Deutsche Post World Net off to a good start in 2007
- Consolidated revenue climbs to 15.5 billion euros in first quarter
- EBIT rises 8.7 percent
- International revenue now accounts for about 60 percent of total
- EXPRESS earnings significantly better
Deutsche Post World Net increased EBIT by 8.7 percent to 998 million euros in the first quarter of 2007, giving the company a good start in the new year. Revenue rose 4.4 percent to 15.5 billion euros. Consolidated net profit after minorities also climbed 4 percent to 499 million euros, and earnings per share were 41 euro cents compared with 40 cents in the same period last year. "The first quarter confirmed the positive trends of the preceding quarters," said Prof. Edgar Ernst, the Group's chief financial officer. "We attained growth in our international mail activities and substantial earnings improvements in the express business." The Group reiterated its forecast for an overall positive business development with an EBIT excluding non-recurring effects totaling at least 3.6 billion euros in 2007.
In the first quarter, the MAIL division raised revenue by 2.9 percent to 3.93 billion euros. As it has done in previous quarters, the division more than offset anticipated revenue losses in the domestic mail market through gains in its international activities. One key reason for this growth was the inclusion of Williams Lea from April 1, 2006. EBIT in the Mail division fell 10.8 percent to 618 million euros. This drop primarily resulted from the loss of 0.7 work days and the steep cut in parcel prices last year.
During the first three months of the year, revenue at the EXPRESS division rose with 0.9 percent slightly to 3.33 billion euros, held back by currency effects totaling 150 million euros. In local currencies, the EXPRESS division grew organically by 6.5 percent. This growth was generated primarily by the high-yielding international express business. Particularly Europe as well as the Asia-Pacific and EEMEA regions recorded strong growth rates. In the Americas region, revenue in local currencies gained 3.2 percent, with high growth rates in the domestic business in Latin America. In euro terms, revenue in the region declined 5.6 percent to 1.05 billion euros. EBIT for the entire EXPRESS division was 62 million euros, compared with a loss of 58 million euros in the same period last year.
The LOGISTICS division boosted revenue by 6.1 percent to 6.22 billion euros in the first quarter. In addition to negative exchange-rate effects of 174 million euros, the sale of various smaller companies reduced revenue by 32 million euros. Purely organically, revenue climbed 9.6 percent. The DHL Global Forwarding business unit recorded revenue of 2.19 billion euros, 1.5 percent less than in the same period last year. The drop was due to currency effects and lower freight rates in some regions. At DHL Exel Supply Chain revenue climbed significantly, jumping 12 percent to 3.19 billion euros. The 10-year contract with the British health-care service NHS contributed considerably to the increase. The DHL Freight business unit increased first-quarter revenue 0.7 percent to 917 million euros. During the reporting period, EBIT in the LOGISTICS division totaled 214 million euros compared with 157 million euros in the year-ago period. The 36 percent increase was largely attributable to the sale of the waste disposal company Vfw AG, which led to a non-recurring income of 59 million euros. Taking higher integration costs than a year earlier into account, the business development met the Group's expectations.
FINANCIAL SERVICES division
The FINANCIAL SERVICES division, which is primarily composed of Deutsche Postbank, raised revenue by 5.2 percent to 2.48 billion euros in the first quarter. EBIT climbed 10 percent to 242 million euros. Deutsche Postbank reported its detailed results separately on May 14.
The SERVICES division combines the areas of Global Business Services, Corporate Center and the retail outlets of Deutsche Post. In addition, non-operating income and expenses of Deutsche Post AG are bundled within the division. In the SERIVCES division, EBIT was minus 134 million euros compared with minus 94 million euros in the same period last year. The primary reasons for the decrease were non-recurring effects stemming from the arbitration proceedings with Deutsche Telekom and the disposal of McPaper AG in the first quarter of 2006.
For the entire year of 2007, the Group still expects EBIT excluding non-recurring effects of at least 3.6 billion euros.
For the MAIL division, the Group expects revenue to be stable or slightly higher. It continues to believe that the revenue losses experienced in the domestic mail market will be more than offset by the other business units. EBIT is forecast to remain stable at about 2 billion euros. In the EXPRESS division, the Group expects full-year EBIT to reach at least 400 million euros, including costs related to the new Leipzig/Halle air hub. In the LOGISTICS division, the Group forecasts EBIT will climb about 15 percent. The forecast doesn't include the sale of Vfw. At FINANCIAL SERVICES, EBIT is expected to rise at least 5 percent. At the SERVICES division, the Group still expects EBIT of about minus 700 million euros.