Strong global platform for further growth
- Deutsche Post World Net posts 3.35 billion euros EBITA
- Group confirms 2005 earnings forecast
Deutsche Post World Net reported a strong 2004 with overall improved results. Revenue climbed by 7.9 percent to about 43.17 billion euros. The Group's profit from operating activities (EBITA), at around 3.35 billion euros, was 12.5 percent higher than in the previous year. Net income rose 21.3 percent to about 1.59 billion euros compared with the previous year's level. This corresponds to earnings per share of 1.43 euros; in 2003, EPS was 1.18 euros per share. As a result of the strong performance, a dividend increase to 50 euro cents per share from 44 euro cents will be proposed.
Chairman of the Board of Management Klaus Zumwinkel said the results were a "splendid conclusion to the business year." The company is well positioned strategically, operationally and financially, and will continue to grow both regionally and in the business segments from the global platform it has created. This year, half of the Group's revenue will be generated outside of Germany. More than a third of the workforce, some 140,000 employees, is already employed outside of Germany. "This year, we will actively exploit growth opportunities worldwide, successfully complete the STAR value-creation program and ensure a customer-focused business and make progress towards profitability in the U.S.," said Zumwinkel.
Key financial figures
At the end of 2004, measures under the STAR value-creation program had contributed a cumulative 862 million euros to earnings, or 23 percent above the originally planned 700 million euros. In the fourth quarter of 2004 alone, the STAR contribution to earnings was 143 million euros. This is the highest quarterly figure since the program was launched. In 2005, STAR will focus on integrating the physical network in Europe. The program will be concluded as planned by the end of the year.
The Group's tax rate for 2004 was 20 percent. Under international accounting standards (IFRS), Deutsche Post World Net expects a group tax rate at this level for 2005 and coming years. This is the outcome of a completed tax audit, with a correspondingly positive effect on net income. The effective cash tax payments will remain on the level of prior years. Net income in 2004 increased by 21.3 percent to about 1.59 billion euros compared with 2003's level.
Deutsche Post World Net remains a significant contributor to the German labor market. Thanks to the employment pact in effect until 2008 and the traineeship pact signed at the beginning of 2005, the Group is able to ensure a high degree of job security and job perspectives for many young people. The Group makes social insurance contributions for the overwhelming majority of the jobs it offers. In addition, the choice of Leipzig as DHL's future European hub with the 10,000 new jobs attached, assures that Deutsche Post will be a "job engine" in the new German states.
Mr. Zumwinkel appealed to politicians not to jeopardize the balance between economically successful and socially responsible conduct: "Adhering to the Europe-wide schedule for deregulation and competition in the postal markets is a prerequisite for securing thousands of jobs in Germany. This must be clear to those in Germany who hold political responsibility in times like these."
MAIL Corporate Division
Business was good in the MAIL Corporate Division in 2004. Revenue climbed by two percent to approximately 12.7 billion euros; EBITA was 2.09 billion euros. The Group expanded its internationalization strategy in 2004. Acquisitions in the U.K., the Netherlands, and particularly in the U.S. helped increase revenue in the Mail International Business Division (DHL Global Mail) by 11 percent to 1.7 billion euros. Already, 48.8 percent of revenue in the MAIL Corporate Division is generated outside of the exclusive license. Next to the international mail business, dialog marketing, with its strongly expanded value-added services and end-to-end solutions for business customers, will become an important growth driver in the coming years.
EXPRESS Corporate Division
EXPRESS boosted 2004 revenue by 16.3 percent to 17.8 billion euros. This made EXPRESS the strongest corporate division in terms of revenue, with almost 40 percent of total revenue, followed by MAIL with 28.5 percent. Revenue in the Americas region rose by 52.1 percent to some 4.3 billion euros. The Europe region was again the major revenue contributor within the division with 62 percent of the total. At 367 million euros, the division's EBITA was 0.5 percent higher than in the previous year. Return on sales for the express business excluding the Americas region was 6.4 percent and 2.1 percent for the entire corporate division.
Looking at the U.S., Zumwinkel confirmed his plan to cut the deficit in the Americas Region to some 300 million euros this year from 495 million euros in 2004 and to reach break-even by the end of 2006. With the acquisition of Airborne and by establishing a strong ground network, the requirements for offering an alternative to customers in the world's largest express market have been met. The Group is investing $1.2 billion in the U.S. express market over the coming years. "The market is good and our revenue is good - now we are proceeding vigorously with our homework in terms of integration, costs and quality," said Zumwinkel.
LOGISTICS Corporate Division
The positive trend in the LOGISTICS Corporate Division continued in 2004. LOGISTICS increased revenue by 15.4 percent to approximately 6.8 billion euros and EBITA by 36.4 percent to 281 million euros. The return on sales rose accordingly from 3.5 to 4.1 percent.
FINANCIAL SERVICES Corporate Division
EBITA for the FINANCIAL SERVICES Corporate Division, which consists mainly of Postbank, increased in 2004 by 21.8 percent to 692 million euros. Income fell by 4.1 percent to approximately 7.3 billion euros, primarily due to the continued decline in interest rates. Postbank reported separately on its results on March 21.
Deutsche Post World Net will again profit from the continuing increase in global trade this year. World trade volumes are likely to show another strong increase of eight percent in 2005, driven by growth in countries such as India and China. The Group already transports around five percent of the entire global trade, is the No. 1 Express provider in Europe and Asia, the No. 3 in the U.S. and the leading provider of air freight services worldwide.
The Group continues to expect EBITA to reach at least 3.6 billion euros in 2005. STAR will contribute a cumulative 1.4 billion euros to these earnings.