Deutsche Post World Net half-year figures show strong business development
The Group increases earnings forecast (EBITA) for fiscal 2003 by EUR 100 million / Consolidated net profit rises dramatically to EUR 650 million in first half year / Revenue more or less unchangedBonn, 07/30/2003, 11:30 AM CEST
Deutsche Post World Net registered strong business development for the first half of 2003, despite the difficult international economic and business climate. The Group is therefore increasing its earnings forecast (EBITA) for fiscal 2003 as a whole by EUR 100 million to a minimum of EUR 2.9 billion.
The Chairman of the Board of Management of Deutsche Post World Net, Dr Klaus Zumwinkel, expressed his satisfaction with the 2003 business performance to date at today's half-year financials press conference in Bonn: "Deutsche Post World Net's operating business is developing positively despite the weak economy. This allows us to compensate for factors bearing a negative influence, such as the cut in mail prices, which is surely a first in the world. Our again improved earnings forecast for fiscal 2003 as a whole is proof of the Group's strength and the successful value creation and integration work within the STAR program."
In the first half of 2003 revenues, at EUR 19.2 billion (-0.8 percent) were approximately constant year-on-year. Profit from operating activities (EBITA) stood at EUR 1.47 billion (first half year 2002: EUR 1.57 billion). Consolidated net profit increased dramatically from EUR 155 million to EUR 650 million, yielding earnings per share of EUR 0.58 (previous year: EUR 0.14).
The 6.6 percent decrease in EBITA can be partially attributed to the one-time effects in the prior year: in the first half of 2002, provisions for postage stamps were reversed in light of the introduction of the Euro, and income from leasing transactions was realized. EBITA was reduced by a further EUR 250 million in the first half of 2003 due to the new mail prices in Germany and the discontinued amortization of Postbank's negative goodwill.
Deutsche Post World Net is expecting a slight improvement in earnings (EBITA) year-on-year for the second half of 2003. The earnings forecast (EBITA) for fiscal 2003 as a whole should increase by EUR 100 million to a minimum of EUR 2.9 billion. This would bring operating profit in at just under the 2002 level. This means that in fiscal 2003 as a whole the Group would absorb a decrease in EBITA of more than EUR 500 million due to the new mail prices (EUR -300 million) and the discontinued amortization of Postbank's negative goodwill (EUR -212 million) without a dramatic impact on earnings. The Group's minimum margin forecasts for the individual corporate divisions for 2003 hold steady (MAIL: minimum 16 percent, EXPRESS: minimum 2.5 percent, LOGISTICS: minimum 3.2 percent, FINANCIAL SERVICES: 11.5 percent return on equity at Postbank).
Deutsche Post World Net was able to achieve a contribution to earnings of EUR 174 million in the first half of 2003 through its STAR Program, EUR 81 million of which was generated in the second quarter. Since the November 2002 program launch, STAR has already brought in an accumulated contribution to earnings of EUR 260 million. Among examples of concrete STAR measures are the May 2003 start-up of a Group-wide, Intranet-based procurement portal, the optimization of the German overnight airmail network, and the pooling of the freight capacities at DHL aircraft.
Segment reporting - the Corporate Divisions
The MAIL Corporate Division contributed EUR 5.7 billion to the Corporate Divisions' total revenues in the first half year, 2 percent below the comparative value in the previous year (EUR 5.8 billion). For one, this is attributable to the cut in postage prices leading to a decrease in revenue of EUR 140 million. For another, the Company feels the effects of the continuing crisis in the press product market, set off by a weak economy, in conjunction with a fall-off in the volume of newspapers and magazines transported. However, sales of business customer letters could be stabilized at the prior-year level, despite the enduring economic downturn.
The profit from operating activities (EBITA) for MAIL, at EUR 1.1 billion in the first half year, stood at some 11 percent below the previous year's level (EUR 1.2 billion). The price cut and the elimination of the positive one-time effects from 2002 are evident here.
Total revenue in the EXPRESS Corporate Division increased year-on-year by 2.7 percent to EUR 7.9 billion due to encouraging business development (previous year: EUR 7.6 billion). A driving force behind this is the European business. Here, revenue growth of 4.4 percent was recorded, in particular from the German and Iberian Peninsula regions.
The Group increased earnings (EBITA) in the EXPRESS Division by more than 55 percent, from EUR 108 million to EUR 168 million. The return on sales stood at 2.1 percent as against 1.4 percent in the prior year.
In the LOGISTICS Corporate Division, Deutsche Post World Net increased its revenue by 1.4 percent to EUR 2.8 billion (previous year: EUR 2.7 billion). The Solutions Business Division in particular developed very well and could profit from the positive development in electronics and telecommunications.
Earnings (EBITA) in LOGISTICS improved by around 15 percent to EUR 77 million (previous year: EUR 67 million). This is above all attributable to the gains in Solutions business. Return on sales increased from 2.5 percent to 2.8 percent.
In the FINANCIAL SERVICES Corporate Division, the decrease in income year-on-year of 6.3 percent to EUR 4.2 billion (previous year: EUR 4.4 billion) can be traced primarily to the lower interest income due to the generally lower interest rates.
In the first half of 2003, discontinuation of the reversal of negative goodwill (EUR 107 million in the prior year period) led to a drop in EBITA of some 16 percent to EUR 232 million (previous year: EUR 276 million). However, excluding the income from the reversal of this goodwill, EBITA rose by some 37 percent. This positive development was helped along by the significant increase in earnings at Postbank. Postbank´s return on equity (ROE) before taxes rose from 8.2 percent in H1/2002 to 10.8 percent. This ratio serves as a measure of the return on capital employed.
In concluding the half-year financials press conference, Chairman of the Board Zumwinkel summarized: "Despite an internationally troubled economic environment, Deutsche Post World Net sees its future in a positive light. Our business is developing strongly; hence, we are increasing our earnings forecast for 2003. The Group will be strengthening its involvement on the US express market in the coming months, and following the merger with Airborne Express, we will rise to be the number three in the world's largest express market." Additionally, Zumwinkel underscored that the upshot of the proceedings launched by UPS and FedEx with the Department of Transportation against ASTAR airlines will have no impact on Deutsche Post World Net's US strategy. "Now, our major competitors also have us to contend with in their home markets. As is known, the same has been the case for years in Germany and in Europe for us Europeans."