Deutsche Post World Net provides preview of full-year 200801/19/2009, 07:30 AM CET
- 2008 underlying EBIT just above targeted 2.4 billion euros
- Tight cost management mitigates softer trading volumes in fourth quarter
- Strong cash position after successful asset disposals
- DHL U.S. Express restructuring proceeding as planned
Bonn: Deutsche Post World Net, the world’s largest express and logistics provider, today reported that it has met its 2008 profit target, thanks to strict cost management and cash conservation. Full-year underlying EBIT, or earnings before interest and tax excluding non-recurring effects, amounted to just above the targeted 2.4 billion euros. “We have taken vigorous action to minimize costs and conserve cash through our Roadmap to Value initiatives during the past year,” said Chief Financial Officer John Allan. “Those measures enabled us to deliver on our profit expectations, despite the weakening economic climate.” Reported EBIT was significantly better than minus 1 billion euros, including the already communicated non-recurring negative effects tied to the restructuring of DHL U.S. Express, one-off charges in other businesses as well as writedowns on goodwill and intangible assets within the Corporate Division Supply Chain/Corporate Information Solutions. Those negative effects were countered by the repayment from the German government following successful EU state aid proceedings.
As expected, fourth-quarter trading volumes in most business units continued to soften in a year-on-year comparison. In Air and Ocean Freight volumes weakened, with a double-digit decline rate reflecting the slowing of the global economies. Express volumes outside the U.S. turned negative in the fourth quarter, with only the volumes in the region Eastern Europe, Middle East and Africa (EEMEA) still showing a mid-single digit percentage increase. In Germany mail volumes in the fourth quarter continued the stable development experienced in the first three quarters of the year. Fourth-quarter revenues in the Supply Chain / CIS division also developed in line with the rate seen in the first nine months of the year.
Year-end net debt, helped by asset disposals including around 700 million euros received from Lone Star in December, was approximately 2.4 billion euros in comparison with 2.9 billion euros at the end of 2007. The cash position stood at around 1.4 billion euros on Dec. 31, following the successful disposal of assets. Since then, the cash position has further improved with the receipt of 3.1 billion euros from Deutsche Bank for a stake in Deutsche Postbank, part of the improved transaction structure announced last week. Reported cash flow from operating activities improved significantly to above 3 billion euros, supported by a marked improvement in working capital. With 1.7 billion euros, capital expenditure (Capex) was 16 percent below the previous year’s level.
The restructuring of DHL U.S. Express with the aim of exiting domestic express services is progressing according to plan. Domestic revenue is eroding somewhat faster than we had anticipated, which has allowed the Group to accelerate cost reductions. Deutsche Post World Net will be in a position to give a more detailed update on the progress when reporting its full-year 2008 accounts scheduled for Feb. 26, 2009.
Deutsche Post World Net doesn’t expect to be in a position to issue a guidance for 2009 before the end of the first quarter. However, the Group expects business conditions to continue to be tough in 2009 due to the impact of the economic downturn on many of its customers. “Fortunately our customer base is highly diversified in terms of both geography and industrial sector,” CFO Allan said. “We continue to focus on further cost reduction and cash generation and believe that Deutsche Post World Net is well placed to trade through any further downturn relatively well.”
Please note: All numbers are subject to audit.