EBIT. And in the chart on the right-hand side, you can see the comparison between this third quarter 2 years ago, '21, then last year, almost breaking even and now with a very positive cumulative EBIT, which is, of course, very good news. So we'll shift capacity upgrades to protect quality at much higher volumes. This is very important, and we believe that the quality that we are able to deliver in Iberia and of course, in Spain is probably one of the key success factors for the present situation on the E&P business. And with this, I would hand the floor to Joao Sousa to guide us starting on the Mail business unit and on financial services and retail.

Thank you, Joao. So as you can see on Slide 10, addressable revenues decreased minus 3.9% versus last year, came to EUR 80.9 million in the third quarter of '23. This comes from a mix of average revenue per item that we can increase 9.2%, but the softer Mail volumes penalized the revenues when you see a decreasing of less 12% on the volumes in this quarter. We know this is a business very volatile. So in that way, we're still working on solutions we have because we want to be part of the process of the digitalization of the customers with the solutions we have in like picking and finishing new Mail rooms and so on. So in that way, being part of this process and helping the customers in this path. And also in the same way, we see the e-commerce growing in Portugal. We also believe that we can use Mail to help the step-ups and the small companies using Mail on this business. Saying this, on the Slide 11, we continue to focus on profitability. As you can see, our costs in the third quarter comes for EUR 100 million, and this is a decrease compared with last year, if you would hear the EUR 3.4 million coming from [ Baltico ] even with inflation growing in this quarter, and this comes from to a recurring EBIT of $100,000 in this quarter. We know that for -- with drivers, profitability in Mail is volumes and pricing. In volumes, we already speak in the slide before. And in costs, we already have taken -- 83 people removed from the company in the first 9 months of the year that account for $4.2 million costs that -- if you look for annualized impact in EBIT is [ EUR 2.5 million ], and we are planning for this quarter and for the next year more 200% of people that we want to remove from the company, that allow us to take care about EUR 12 million to EUR 15 million of cost. And we think as we look for an impact of an EBIT of EUR 5 million to EUR 5.5 million. Coming for Slide 12, Financial Services and Retail, we can see that less and attractive rates and the stringent impact in the placements and the profitability of this business area. We come from EUR 883 million of public debt placements in this quarter. That comes for EUR 8.5 million of revenues, a decrease of 44.6% and a recurring will be EUR 4.9 million. Saying this, the margin increased from 44.8% to 58.2%. I think it's important to explain in this front -- we are working in 2 major fronts. So the first one is the digital front. We are still working to add the best we think -- we can have the best digital front for public placements in the future. That's something that we are working in this quarter and grab all the new [ savers ] that want to do this process by digital. Just to remember you that in the last quarter, we already launched in the market, the capability the customer to schedule in our website the visit to the store and upload all the documents, that we have more than 3,000 visit schedule. And we think with this -- bringing this process to our app, it's going to help us to grab more market share in the future and also using the more than 10,000 persons that use our app in a daily basis. Saying this, we are working in 2 front, like focusing towards selling, as I was saying before, insurance products. Now we see almost our stores already selling these insurance products, and we see an increasing of client interactions and doing simulations that help us a lot to sell this product. And also, we communicated this quarter the partnership with [indiscernible] that we think also it's service is well connected with our strategy for retail. And that way, we think we have 2 major points here. So the first one is working on digital for public placements, and the second one is have more services well connected with the strategic part retail. We have its savings and credit we want to develop here. Now I pass to Guy Pacheco.

Thank you, Joan, Good morning to all. On Page 15, we can see the Banco key figures with a steady progress towards our 2025 targets, be it in accounts, be it in business volumes. Our accounts grew 35,000 up to the third quarter, and our loans and resources growing EUR 0.6 billion in the first 9 months. In the top of the chart, we can see that we are trading per quarter above what is needed to fulfill our targets, so a clear and strong progress here. On the next page, we can see more detailed key figures for the bank, where we see our customer deposits where we were impressive growth of 21% against the backdrop of the Portuguese market declining 4.3%. The auto loans and mortgage also with a good progress, 10.4% and 7%. Although here, we see some pressure on the evolution of the market. In terms of yields, very steady yields on the auto loans, 6.2% and a very strong progress on mortgage that are now up to 3.1%. Also, the cost of deposits going up as the banking industry starts to react in this front. On the next page, we see also a strong set of results, I should say, with revenues up 19.3%, so with net interest margin reaching 3% and this is, of course, being driven by net interest margin. With the cost of risk under control and steady and higher efficiency, we can see our -- we saw our EBIT more than doubling versus last year, EUR 8.5 million in the third quarter, 22% of EBIT margin. And our profit before taxes also with a very impressive growth. Our return on tangible equity in this quarter reached 11.5%, double-digit for the first time. On the Slide 17, we start our financial review where we can see a good quarter, consolidating a very strong performance up to the 9 months of the year. Revenues growing 8.6%, our recurring EBIT stable of when we are exiting this very strong period of financial debt placements that fuels our growth during the last 4 quarters. Our net income reaching EUR 9.5 million in the quarter, EUR 35.5 million in the 9 months. And our free cash flow for the third quarter stood at EUR 16.6 million. On the Slide 18, we can see the retail revenue evolution with a very, very strong contribution from Express & Parcels and a strong contribution from Banco CTT. Our Parcels business growing 35% year-on-year on revenues, with our Portuguese operations growing EUR 20.5 million in volumes and more than 13% in revenues. In Spain, we see a fantastic acceleration to 68.9% in revenues with growth across all segments, with a good progress in diversification, as Joao already mentioned. And I should highlight that this is done against a backdrop of e-commerce that is rather flat in the beginning of this year and for some quarters now. Mail & Other declining EUR 3.8 million with the acceleration of the decline of Mail volumes, especially on the financial sector, where it seems to be a new acceleration for digitalization. Financial Service declining EUR 6.9 million with debt placements below EUR 900 million with a difficult comparison. Well, in the third quarter last year was the first quarter of this high period of demand, where we placed EUR 1.7 billion, and that's the comparison that shows on the revenue dynamic. The lack of competitiveness of the product right now vis-a-vis term deposits and the volume cap introduced by the Portuguese government is withholding the growth of the placements. The cap is something that we see starting next year being removed and as such, the -- fueling again the placements of these products. Bank revenue is growing EUR 6.2 million on the back of net interest income expansion and driven by -- also by higher volumes and higher yields. On OpEx, Slide 19, we can see an increase of 9.7%, driven by Banco and Express & Parcels. Well, our Express & Parcels increased 28% our cost, EUR 17.9 million, and which is a normally difficult quarter for Parcels in terms of unit costs. I think this quarter we show a very good progress in unit cost. We were not much resilience, and the strong progress on margins, especially in Spain. Our unit cost is declining in our view, despite we are in an inflationary context that is pushing namely wages and energy upwards. And this is the fact that we are reaching critical mass in Spain and our continuous investments in efficiency are paying off, and as such, we see resilient margins in this unit. Mail & Other decline in [ EUR 2.7 million ]. If we account for the one-off of the other quarters, more than compensating the wage inflation that stood at EUR 2.6 million in this quarter. Financial Services declining EUR 3.4 million, and this is completely linked with the decrease in the activity that we saw. And Banco CTT increasing EUR 1.8 million directly also with activity. The cost of risk in the second quarter declined and stood at 1.2%. That is a progress or improvement year-on-year. On Slide 20, we see our recurring EBIT that was broadly flat. And where we see a change on the contribution by business unit versus the 9 months, that is in line what with it was anticipated. Express & Parcels, the main contributors, with a very, very strong progress on Express & Parcels, and that is the trend that we see going forward. Mail with a difficult comparable on costs because of effect of that quarter and higher than anticipated decline in volumes. Financial Services declining after this normally high demand that will be -- this tough comparable to be remaining here until the second quarter. Next year, [ Banco ] CTT growing EUR 4.4 million due to strong growth in net interest, high efficiency and good cost of risk performance. In all, we see these 2 big contributors to our growth Express & Parcels and [ Banco ] CTT as the strong motors of our improvement in profitability going forward. And with that, on the next slide, we still have the cash flow generation in 21 -- Slide 21. Our cash flow stood at -- operational cash flow stood at EUR 76.2 million with a strong operational performance, free cash flow EUR 64.5 million. We have now a consolidated cash position, including lease liabilities of EUR 21.7 million. And with that, I'll pass you to Joao to his final remarks.

Thank you, Guy. So summarizing on Slide 23. This was a very good quarter with strong revenue growth, improved profitability, and we want to call you to draw your attention, this is happening while the macroeconomic environment is somehow deteriorating. This was a result mostly of the performance of Parcels and the bank. Indeed, on Parcels, we've seen a very strong growth with market share gains in Portugal and Spain with margin expansion. And with that, we feel very confident for the forthcoming peak season. We continue working on pricing, but mostly on cost reduction, and we believe that with the new formula and with the price increase for next year and all the cost reduction initiatives, that also [indiscernible] has detailed, we will be able to cope with this softer demand that we are seeing. What I prepared with that -- well, everything has been set, we see that the placement normalizing, and we now are focusing on the distribution of insurance and other services and also in the short, medium term on the digital placements that we believe will bring again market share gains. The bank continues to grow in all fronts, in clients, in volumes, in stability and towards actually the 2025 targets that we have recently updated with the [ reversible ] show that we did. This was a quarter that provided a steady and strong cash flow as seen and supporting, I think, already existing financial flexibility. We also kept executing the EUR 20 million share buyback program that complements our dividend policy. And with that, and as a result of the performance that we have described, namely on the back -- against the backdrop of a very good performance of Express & Parcels. We have decided to upgrade yet again our recurring EBIT that now stands to at least EUR 85 million. And with this, we close the presentation and remain available for answering to your questions. Thank you.

[Operator Instructions] We'll take our first question from Joel Safara from Banco Santander.

So I have 2 questions from my side. The first one, just -- and I think I mentioned this briefly, but just wanted to understand a bit on the sustainability of these margins? And if there was any -- I mean, any particular driver for the unit cost to be so low in this third quarter? I mean I would say we're talking about pretty strong margins for this business, around 8% in Portugal, 6% in Spain in EBIT margin. So if you could better elaborate on what's the sustainability of these margins, obviously, with the usual volatility due to seasonality? But it seems that as long as revenues keep growing, this should be sustainable. So just -- my first question will be just to touch on that. And then the second one, regarding the recent decision by ANACOM to approve the new quality service indicators, basically reducing it to 8% instead of 24% before. And I have 2 questions regarding this. I mean, first, I understand this will only be applied from January 25. So the question here is what will happen in the meantime? So what is ANACOM's view on the quality indicators that you deliver in '23 and '24? And what does this -- what can this imply in terms of either additional CapEx or any fines? And then the second, just regarding these indicators, if you feel comfortable that you can achieve them and if you could give us a bit of overview on that? Those are my questions.

Our next question comes from Marco Limite from Barclays.

Sorry?

Yes, go ahead.

I'd like to answer the question. I will start with -- thank you as well for your question. We'll -- I will start with the [ quality ] KPI and then hand over to Guy for the sustainability of our EBIT margin. So the quality indicates this proposal that came to the public, should not have come to the public because the law is quite clear and has no ambiguity whatsoever. It says that the quality indicators are set by government ruling in Portuguese [indiscernible]. Following a proposal by ANACOM after hearing the representatives of the customers. So this is not -- was not supposed -- it's not supposed to be a public hearing, and we are handling that accordingly. I will anyhow disclose that this is not what it looks like because, in fact, these new 8 indicators, they are a condensation of all the previous indicators. And therefore, our view is that this proposal is rather useless because it doesn't conform with the law, not in terms of process nor in terms of the content. And I would only [ expand ] to a final example, which is, as you know, the law and the contract states that indicators should be in line and using the average of European countries. And these 8 are indicators -- address 6 different products. And the European average is [ 2.7 ] product. So in general, this is just one example of May that we could provide. This does not compare with the law. And therefore, we are not -- of course, we are participating in the public hearing, but we are also moving ourselves towards -- while getting -- making sure that the proposal and finally, the KPIs will comply with law. With this, I would pass to Guy to answer the first question.

As to sustainability of margins, so we are, I should say, at least on the second quarter of strong progress on margins. Normally, the summer, especially on August is very challenging because all the market normally has softer volumes, all the providers of softer volumes during August. And because we cannot dismantle operations only for 1 month and to resume all the next, we normally have higher unit cost. This quarter we are very strong volumes even in August that enabled us to dilute our fixed rate costs during August. And that is a function of we are sustainably above a threshold of volumes in -- be it in Portugal and in Spain, and that enable us to be on this kind of margins. So they are sustainable, as we see volumes sustainable going forward and pretty much in line in what we -- your assumption during your question. So it's foreseeable sustainable margins, even some improvement vis-a-vis the quarter in what should be sustainable margins going forward.

Our next question comes from Marco Limite from Barclays.

First question is on Spain. So just a follow-up question there. Clearly, you are benefiting from volumes growing a lot, 60%, 70%. And I guess, it's been for the first time -- Spain profitability was higher than the Portuguese profitability for the first time. So I'm just wondering when we should expect basically volume growth to normalize more closer to the underlying market growth? So when your campaign of new clients acquisition will, sort of, normalize on a higher base and from there we should expect just more of a normal growth. Second question is on capital allocation. So you recently announced about EUR 25 million of compensation from the state. So when are you going to receive that amount of cash? And similarly, when you're going to cash in from the real estate stake disposal? And what do you intend to do with all of that money?

So on Spain, we've been acting and performing and grabbing the benefits of an attacker -- a sensible attacker in the sense that we still have a very small market share, although growing at the [ reducing ] base. So it's very hard to answer to what should be the normalized growth rate. What we see is that, and Guy already mentioned that, we see the situation in Spain and e-commerce is not growing. We have -- we've been able to specialize very significantly on out of Europe e-commerce. We have this vertical of customs clearance and combined with [ sorting ]. So we believe we have a very significant quality. We have a very integrated operation with, Portugal more and more. So we see that we have a significant number of [ drivers ] that would allow us to be some growth, but it's -- of course, it's -- 70% is not sustainable, but it's still early days to establish what would be a normal market growth. Coming to capital allocation. So we -- this EUR 23 million we expect to receive them somewhere next year. These processes -- well, there are tricks and ways of storing this and the state has used them, as usually does in these processes. And so the fund should come next year. And as for the real estate cash in, we've said that we want to complete legal before year-end of the cash to come into tranches, and we think that we are so far comfortably executing that front. What to do with this money? We've said that very clearly, we want to reserve room for additional efficiencies. So some part of these funds are going to be invested on additional efficiency, namely by reducing our workforce base. We want to provide and keep providing an interesting level of shareholder remuneration. As we said, we have now, after 2 years, a stable and explicit dividend policy of between 35% and 50% of net profit. And when we have available cash opportunistically, we will perform share buybacks as we are doing exactly now. And third, we want to reserve some room for additional growth and no organic growth on -- well, the [ Iberian ] space. So this is -- well, the final end of this fund is going to be a mix of these 3 capital allocation destination so to say.

Our next question comes from Filipe Leite from CaixaBank.

I have 2 questions, if I may. The first one is regarding Mail and Mail prices for next year, because I believe that the 12-month reference period for next year price increase ended in June. Do you already have some view, or what is your belief in terms of magnitude of price increase for next year, if you can share that? And second question, also regarding Mail. And if you can give us the breakdown in terms of volume evolution during this quarter from regulated Mail and bulk Mail, just to understand what's the type of Mail that has a higher volume drop? Because on regulated Mail, you can recover the drop on next year prices, but on bulk Mail you cannot recover it. Just to understand the breakdown.

So on net prices, as you know, we are now -- you rightly said that the data is completed between June and June, the numbers are now known. The formation of price is a combination of a number of things. The most obvious ones was the pure application of the formula. And then the constraint that we have of various kinds. Just to remind some of them, we have a constraint on the normal letter. We have a constraint on no more than 15% in any project on the 3 years, no more than I believe 10% -- 15% -- sorry, 30% on 3 years and 15% on 1 year. So with all that, what we can say is that the price increase will be clearly above the one we have this year. And we are now in the process of -- not negotiating, arranging that, discussing that because it is -- there's no negotiation. It's very factual, and we should come up with disclosing that number as soon as it is finally set up, but clearly above what we had this year. On the second question, Guy will answer.

You have the details on the appendix on Slide 7. But nevertheless, just commenting that, that we have an increase or a higher decline in both regulated and [ competitive ] Mail. But the sharper increase was on regulated Mail and also in some customers on bulk, but very concentrated on financial services. So some banks -- some specific banks are changing the dynamics in terms of statements. And we had some changes in law for insurance companies regarding the green card, and that is showing off also those kind of digitalization measures on that sector specifically.

Our next question comes from Antonio Seladas from A|S Research.

[indiscernible] related with [ address ] Mail and [ sharp pull ] over the third quarter. Do you think that the customer is changing the way digitalization and so on? It is slated with the price increases that you apply this year or not? So just first question. And second question is related with the competitive environment in the Express & Parcels. I don't know if you can explain a little bit more because your performance and Spain is really, really strong. So -- and taking consideration that the market is not growing so much. And what is -- and you are gaining market share for sure. But in Portugal, it is -- how you are playing? I guess, that you are just keeping your market share nevertheless. I'm just receiving more and more suppliers, different suppliers. So my feeling is that the competitive environment is increasing. So I don't know if you can elaborate on this?

On Mail, let's say, it's very difficult to assess if it's -- this is elasticity. I think it's both factor. But on big customers, what we see is very sharp changes in dynamics in very concentrated clients. So it's where we see dramatic falls on these swings after movements like the bank statements or finishing the green cards and all that. On regulated Mail, it depends on the quarter. But until right now, we increased prices in March. We didn't saw such dramatic change on volumes. So difficult to assess if it is elasticity or not. On Spain, it's important to understand that the market, although it's not growing that much, there are very swings -- or some dramatic swings between the players that operate there. So namely out of Europe players that are gaining share aggressively. And we are lucky enough to be actually providing services to everyone and also to those out of Europe players that are driving the growth. But we are also growing on the small clients. So we see ourselves as an attacker on the market. And as such, we keep grabbing share, and that I think it's our obligation as we have the market stance that we have in Spain. In Portugal, we see ourselves growing at least on the market, but we see ourselves also gaining share. What do you see it in your home, that I'm not always sure if it is a good proxy for the market, but normal -- it's normal because it's -- what we have is a number of players, not only operate in very dense areas like [ Lisbon ] and [ Porto ].. That can be geographically competitive but not to mention [ why ]. We ourselves are also having tariffs that adds our exposure to that because we have tariffs oriented to density in order to give less space for them. But we don't see that dynamic. We are growing slightly above the market and we are gaining share. So it's at least our view.

Our next question comes from Artur Amaro from CaixaBank.

Just one question, if I may. We witnessed EBIT guidance revision upwards. I think it's fair to assume that this EBIT target has been achieved quite supported by the performance of financial services. Meanwhile, we see a very significant slowdown of this segment generated EUR 5 million this quarter. If we annualize this, we're talking about roughly EUR 20 million per year. My question is, how are you incorporating these new trends in your EBIT target for 2025, which is, if I'm correct, the average point is EUR 110 million, and this is my question.

So you are right that in that financial service is playing a different role. We are, well, clearly in line with the targets for 2025. We are not happy with the level of placements that have now. We've already mentioned a few measures that we are active on. The digital channel will be probably one of the most relevant ones. We are also -- I cannot say pretty sure, but with very strong confidence that the caps per account will be removed, hopefully, back to the -- 5x more the previous [ $250,000 ]. Larger placements occur mostly on our branches. So we are confident that, that will improve. But we see a very positive trend on Express & Parcels on the bank. We have a very hedged portfolio and diversification is, in fact, the most relevant sustainability lever for a postal operator. And so we keep, I would say, strongly confident that we are in a conversion path towards -- well, in a soft way toward the expectations that we have forward to the marketing on Capital Markets Day. We have seen, for example, the bank achieving this quarter return on [indiscernible] equity that is, well, surprisingly ahead of what we had in mind. So we are pretty confident that we will be there even if -- with the slight contribution of the various business areas.

[Operator Instructions] Our next question does come from Marco Limite from Barclays.

A follow-up question from me. So back to the Spanish volumes. Would it be possible to know what's the split between domestic volumes versus cross-border volumes? I'm just aware that there were few press articles mentioning some security issues with some of the Asian retailers [ up ].

I'm not sure I understood well the security issue. But we have, I would say, a predominance of large customers. Most of them are out of Europe. We are not -- of course, we don't disclose the data on a customer-by-customer basis. But I would say that there is a significant contribution out of your customers in Spain, also in Portugal and also because most of the out-of-Europe volumes in Portugal come from Spain.

I probably can add that -- and this also goes to a point that -- I think even [indiscernible] mentioned earlier on why are we so driving market share in Spain. We have developed the specialization on out of Europe and especially Chinese e-commerce players because, as you know, a few years ago Chinese e-commerce would come into Europe -- actually into the world through the postal network. And hence, postal operators have had a privileged opportunity to replace when those players abandon the Mail network to replace them, and we were very well positioned to do that in Portugal, Spain. So that's one of the reasons why we have this privilege relation with that part of -- that segment of the market. Also, as I've mentioned before, we have launched a custom [ screen ] operation in Madrid early this year. And this is the only operation where customs clearance and sorting together, which we believe is also a competitive advantage. And so I mean, we are going to disclose customer by customer, but you may trust that there is a significant importance on out of Europe customers. Joao Sousa can complement my comments.

Yes. What I think is -- what we are seeing in Spain is the result of our betting diversification of our customers. So like Joao was saying that we focus on these out of Europe customers and also Chinese, that before it comes from [ Mail ], not -- rapid traffic for Portugal and Spain for Express & Parcels, but we also are very happy with what we are seeing growing in SMEs and in big customers. So what we can say, we have -- we see a very good numbers on this diversification in Spain, in different segments and different dimension of customers and also for using CTT to distribute in Spain and also for cross border. In the same way, if you allow me, we are also very happy to diversification in Portugal because you see different sizes of companies and different sectors that allow us to managing the different economic environment, also for the traffic in Spain. And we can say that using the backdrop of the Iberian proposition we have that we know that is a unique thing, and we don't see any competitor using these like we have been using. This bring us a very happy growth in Spain with diversification of the customers.

Our last question in the queue is from Joao Safara from Banco Santander.

Last question from my side. In this quarter, in particularly, we've seen the -- I mean the market share of -- your market share of the total placements reducing significantly. If I'm not mistaken, I think third quarter last year was around 80% of the total public debt [indiscernible], meaning new subscriptions, obviously, and this year, close to 63%, 62%. I mean the question here is, first, is there -- was there a new competitor for placing these products? Or is this just the digital segment of the public credit agency that had a higher market share in this quarter? And also, do you expect this to be a trend also in the future?

Thank you, Joao, for your question. So as you know, with the growth of we have been seeing from the last quarter of last year and also the first half of this year of new savers [ can ] lot of -- [ offer ] new young people putting their savings on public debt placements. This allow us to bring for these services more digital persons. That's what we are competing. That's why it's so important. Like I said before, we have a very good experience and the capacity we're going to put in our app for these servers also can use our digital channel. So what we have strong feelings for the future is when you deploy this digital channel from CTT that we're going to grab more market share for the future. And I think that's the big difference.

Just a follow-up on that. Do you have any date for the launch of this digital platform?

Most likely beginning of next year.

There are no further questions. I will hand you back over to your host, Joao Bento, CEO, to conclude today's conference.

Thank you again for coming and for your questions. And of course, we remain available to our IR team to follow-up ones. Thank you very much. Have a nice day and a nice weekend.