Austrian Post: Revenue up 6.0 percent - May 16, 2008
[Press Release]
- EBIT margin of 8.2%
- Group revenue up 6.0%, to EUR 609.9m based on the consolidation of new subsidiaries
- Volume and revenue were impacted in a quarterly year-on-year comparison by one working day less and the timing of Easter already in March 2008
- Expected revenue and earnings reduction due to the loss of two parcels customers in Austria
- Other parcel customers were retained; restructuring of the parcels business proceeding as planned
- Earnings development in the first quarter confirms forecast for 2008
- EBIT of EUR 49.9m, EBIT margin of 8.2%
- Group profit for the period of EUR 41.9m, earnings per share of EUR 0.6
- Operating cash flow before changes in working capital continues to be stable, at EUR 77.0m
- Outlook for 2008 confirmed: stable to slight increase in revenue, earnings before interest and tax (EBIT) only slightly below 2007, and then continually rising.
Good Business Development in the First Quarter of 2008
The business operations of Austrian Post developed favourably in the first quarter of the 2008 financial year, thus confirming the original outlook for 2008. On balance, total revenue rose 6.0%, to EUR 609.9m. This increase was due to the initial consolidation of the Group subsidiaries Scherübl, Road Parcel Logistics, Merland Expressz Services, meiller direct, Dedicated Distribution Services (DDS), Van Osselaer-Pieters Colli Service (VOP) and City Express which did not belong to the scope of consolidation in the first quarter of 2007. In a quarterly year-on-year comparison, it is important to note that the first quarter of 2008 was characterised by a lower level of volumes due to one working day less, as well as the timing of Easter already in the first quarter. Against this backdrop, the Mail Division in particular generated growth on the basis of the acquired subsidiaries, but also through organic growth.
As originally predicted at the end of 2007 and now confirmed, this revenue development reflects the lower volume in the Austrian parcel segment due to the loss of two major mail order customers. However, other important parcel service customers could be retained, and revenue from the new premium parcel service increased. The current development in the Parcel & Logistics segment corresponds to the expectations of the company. All in all, revenues of the Mail Division climbed by 8.3% during the first quarter of 2008, whereas revenues of the Parcel & Logistics Division were up 4.5%, and the Branch Network Division posted a decline of 3.4%.
In addition to the 6,0% increase in revenue, the consolidated income statement of Austrian Post shows a decline in other operating income, which is primarily related to lower proceeds from the disposal of property, plant and equipment compared to the first quarter of 2007.
In the first three months of 2008, the earnings before interest and tax (EBIT) of Austrian Post decreased by 9.5% year-on-year, to EUR 49.9m, which can be attributed to the described special effects in the first quarter, lower proceeds from the disposal of property, plant and equipment and a changed market environment in the Austrian parcels segment. The EBIT margin amounted to 8.2%.
All operating divisions made a positive contribution to earnings. EBIT at the Mail Division was EUR 74.1m, at the Parcel & Logistics Division EUR 4.7m, and at the Branch Network Division EUR 2.6m.
Profit for the period of Austrian Post only declined by 2.0%, to EUR 41.9m year-on-year. Earnings per share in the first quarter of 2008 were EUR 0.60, compared to EUR 0.61 in the comparable period of the preceding year.
Solid Balance Sheet Structure – Equity Ratio of 44%
The balance sheet structure of Austrian Post reflects the positive development of the company in recent years. Accordingly, the equity ratio amounted to 43.7% as at March 31, 2008.
At present, Austrian Post has a net debt position of EUR 149.7m. This financial figure represents the difference between interest-bearing assets (securities, other financial assets and cash and cash equivalents) amounting to EUR 557.9m, and interest-bearing debt (financial liabilities, social capital and other interest-bearing liabilities and provisions) totalling EUR 707.6m.
In the next 2-3 years, Austrian Post aims to achieve a ratio of net debt to EBITDA of 2.0. One important aspect of this targeted capital structure is an ongoing attractive dividend policy (payout ratio of at least 75% of the total profit for the period).
Cash Flow Remains Stable
In the period under review, total operating cash flow before changes in working capital amounted to EUR 77.0m, practically unchanged from the level achieved in the first quarter of 2007.
The cash flow from changes in working capital amounted to EUR minus 23.3m in Q1 2008. This is primarily comprised of increased receivables of EUR 17.6m, reduced liabilities of EUR 7.9m, and increased current provisions of EUR 3.2m. On balance, total cash flow from operating activities amounted to EUR 53.7m for the first three months of 2008.
The cash flow from investing activities totalled EUR minus 13.2m, comprising the purchase of property, plant and equipment amounting to EUR 16.8m and the acquisition of the remaining shareholding of Scanpoint for EUR 2.6m. Accordingly, total free cash flow reported in the first quarter of 2008 increased to EUR 40.5m.
Outlook for 2008
All in all, Austrian Post confirms its original forecasts for the 2008 financial year, namely a stable development to a slight increase in its total revenue (up to 3%). This includes the integration of the new subsidiaries acquired during the course of 2007. Despite the adverse effects on the parcels segment, Austrian Post expects earnings before interest and tax (EBIT) in 2008 to be only slightly below the level achieved in the year 2007, and then continually rise in subsequent years. Accordingly, the EBIT margin will be slightly below 7% in 2008, and then reach the targeted range of between 7% and 8% in the following years. Based on a stable cash flow development and a solid balance sheet structure, Austrian Post expects to continue pursuing an attractive dividend policy.
Events After the Balance Sheet Date
The Annual General Meeting held on April 22, 2008 approved the distribution of a basic dividend totalling EUR 98m (EUR 1.40 per share). Moreover, it was resolved to distribute a special dividend amounting to EUR 70m (EUR 1.00 per share). The dividend payment date for the basic dividend was May 6, 2008, whereas the special dividend will be paid on September 5, 2008. Furthermore, the resolution authorising the Management Board to buy-back and, if applicable, to withdraw treasury shares at a value of up to 10% of the company’s share capital during a period of 18 months (buy back without purpose) was also approved.
Performance of Divisions Mail Division
In the first three months of 2008, year-on-year external sales by the Mail Division climbed by 8.3%, compared to the same period of the previous year, to EUR 370.0m. This improvement in revenues in chiefly related to the first-time consolidation of the subsidiaries acquired since the first quarter of 2007, but also includes organic revenue growth.
The Letter Mail Business Area developed very satisfactorily, despite the adverse effects on mail volumes due to one working day less in the first quarter of 2008, as well as the timing of Easter already in March 2008. Revenues of the Mail Division declined by only 1.4% year-on-year. External sales of the Infomail Business Area (addressed and unaddressed advertising) climbed by 25.9% in the first three months of the 2008 financial year, to EUR 134.7m. A considerable contribution was made by the initial consolidation of the direct marketing services provider meiller direct. The revenue increase was also driven by international services for advertising mail.
The Media Post Business Area raised its first quarter revenue by 10.8%, which is mainly related to the positive development of regional media, but also the one-off effects of regional elections in Austria. On balance, EBIT of the Mail Division, at EUR 74.1m, came close to matching the previous year’s level.
Parcel & Logistics Division
External sales by the Parcel & Logistics Division climbed 4.5% in the first quarter of 2008, to EUR 191.2m. Austrian Post now divides its service portfolio into premium parcels (parcel delivery within 24 hours to private and business customers) and standard parcels. Growth in the premium parcel segment can primarily be attributed to the newly acquired Group companies (Scherübl, Road Parcel, Merland, City Express, DDS, VOP), which did not belong to the consolidation range in the comparable period of 2007. At the same time, higher external sales are also related to the general volume increase of this premium product, in Austria as well as in the international subsidiaries of Austrian Post.
As expected, revenue decreased in the standard parcels segment in Austria. The volume decline forecast by Austrian Post materialised due to the market entry of a German parcel services provider. Comprehensive redimensioning measures designed to increase the profitability of parcels services were already initiated in the Parcel & Logistics Division at the end of 2007. The redimensioning of parcel logistics is proceeding on schedule. In the first three months, earnings before interest and tax (EBIT) of the Parcel & Logistics Division amounted to EUR 4.7m.
Branch Network Division
External sales by the Branch Network Division declined by 3.4% in the first three months of 2008 compared to the same period of the preceding year, to EUR 48.0m. One key reason was the decline in mobile telephony sales. In the financial services segment, there was a slight rise due to the growth measures which had been initiated, based on the repositioning of PSK Bank and the sales drive for private customers. The assortment of products and services offered in the branch network was improved, and the sales structures were strengthened. Due to lower mail volumes handled by the branch network, internal sales of the Branch Network Division also fell. Earnings before interest and tax (EBIT) totalled EUR 2.6m in the first three months of the 2008 financial year.
Dutch to Postpone Opening Postal Market - May 16, 2008
[Hemscott.com]
The Dutch government decided on Friday against opening up the Dutch postal market to competition on July 1, stressing there are too many uncertainties to allow for full liberalisation.
The Cabinet said in a statement the wage accord agreed between unions and a number of new postal operators still offers insufficient certainty regarding a postal sector collective labour agreement.
The government also said the situation in the German postal market and the impediments for Dutch companies there means there is insufficient reason to agree to an opening of the Dutch market.
The Cabinet will continue to urge the European Commission to undertake action to allow competition in various European postal markets.
It added that the decision to delay liberalisation in the Netherlands does not mean the country's postal market will remain closed to competition as an EU agreement stipulates that all countries open up their postal markets by December 31, 2010.
Newspaper Het Financieele Dagblad earlier reported on Friday that a parliamentary majority was in favour of opening up the Dutch market from July 1, a decision that would see former state company TNT NV lose its monopolist position for parcels less than 50 grams.
Funding to Help Royal Mail Deliver Valued Universal Service - May 15, 2008
[Press Release]
Development of competition will continue to stimulate innovation and efficiency
Postcomm, the independent regulator for postal services, today said that a universal service that is financially viable and safeguarded for the future is most likely to be achieved through a radical transformation of the governance and structure of Royal Mail.
Postcomm concluded in its first submission to the independent review of the postal market that Royal Mail’s current business model is unsustainable and that, unless some bold actions are taken very quickly, it is highly likely that its letters business will move to a position of managed – but accelerating – decline.
In its second submission, which will be submitted tomorrow, Postcomm says:
- With the mail market now in structural decline, because of the increasing impact of e-mail and the Internet, Royal Mail needs access to private capital and a stronger set of incentives to enable it to restructure and become more profitable;
- Partnerships with the private sector, such as we are seeing in some European countries, could serve as a catalyst to more rapid transformation and greater efficiency from the universal service provider;
- As competition develops in segments of the market, it can replace regulation as the force which protects customers’ interests. This – and the need for much more transparency about the costs of Royal Mail’s business – will be a major theme of Postcomm’s proposals for the regulatory framework post April 2010;
- The transformation of Royal Mail will ensure a more dynamic mail market that can respond quickly and effectively to changing customer needs as mail increasingly is challenged by electronic media.
Postcomm believes competition and liberalisation should continue to be promoted as they are delivering far better customer focus and strong incentives for all mail operators to innovate and to become more efficient. Competition has already benefited large customers, and choice is now becoming available to smaller businesses. The regulator also urges the removal of artificial barriers to postal market entry – including the removal of new entrants’ VAT disadvantage – which could encourage wider competitor involvement in the collection, sorting and delivery of mail.
Postcomm chairman Nigel Stapleton said: “Postcomm’s primary duty is to protect a universal postal service. A high quality universal service must be maintained and Postcomm is determined to do all we can to ensure it continues to meet the needs of customers. “The company also needs access to private capital to fund and incentivise a radical transformation of the business. Postcomm wants to see the Government and Royal Mail embrace a partnership approach with the private sector to secure a universal service valued by all users and provided at least cost, without public funding.
“Royal Mail can only provide an internally funded universal service if it has the funding to restructure and become the best in class operator that it aspires to be and if it is no longer saddled with having to pay down an enormous pensions deficit. None of us want to see either of the two other possible outcomes: a universal service that becomes an ever greater burden on the taxpayer or one where there is a substantial threat to its specification.”
Postcomm: Market Research into Customers' Needs from the Postal Service - May 15, 2008
[Press Release]
Postcomm has today published some important research findings to help inform the debate that was started in its Strategy Review issued in August 2007 about what sort of universal service would meet the needs of today’s customers. Publication coincides with Postcomm’s second submission of evidence to the Independent Review Panel.
This research was undertaken to help inform Postcomm’s policy making; none of the research represents policy proposals as such.
Postcomm’s research covers two important areas:
- Market research carried out in 2007 into customers’ needs from the postal service in the UK. This adds to the body of research carried out jointly by Postcomm, Postwatch and Royal Mail in 2006 and to research that Postwatch plans to publish shortly. This work was commissioned by Postcomm because Royal Mail have little recent and detailed information about what customers need from a universal service.
- Econometric modelling to estimate the impact of changes to some aspects of the current universal service on Royal Mail’s costs and revenues. This work was commissioned by Postcomm because Royal Mail’s own costing system was not designed to produce any information of this nature. Royal Mail has co-operated with the research and analysis, providing data and participating in discussions on the methodology used and the validity of many of the underlying assumptions.
Postcomm believes that the research is based on the soundest possible approach in terms of econometric modelling, cost derivation and the use of consumer research. However, as with all research, there are limitations and these are explained fully in the reports.
Postcomm will be undertaking further research on a number of aspects of the universal service. In the submission to the Independent Review Panel, Postcomm has said that without a radical transformation of Royal Mail to increase both its efficiency and pace of innovation, it is most unlikely that the universal service can be provided on a basis where revenues fully covers the costs. Postcomm’s evidence makes a number of proposals that are designed to promote such a radical transformation over the next few years, but it is not recommending any changes to the activities in the universal service.
Postcomm would be interested to hear any feedback on these reports.
Market Research into Customers' Needs from the Postal Service Survey
| SME Tables
| Residential Tables
Increased Revenues and Costs for Norway Post - May 15, 2008
[Press Release]
Acquisitions and growth in the Logistics and IT segments contributed to a growth in Norway Post's revenue in the first quarter. The operating revenues increased by 4% to MNOK 6 997.
The earnings before non-recurring items came to MNOK 74, compared to MNOK 219 in the first quarter 2007. The profit performance in Q1 is influenced by the reduced volume during the Easter week. Easter fell in March in 2008, while it was in April in 2007. The earnings before non-recurring items as at 30 April (first four months) came to MNOK 208, an improvement of MNOK 35 compared to the corresponding period last year.
Good Nordic Growth
It was primarily developments in the Mail segment and the Easter effect that made a negative contribution to the quarterly result. Although the letter volume is increasing slightly, the decline in the volume of addressed letter products and banking transactions at post offices is continuing.
"Our foreign operations and the Logistics and IT segments produced good results and these compensated for some of the poorer results from the Mail Division. This shows that we must continue to achieve Nordic growth, and that this is crucial for Norway Post's ability to offer competitive postal and logistics services in the future," says CEO Dag Mejdell.
Norway Post's Nordic operations improved during the quarter and now provide around 25 per cent of the Group's total revenues. The Q1 operating revenues from activities outside Norway came to NOK 1.7 billion - a rise of 19.2 per cent compared to Q1 2007.
Increased Competition
The Group is experiencing increased competition in all its business areas. The EU has decided on a liberalisation of the postal market in Europe and this will lead to full competition as from 2011. On 1 April of this year, Sweden Post and Post Denmark announced that they are to merge to form a large Nordic postal and logistics group.
"This merger will lead to increased competition. This means that we at Norway Post have to continue to improve our efficiency and cut costs so we can offer competitive products," says Mejdell.
One of the most important means of improving cost effectiveness and ensuring a high delivery quality is the new high-tech letter centre at Robsrud outside Oslo. This facility is under construction and is expected to be finished in 2009.
"We are also implementing a Group programme to improve the efficiency of production processes and reduce the Group's cost level," says Mejdell.
Mail Division
This division's operating revenues fell to MNOK 3 234, compared to MNOK 3 254 in the first quarter of 2007. The division's Q1 earnings came to MNOK 64, compared to MNOK 224 in 2007. The Easter effect and the fall in the volume of addressed letter products are the main reasons for the reduction in the earnings.
As from 1 April 2008, Norway Post was the Nordic postal company with the highest household coverage. The expansion of CityMail in Sweden has led to the Group now distributing post to 2.3 million Swedish households.During the first quarter, 86.3 per cent of the A-priority mail in Norway was delivered overnight. This is an improvement of 5.2 percentage points compared to Q1 last year and is better than the licence requirement.
Logistics Division
The Logistics Division's operating revenues rose to MNOK 3 115 in the first quarter, compared to MNOK 2 973 in the first quarter 2007. The division achieved earnings of MNOK 115, up from MNOK 109 in the corresponding period last year. The main reasons for this growth are acquisitions and a large increase in volume.
The division started to install 40 parcel delivery machines in Norway and Sweden in the first quarter. These will improve the Groups position in the online shopping and post order segment in the Nordic region.
IT Division
This division's operating revenues rose by 12.7 per cent to MNOK 1 498 in the first quarter. The division's earnings also increased and came to MNOK 62, compared to MNOK 40 on the same date last year. This growth is due to a large volume of orders from both new and existing customers as well as to the acquisition of Bekk Consulting. The division's organic growth rate was 7.5 per cent.
TNT Builds Up its Green Fleet Worldwide - May 15, 2008
[Press Release]
TNT is doubling its effort to cut carbon emissions of its road fleet with the introduction of over 100 electric trucks in the UK, China, and Australia.
TNT Express and Smith Electric Vehicles last Monday launched in London the world’s largest fleet of zero emission electric vehicles. TNT’s new 100-strong fleet of battery-powered ‘Newton’ delivery trucks will replace diesel equivalents over the next 18 months. The 7.5 ton lorries will prevent the release of up to 1,299,000 kilograms of CO2 into the atmosphere of towns and cities in the UK each year. The first tranche of 50 trucks will operate from TNT locations in London, Basildon, Birmingham, Bradford, Bristol, Durham, Edinburgh, Enfield, Glasgow, Leeds, Leicester, Luton, Northampton, Oxford, Paisley, Preston, and Wolverhampton. The partnership with Smith – the world’s largest manufacturer of road-going commercial electric vehicles – follows an 18-months trial in London. TNT is looking into piloting electric vehicles in all major European cities.
Last week, TNT and Dong Feng Motor Co., China’s largest automaker and manufacturer of electric vehicles, began a trial of two battery-electric delivery vans in the city of Wuhan, the capital of Hubei Province, China. The trial involves two light electric vans designed, manufactured and assembled in Wuhan by Dong Feng Motor Co. It is TNT’s first zero-emissions test outside of Europe. The vans have a top speed of 80 kph (50 mph), a range of 160-200 km (100-124 miles) and can carry a one ton load.
At the end of April, TNT Express Australia introduced 10 Hino hybrid trucks, becoming the first business in Australia to start operating a fleet of diesel-electric hybrid as replacements for conventionally powered vehicles. The new trucks will reduce TNT’s greenhouse gas emissions by an average of 1,600 kilograms of CO2 a year per vehicle. They emit 14 percent less CO2 and 50 percent less nitrous oxides than a conventional diesel truck of equivalent size.
“Greening our road fleet is a must to achieve TNT’s quest to become the first zero emissions express and mail company,” says TNT CEO Peter Bakker. “TNT is renewing its operations to reduce their environmental impact. Examples range from greener offices and depots to electricity sourcing and innovative electric vehicles.”
Deutsche Post World Net: First Quarter on Target - May 14, 2008
[Press Release]
- Revenue increases 1.8 percent to 15.7 billion euros
- Underlying EBIT rises 6.4 percent to 1 billion euros despite fewer working days; reported EBIT declines 15 percent
- Supervisory Board to meet on EXPRESS Americas on May 28
Deutsche Post World Net started the year of 2008 with solid performance in the first quarter: Underlying EBIT rose 6.4 percent to around 1 billion euros, meeting the Group's own targets. That was despite the fact that the quarter had two working days less than the year-earlier period.
Headquarters of Deutsche Post World Net
Reported EBIT declined 14.7 percent to 851 million euros due to non-recurring expenses at Deutsche Postbank tied to the crisis on the financial markets. Revenue totaled 15.7 billion euros, up 1.8 percent from the year-earlier period, excluding negative currency effects the increase was around 6 percent.
"Given the working day effect and the faltering U.S. economy, business was very satisfactory in the first quarter," Chief Financial Officer John Allan said. "Both the EXPRESS and the LOGISTICS businesses grew organically and we made good progress in our Roadmap to Value capital markets program." The Group reiterated its full-year earnings forecast.
Net Income
During the first quarter, net income after minorities fell 18.4 percent to 407 million euros. Earnings per share stood at 34 euro cents, compared with 41 cents in the same period last year. Operating cash flow fell to 141 million euros from 250 million euros in part due to the fact that the quarter had two fewer working days. Free cash flow climbed to 117 million euros in the first quarter of 2008 from minus 65 million euros in the same period last year as a result of higher income from real-estate sales and lower spending on acquisitions.
Roadmap to Value
The Group reached several milestones on its way to creating more value for investors in the first quarter:
In order to raise profitability, measures amounting to 70 million euros were introduced in the first quarter alone, particularly in the EXPRESS and LOGISTICS divisions. All in all, Deutsche Post World Net has identified more than 100 initiatives aimed at underpinning EBIT growth by 1 billion euros by the end of 2009.
In its strive to relentlessly focus on underperforming businesses, the Group is currently finalizing its plan to substantially improve the performance of its EXPRESS Americas business. The supervisory board is scheduled to meet on the matter on May 28.
In terms of cash generation, it is already clear today that Deutsche Post World Net will exceed its goal of generating at least 1 billion euros from real-estate sales by the end of 2009. In addition to real-estate sales totaling 350 million euros that were agreed on in November, the Group announced a month ago that it was selling about 1,300 properties for 1 billion euros to the U.S. investor Lone Star. Efforts to reduce working capital are producing initial positive results as well. In the first quarter, this key figure improved by 30 million euros.
In the context of its transparency initiative, Deutsche Post World Net has unbundled its SERVICES segment and reported its first-quarter figures reflecting the new structure. In addition, the Group is reporting cash flow and capex by segments for the first time as well as publishing volume figures for the EXPRESS business.
The Group has been making good progress in its focus on organic growth, which is underlined by the fact that DHL managed to outgrow the market in all high-growth regions in the first quarter. In addition, the company's Global Customer Services business, which comprises the Group's around 100 biggest customers, grew 8.9 percent in the period.
MAIL Corporate Division
Revenue in the MAIL division declined by 1.4 percent to 3.9 billion euros in the first quarter, which was mainly due to the working day effect. Total sales per working day exceeded the comparable year-earlier level. The MAIL division reported 9.2 percent lower EBIT of 599 million euros.
The German postal market was fully liberalized at the start of this year. The effects of the complete opening have been limited so far: Deutsche Post has maintained its position with major key account customers and has gained more new customers than it has lost.
The 3.9 percent decline in revenue in the Mail Communication segment can be attributed both to intensified competition and to the increasing use of electronic forms of communication. Quarterly revenue in the Dialogue Marketing segment fell by 2.7 percent despite higher volumes of unaddressed advertising mail. Revenue in the Press Services segment also declined by 3.3 percent as a result of the shrinking advertising business.
The Parcel Germany segment benefited from the growing online retail market: Rising sales volumes among private and business customers boosted revenue by 1.3 percent in the first quarter. The Global Mail and Corporate Information Solutions segments even posted 2.1 percent higher revenue.
EXPRESS Corporate Division
The EXPRESS division posted healthy growth in all regions except for the United States. Revenue in the EXPRESS division increased by 1 percent to 3.4 billion euros in the first three months of the year, including a negative currency effect of 225 million euros as the division generated more than half of its revenue outside the euro zone. Organic growth in local currencies amounted to 6.5 percent, with demand for the Time Definite International and Day Definite Domestic products increasing, in particular. Volumes of those products increased 2.5 percent and 7.4 percent respectively.
EBIT in the EXPRESS division fell by 32 percent to 21 million euros. The two major reasons for this decline were the fewer working days, which in particular had an effect on the European business, and the economic development in the United States.
Revenue in Europe rose by 4.4 percent, driven largely by the Central European region including Poland, Hungary and Romania as well as France and the Benelux countries. Exchange-rate effects caused revenue in the Americas region to decline by 10 percent. In local currency terms, the region recorded organic revenue growth of 2.2 percent. In addition to growing volumes in Latin America, growth in the Day Definite area as well as the international business in the United States contributed to this result.
Revenue in the Asia Pacific region rose 6.3 percent, while the EEMEA region (Eastern Europe, Middle East and Africa) recorded even stronger growth of 13.4 percent. Excluding the currency effects, growth in both regions would have been even faster.
LOGISTICS Corporate Division
The LOGISTICS division improved its operating performance across all businesses in the first quarter, with EBIT growing even faster than revenue. Excluding 59 million euros in non-recurring income from the divestment of Vfw AG in the year-ago quarter and 15 million euros in negative exchange-rate effects in the first quarter of 2008, EBIT increased by a pleasing 23 percent. Reported EBIT reached 173 million euros compared with 201 million euros a year earlier.
Exchange-rate effects totaling 390 million euros also dampened revenue growth in the first quarter. As a result, revenue at the LOGISTICS division was little changed at 6.2 billion euros. In local currency terms, organic revenue grew by 6.6 percent.
In spite of negative currency effects, revenue in the DHL Global Forwarding segment rose by 7.4 percent. Air-freight volumes outgrew the market with a rate of 6.6 percent. Business in Europe, the Middle East and Africa developed particularly favorably. The division also posted above-market growth in the ocean-freight segment, which raised revenue by 10.9 percent.
Negative exchange-rate effects led to a 4.2 percent decline in revenue at the DHL Exel Supply Chain segment. Organic revenue growth at the business reached 3.7 percent. The positive trend of the previous quarter continued, with the segment generating new business worth an annualized 250 million euros. In addition, 90 percent of expiring contracts were renewed.
Revenue in the DHL Freight segment rose slightly by 0.9 percent, with business in the Benelux countries, Eastern Europe and Germany developing particularly well.
In March, the LOGISTICS division was divided into the two operative units: Supply Chain and Corporate Information Solutions headed by Bruce Edwards and Global Forwarding and Freight led by Hermann Ude. The new structure takes into account the growing business volumes and the two different business models and will be reflected in the Group's first-half report.
FINANCIAL SERVICES Corporate Division
The FINANCIAL SERVICES division, which consists largely of Postbank, boosted its quarterly revenue by 11.4 percent to 2.8 billion euros. EBIT before non-recurring items rose by 36 percent to 364 million euros. Reported EBIT dropped by 22 percent to 190 million euros due to the turbulences in the financial markets. Deutsche Postbank reported a 25 percent decline in pretax profit to 166 million euros for the first quarter. Postbank reported its quarterly results separately on May 8.
Corporate Center / Other
The SERVICES segment has been unbundled and the reporting structure adjusted accordingly. The costs of Global Business Services are charged to the operational units and the retail outlets were transferred to the MAIL division at the start of the year. EBIT improved to minus 132 million euros compared with minus 137 million euros a year earlier.
Outlook
Deutsche Post World Net is aware of the uncertainties in the world economic development. Even so, at this point in time, the Group has no reason to change its full-year earnings forecast of around 4.2 billion euros in EBIT before non-recurring effects and around 3.2 billion euros in pretax profit.
The MAIL division projects EBIT of around 1.95 billion euros for 2008. The EXPRESS division is expected to generate EBIT of around 500 million euros, while the LOGISTICS division is scheduled to increase EBIT to around 1.05 billion. The FINANCIAL SERVICES segment projects EBIT of around 1.2 billion euros. A loss of around 550 million euros is forecast for Corporate Center / Other.
The guidance of around 4.7 billion euros in EBIT before non-recurring effects for 2009 has also been reaffirmed.
Itella to team up with IVANAhelsinki for Post Products - May 13, 2008
[Press Release]
Itella Corporation and IVANAhelsinki have concluded a licence agreement giving Itella exclusive rights to use IVANAhelsinki designs in selected Post products and services, such as postcards and packaging materials and supplies. This agreement will enable Itella to develop a novel product family, based on the material licensed by IVANAhelsinki, while IVANAhelsinki will have the opportunity to sell its products through the post office network, at first in the Helsinki General Post Office. Itella made a similar licence agreement with Marimekko in 2007.
Consumers represent an important customer segment to whose changing needs Itella is seeking to respond. Itella is dedicated to providing its customers with opportunities to send greetings and other messages using both conventional and new methods. The product range based on IVANAhelsinki designs has the aim of encouraging Finns to send personal greetings to their nearest and dearest by post.
The personal and inspiring IVANAhelsinki patterns will be used, for instance, in the Post’s packaging materials and supplies as well as electronic consumer products, such as ePostcards and Mobile Postcards. The first prints included in the agreement will make their entry into the Post’s product range in early 2009.
“We are complementing our consumer product range through co-operation with IVANAhelsinki,” says Lars Eklundh, Director of Consumer Sales at Itella. “Itella, with its strong Finnish roots, and the unique design work of IVANAhelsinki, recognised in the international fashion arenas, go well together. We are developing our products and services with high respect for traditions while creating something novel, by teaming up with Finnish designers,” Eklundh continues.
“In logistics, Itella has been a familiar and safe co-operation partner for us for many years. Itella’s open-minded, contemporary approach to combining attractive, visual elements with their services and products was the basic starting point for our collaboration. This co-operation will now realise our aim of bringing beauty to everyday life and festive occasions in a very concrete form, explains Pirjo Suhonen, Producer of IVANAhelsinki.
Canada Post Issues First Corporate Social Responsibility Report - May 13, 2008
[Press Release]
Canada Post today issued its first annual Corporate Social Responsibility Report (CSR). The Report reflects the corporation's economic, social and environmental objectives, strategies, and performance.
"Our future success depends on our ability to operate in an environmentally and socially responsible manner", said Moya Greene, president and CEO of Canada Post. "This report and the action plans that drive it are an important step in inspiring confidence that Canada Post is working to create a sustainable future not only for the corporation, but also for all Canadians."
Robert Waite, Senior vice-president, Corporate Social Responsibility said, "The Corporation's approach to social responsibility is anchored in the belief that our long term economic health is directly linked to the health of our employees, our communities and our environment. With this first CSR Report, Canada Post aims to communicate both its accomplishments and challenges in an open and transparent way. It is designed to initiate a conversation with all employees and stakeholders about our social and environmental responsibility."
Some key achievements in the 2007 CSR report include:
- Recognition in Maclean's magazine as a top 100 employer in Canada;
- A Strategic Council poll found Canada Post "the most trusted federal institution" in Canada;
- According to a Leger Marketing survey Canada Post ranked third among the 150 most-admired businesses in Quebec;
- Since 2002, Canada Post has invested more than 10 million dollars in more than 250 energy-reduction initiatives and has reduced greenhouse gas emissions from its buildings and fleet by 3%. br>
- Canada Post plans to follow LEED" green building standards for all major new buildings and has targeted a 75% lfill waste diversion rate by December 2008
- Employee engagement levels rose by 5 percentage points;
- Canada Post donated 1.4% ore-tax profits to registered charities and not-for-profit organizations;
- Through employee and corporate donations, Canada Post raised more than 2.5 million dollars for the United Way;
Canada Post faced some significant challenges in 2007. There were more than 4,000 accidents that resulted in lost time. Absenteeism is a concern; there were 14.8 lost days per employee compared to an overall national average of 9.7 days. Despite 10 years of labour peace, more than 20,000 grievances were filed in 2007. High fuel prices continue to be a concern for Canada Post and its aging infrastructure requires an investment up to $1.9 million to modernize.
"While we have much to take pride in, we are also taking action in those areas in which we need to improve", said Moya Greene. "To enable us to measure our improvement, we are setting baselines against which we will measure our future progress."
Report
Royal Mail Survey Results - May 12, 2008
[Christine Buckley, Financial Times.]Business customers are deserting Royal Mail and most firms do not find the postal group an efficient organisation to work with, a study by the British Chambers of Commerce (BCC) for The Times has revealed.
The BCC sought the views of nearly 1,000 businesses throughout the country about their use of Royal Mail and their experience of the organisation.
Sixty-eight per cent said that they did not find the postal group to be a “professional, efficient organisation to do business with”; 55 per cent said that Royal Mail was less reliable than it was five years ago and only 8per cent thought that it had improved.
In a striking example of how much electronic communication has hit the use of postal services, nearly 86 per cent of businesses said that they used the internet and e-mail for transactions that they would have put through Royal Mail five years ago.
The BCC survey comes as the National Federation of SubPostmasters (NFSP) gives warning today that 3,000 more post offices may be forced to shut if the Government withdraws post offices' rights to handle benefits and pension payments through the post office card account.
Royal Mail is in the middle of a programme to shut 2,500 post offices in its loss-making network. The poor reaction to Royal Mail from BCC firms comes as the postal group suffers a new crisis of confidence.
Last week an independent review for the Government said that Royal Mail's financial position was so bad that in the future it would not be able to fulfil its legal obligation of providing a flat-rate nationwide postal service.
Royal Mail also gave warning that it would be seeking more money from the Government and that its pension deficit could soon double, leaving it with a £1 billion annual pension bill.
David Frost, the director-general of the BCC, said: “With large numbers of businesses using Royal Mail less often than in previous years, it is clear that a lot has to be done to regain the confidence of the business community. It is also clear that competitors are not making the inroads they would probably have expected, given the dissatisfaction with the service Royal Mail provide. Increasingly businesses are turning to the internet and e-mail for transactions previously carried out through the post.”
A Royal Mail spokesman said: “Royal Mail has made huge progress in terms of efficiency, but we know we have more to do and that's why we have embarked on modernisation of the business - and we have also argued consistently to be allowed to compete fully with our rivals on price.”
Subpostmasters will press the Government today to renew the contract for the post office card account when it comes up for review next year.
Pat McFadden, the Postal Minister, will be told of their fears at the NFSP conference today.
George Thomson, the NFSP general secretary, said: “The post office card account is a crucial lifeline to thousands of subpostmasters already struggling to keep their businesses going. If the Government chooses not to award the contract to the Post Office, up to 25 per cent of those post offices remaining open will be forced to close.”
Austrian Post: Revenue up 6.0 percent - May 16, 2008
Dutch to Postpone Opening Postal Market - May 16, 2008
Funding to Help Royal Mail Deliver Valued Universal Service - May 15, 2008
Increased Revenues and Costs for Norway Post - May 15, 2008
Deutsche Post World Net: First Quarter on Target - May 14, 2008
Itella to team up with IVANAhelsinki for Post Products - May 13, 2008
Canada Post Issues First Corporate Social Responsibility Report - May 13, 2008
