Magyar Posta Aims To Expand Into Other Regional Countries - March 11, 2010
[MTI-Eco News.]State-owned Hungarian postal company Magyar Posta plans to begin offering some of its services in other central and eastern European countries, specifically Romania and Ukraine, by the complete liberalization of Hungary's postal services on January 1, 2013, the business daily Vilaggazdasag reported on Thursday, citing Magyar Posta CEO Ildiko Szuts.
Ms Szuts said that Magyar Posta intends to implement its planned expansion in cooperation with a western European postal service.
The Magyar Posta CEO noted that in 2010 the company will spend HUF 10bn (EUR 37.45) on investments, which will include construction of a second logistics center just northeast of Budapest, establishment of an international exchange hub at Budapest Ferihegy International Airport and renovation of the 98 busiest post offices in Hungary.
Ms Szuts remarked that Magyar Posta intends to compensate for the decline in traditional postal activities with an increase in financial, money-transfer and electronic services.
The Magyar Posta CEO said that the company already derives 75pc of its revenue from competitive market-operations.
Magyar Posta generated revenue of HUF 193.76bn in 2009, down 1.88pc from HUF 197.49bn in 2008, and after-tax profit of HUF 6.53bn last year, down from 16.6pc from HUF 7.83bn from the previous year.
Liberalise Postal Service And Reform E.I., OECD Tells Canada - March 11, 2010
[Canoe.]Canada must enhance competitiveness, especially in telecoms and postal services, as well as reform E.I. to make it a post-recession global economy, the Organisation for Economic Development and Co-operation said in a report released Wednesday.
In its 30-nation report entitled Going for Growth, the OECD said economies in general must replace crisis management tactics with new-found competitiveness and taxation measures.
Governments, including Canada’s, have already started to wind down stimulus measures turning their attention instead to debt repayment.
The report said high unemployment will persist and that investments will be riskier as the cost of capital rises. The jobless rate in Canada hovers around the 8% mark and at around 10% in the U.S.
In its latest Throne Speech, the federal Conservatives signalled the floodgates to foreign ownership in the telecom market could soon be opened.
Canada’s postal services also need to liberalised, it said. This can be done by “eliminating legislated monopoly protections and privatising Canada Post.”
Italy's Post Office Interested In Fixed-Line Network - March 10, 2010
[Gilles Castonguay, Dow Jones Newswires.]Poste Italiane says it could play a role if separation of network were to take place.
Poste Italiane could be interested in playing a role in the potential separation of the fixed-line network of Telecom Italia SpA, the head of the country's postal service says Wednesday.
"The telecommunications operator has to manage the entire system, including the network," Chief Executive Massimo Sarmi says in an interview in Italian business daily Il Sole 24 Ore.
"Having said this, should such an eventuality [separation] were to present itself, we could be interested in having a role, given how this would enable us to contribute to the development of the basic infrastructure," he added.
Deutsche Post Expects Earnings To Rise This Year - March 10, 2010
[Hilde Arends, Dow Jones Newswires.]Mail and logistics company Deutsche Post AG Tuesday said it expects 2010 earnings to increase as a recovery in the hard-hit sector ensues, even as it reported a surprise fourth quarter net loss that missed analysts' expectations.
The company said it expects "a moderate recovery in global transport volumes" in 2010 which will result in adjusted earnings before interest and tax of between EUR1.6 billion and EUR1.9 billion and an improvement in reported EBIT and net profit on the year. It expects the "positive earnings trend to continue in 2011."
Like rivals, including TNT NV (TNT.AE) of the Netherlands and U.S. companies FedEx Corp. (FDX) and United Parcel Service Inc. (UPS), Deutsche Post has been hit hard by the credit crunch and economic downturn that hit global trade, including the sending of parcels and packages by express delivery. All four companies, which have focused on cutting costs during the downturn, have now predicted better volumes in 2010, and Deutsche Post and UPS are predicting this will boost earnings.
Still, BHF Bank analyst Nils Machemehl said Deutsche Post's forecasts were below market and the bank's own expectations, and at 0829 GMT, the shares were trading down 1.6% at EUR12.60, underperforming a flat DAX index. The stock has lost about 8% of its value since Jan. 1, underperforming the DAX, which has shed 3% of its in the same period.
The Bonn, Germany-based company made a fourth-quarter net loss of EUR283 million because of high restructuring costs, charges related to the Arcandor AG (ARO.XE) insolvency and loss-making contracts. That fell significantly short of a EUR220 million average net profit forecast in a Dow Jones Newswires survey of 10 analysts. The charges for loss-making contracts and the Arcandor insolvency--Deutsche Post handled part of the German retailer's mail and parcels--was EUR344 million.
It made a net profit of EUR644 million for the whole of 2009, compared with a net loss of EUR1.69 billion in 2008, after achieving cost savings of EUR1.1 billion, above its EUR1 billion target.
Its closely watched EBIT, adjusted for restructuring costs, charges related to the Arcandor insolvency and loss-making contracts, fell 18% in the fourth quarter to EUR526 million, while the EUR136 million reported EBIT loss narrowed from a loss of EUR2.82 billion a year ago. The company pointed to tight cost-control and lower restructuring costs and the planned reduction of losses from the U.S. Express division.
Sales for the October-to-December period fell 12% to EUR12.39 billion, reflecting a steep drop in shipping demand and lower transport rates across the globe due to the weaker economy.
"We have successfully managed the repercussions of the economic crisis and exceeded our targets for 2009," Chief Executive Officer Frank Appel said in a statement.
Along with its financial results, Deutsche Post introduced its new long-term financial strategy that focuses on its credit rating. It aims to retain its BBB+ credit rating from Standard & Poor's and its Baa1 from Moody's in the long-term. The specific long-term dividend target is to pay out between 40% and 60% of its net profit to shareholders, it said.
"This long-term oriented dividend policy with its focus on sustainability is an important message to the capital market, showcasing our efforts to further increase our attractiveness to investors," said Chief Financial Officer Larry Rosen.
The former German monopoly proposed a dividend of EUR0.60 per share for 2009, flat compared with 2008.
Reacting to a dramatic downturn in the shipping industry, Deutsche Post in May stepped up its wide-ranging restructuring program to cut costs in an effort to adjust capacity to demand. Measures included extending working hours and postponing wage increases as well as scrapping organization levels
Rival Becomes Part Of The Package For Royal Mail With New Agreement - March 10, 2010
[Business Times.]Royal Mail has granted a licence to UK Mail to handle packets up to 5kg in weight — the sort of goods mailed by the likes of Amazon or department stores such as John Lewis.
It is reckoned that Royal Mail has lost up to 40 per cent of this market to private mail order operators such as the Home Delivery Network, owned by the Barclay brothers, which deliver directly to homes.
The new Royal Mail arrangement, which will begin on April 6, means that UK Mail will handle the bulk mailing of such items — typically in excess of more than 1,000 items a night — for customers, oversee the sorting and then hand them over to Royal Mail postmen for the “final mile” delivery. Even including its fees to Royal Mail, UK Mail is confident that it can undercut the opposition.
Guy Buswell, chief executive of UK Mail, said: “It is good business for us and good business for Royal Mail getting post back into its network.”
The market for packets up to 5kg is thought to be worth £1.5 billion a year and is expanding as retailers turn increasingly to mail order and the internet. Mr Buswell said: “It represents the next logical step for UK Mail, given the success our mail business has enjoyed since its start-up at the liberalisation of the postal markets six years ago.”
The news comes as the spectre of further industrial action at Royal Mail after last November’s damaging one-day walkouts was lifted after the Communication Workers Union signed a peace deal in return for a 6.9 per cent pay rise spread over three years.
Separately, TNT, which like UK Mail has taken significant market share in bulk mailings of bank and utility statements, will launch a pilot project in Scotland aimed at medium-sized businesses.
Royal Mail Welcomes Agreement with CWU - March 9, 2010
[press release.]Royal Mail today welcomed the agreement reached with the Communication Workers Union on business transformation which paves the way for a strong and successful future for Royal Mail and its people and helps secure the Universal Service.
The company said it is extremely grateful to Roger Poole for his help and support in overseeing discussions with the CWU over the last three months and also thanked the union for the constructive nature of the talks.
The Agreement - Business Transformation 2010 and Beyond - means Royal Mail Letters can continue with its much-needed £2 billion modernisation, including the introduction of new automated machinery and delivery equipment and changes in the way our people work. It also ensures a fair reward for our people that reflects the vital part they play in the transformation of Royal Mail.
The three-year Agreement has the strong and unanimous backing of Royal Mail, the CWU leadership and Roger Poole. The union plans to ballot its members on the Agreement during the next few weeks.
Under the terms of the agreement basic pay and allowances for Royal Mail postmen and women will increase by 6.9 per cent over the three years from April 1st 2010. Over the same period the working week will be reduced by one hour to 39 hours.
In addition to these changes in basic remuneration Royal Mail will pay lump sums totalling £1,000 per full-time individual - linked to the introduction and delivery of the planned changes - to further reward them for their part in the modernisation of the business and to reflect the scale of the transformation Royal Mail needs to implement over the coming years. The payments will be made pro-rata to part-time employees.
Adam Crozier, Royal Mail Group Chief Executive, said: "This agreement is good for the business as it allows Royal Mail to get on with its modernisation, it’s a good and fair deal for our people, and it’s a good deal for our customers as it ensures stability over the next three years. It is a real credit to all those involved - both in the company and the union - and I’m grateful for all their hard work. I’m also grateful to Roger Poole for his help and support over the last few months."
Mark Higson, Managing Director of Royal Mail Letters, said: "This three-year agreement is an important achievement for the Letters business and its people and one which breaks new ground in our relationship with the CWU. I’d like to thank the teams in Royal Mail and the union who made it happen, as well as Roger Poole for his input and support."
"The Agreement is crucially important in allowing Royal Mail to compete successfully in the highly competitive communications market and to help counter the effect of the ongoing decline in traditional mail volumes. It enables the business to rapidly complete the introduction of the latest generation sorting technology and new delivery methods to improve efficiency. It also enables us to protect as many full time jobs as possible while at the same time giving our people the best possible tools for the job."
CWU: Deal Brings Pay And Job Security For Postal Workers - March 9, 2010
[Press Release.]The Communication Workers Union has reached a deal with Royal Mail which brings a pay rise in excess of 6.9 per cent over the next three years, reduces the working week and brings greater job security to postal workers while delivering business transformation. In addition, postal workers will receive lump sums of around 2,500 pounds and weekly basic pay supplements through consolidation of existing money worth between 2.3 and 5.9 per cent.
Dave Ward, CWU deputy general secretary, said: "It's been a long time coming, but this deal delivers on the major issues which postal workers have fought for. There's a balance of pay and operational changes which will help offset job losses and ensure our members are fairly rewarded for change.
"We have always said that we couldn't face away from change. The agreement recognises the reality of automation, competition and the financial challenges facing the company, but it does so in a way that puts the interests of CWU members at its heart.
• Both sides have committed to improving industrial relations and ensuring a more positive working relationship in the best interests of everyone at Royal Mail.
"We'd like to thank Roger Poole, ACAS and Brendan Barber for their efforts over the past months which have helped to secure this successful outcome."
"There has been a lot of talk about the future of the company in relation to competition and the pension deficit. Now that we have reached this agreement it is clear that business transformation can be delivered. As a result we're determined to address the pensions issue and establish whether the government will now finally accept its responsibilities, as the owner of the company, to find an acceptable solution."
The agreement is subject to a ballot of CWU membership for acceptance.
The agreement is over 80 pages long and covers lots of industrial detail for different areas of Royal Mail. The key areas are:
• Pay:increases to basic pay of over 6.9% over three years broken down as:
- 400 pounds for each full time employee (and pro-rata) on ratification of the agreement
- 1,000 per full time employee (and pro-rata) linked to delivery of planned changes in each workplace.
• Payments of bonus payments at their value in 2011 and 2012 - these should increase in value as transformation improves the position of the business.
• Pay: opportunities to turn allowances (and in delivery door-to-door payments) into regular additions to basic pay starting with an immediate payment of 20.60 pounds per week for delivery staff (equivalent to 5.9% pay increase) and 8 ponuds per week for mail centre staff (equivalent to 2.3%).
" Shorter working week - reduced by one hour to 39 hours gross, 35 hours 40minutes net for the vast majority of postal workers
• Job security - agreement to maintain at least 75% of workers as full-time with no forced move for any worker from full time to part time or vice versa
" Job security - improved terms are available for people moving to alternative offices as a result of the changes and a commitment to continue making changes through voluntary means.
• Improved maternity pay from 18 to 26 weeks and paternity pay from one to two weeks.
• Saturday as a normal working day for deliveries, but with opportunity for people to have more Saturdays off if they want them. A joint innovative approach to duty patterns to meet business needs and employee aspirations.
Deutsche Post DHL Exceeds Forecasts For 2009 And Targets Sustainable Earnings Improvement - March 9, 2010
[Press Release.]
Highlights:
• Underlying EBIT of EUR1.47 billion surpasses the revised guidance of at least EUR1.35 billion
• Consolidated net profit of EUR644 million considerably higher than 2008
Group presents the cornerstones of its new financial strategy - proposed dividend for 2009 unchanged at EUR0.60
• Group forecasts higher operating profit for 2010 and 2011
• CEO Frank Appel: "We have successfully managed the crisis."
• Hermann Ude and Bruce Edwards appointed to Board of Management for a further five-year term
Deutsche Post DHL generated underlying EBIT of EUR1.47 billion in the full year 2009, exceeding its November forecast of at least EUR1.35 billion. One of the key contributors to this positive development was the introduction of the 'IndEx' program at the end of 2008: It generated cost savings of EUR1.1 billion - one year ahead of the original schedule and EUR100 million ahead of the last forecast for the end of 2009. These efficiency increases also significantly helped Deutsche Post DHL to achieve its consolidated net profit target. Following a loss in 2008, the full-year consolidated net profit rose to EUR644 million in 2009. Deutsche Post DHL's 2009 capital expenditure of EUR1.17 billion also fully met expectations.
"We have successfully managed the repercussions of the economic crisis and exceeded our targets for 2009," said Frank Appel, Chief Executive Officer of Deutsche Post DHL. "Thanks to strict cost management and the consistent implementation of our Strategy 2015, we are now able to benefit overproportionally from the accelerating global economic recovery."
Outlook: Sustainable improvement of profitability
For this year, the Group foresees a moderate recovery in global transport volumes. Against this backdrop, Deutsche Post DHL expects underlying EBIT to total between EUR1.6 billion and EUR1.9 billion in 2010. In a reflection of the Group's two-pillar strategy announced last year, the DHL Divisions and the MAIL Division are to make roughly equal contributions to earnings for the first time: While the MAIL Division is expected to generate earnings between EUR1.0 billion and EUR1.2 billion, the contribution by DHL is expected to total between EUR1.0 billion and EUR1.1 billion. Corporate Center expenditures are forecast at around EUR400 million.
As a result of an anticipated significant decline in non-recurring items Deutsche Post DHL's reported EBIT is expected to be considerably above last year's level. Consolidated net profit should further improve compared to 2009. "We are optimistic about the future, even though many uncertainties remain about the strength of the economic recovery as well as about political and regulatory issues," Appel added. "We will move ahead as planned this year and sustainably improve the Group's profitability with innovative products, high service levels and the ongoing development of customer-oriented solutions." The Group expects the positive earnings trend to continue in 2011.
Business year 2009: Increase in earnings despite global economic crisis
CFO Larry Rosen: "This long-term oriented dividend policy with its focus on sustainability is an important message to the capital market".
At Deutsche Post DHL, the global economic crisis caused a significant decrease in transport volumes last year triggering a 15.2 percent drop in revenues to EUR46.2 billion. However, successful cost cutting across all businesses, substantially lower restructuring expenses as well as the planned reduction of losses from the U.S. EXPRESS business helped mitigate the impact on the Group's profitability. Reported EBIT of EUR231 million for 2009 thus substantially exceeded the EUR966 million loss incurred in 2008.
The 2009 result includes losses from the Arcandor insolvency and costs related to onerous contracts amounting to a total of EUR344 million. In addition to the operational improvements, positive effects from the Postbank sale as well as lower taxes led to an increase of the consolidated net profit to EUR644 million compared to a loss of EUR1.7 billion in 2008. As a result, earnings per share climbed from EUR-1.40 in the previous year to EUR0.53 in 2009.
Based on last year's positive results and the Group's confidence in the future, the Board of Management and the Supervisory Board will propose a dividend of EUR0.60 to the Annual General Meeting on April 28, 2010, maintaining last year's level. In addition, Deutsche Post DHL's Supervisory Board in its meeting yesterday appointed Hermann Ude and Bruce Edwards to the Board of Management for another five years starting 2011. Ude (48) will continue to be in charge of the Corporate Division "Global Forwarding, Freight" while Bruce Edwards (54) will remain in charge of the Corporate Division "Supply Chain". Both were first appointed to the Board of Management in March 2008.
Financial strategy: Focus on stability and flexibility
As in the past, ensuring financial stability and flexibility will remain a top priority for Deutsche Post DHL. As an appropriate balance sheet structure is paramount to achieving this objective, the Group's new financial strategy will predominantly focus on the firm's credit rating: Deutsche Post DHL currently holds a BBB+ rating from Standard & Poor's and a Baa1 from Moody's. The company seeks to retain these rating levels long-term. The financial strategy also includes a specific target for the long-term dividend policy: going forward, the firm plans to distribute 40 percent to 60 percent of its consolidated net profit to shareholders.
"This long-term oriented dividend policy with its focus on sustainability is an important message to the capital market, showcasing our efforts to further increase our attractiveness to investors," explained Deutsche Post DHL Chief Financial Officer Larry Rosen. "At the same time, our financial strategy will ensure that we possess the necessary financial strength and flexibility to further grow our operations and thus successfully implement our Strategy 2015."
Fourth quarter 2009: Negative revenue trend halted
During the fourth quarter, the Group was able to halt the negative revenue trend created by weakened demand and reduced transport rates. The Group increased quarter-on-quarter revenues for the second time in a row. Year-on-year, though, revenues fell by 11.6 percent to EUR12.4 billion. At EUR-283 million, the consolidated net profit was considerably better than the previous year's level. A loss of more than EUR3 billion was recorded in the final quarter of 2008. At the same time, earnings per share rose from EUR-2.64 to EUR-0.24. The loss of the final quarter in 2009 is wholly attributable to high restructuring costs, expenditures related to the Arcandor insolvency and costs related to onerous contracts.
MAIL Division: Market share maintained
During the past year, the MAIL Division not only was affected by the global economic crisis, but was also confronted with the increasing substitution of physical mail by electronic media. As a result, revenues were 4.9 percent below the previous year's level, totalling EUR13.7 billion. Thanks to its intense customer focus and its high-quality service, Deutsche Post maintained its share of this shrinking market at 87.2 percent. In addition, comprehensive cost-cutting measures cushioned the impact from higher wages and losses related to the Arcandor insolvency on the division's profitability. For fiscal year 2009, underlying EBIT fell by 14.0 percent to EUR1.4 billion. In the fourth quarter, though, it rose by 7.4 percent despite the continuing decline in revenues.
EXPRESS Division: Profitability improved
Lower volumes also impacted the EXPRESS Division. During the second half of the year, however, trade volumes began to rise sequentially. The fourth quarter saw a slight recovery of the Time Definite Domestic and Day Definite Domestic product groups outside the U.S. Nonetheless, revenues for fiscal year 2009 fell by 24.4 percent year-on-year to EUR10.3 billion.
The main causes of this decrease were the Group's exit from the domestic express business in the U.S. along with exchange rate fluctuations and lower revenues from fuel surcharges. Outside the U.S., revenues adjusted for acquisitions and exchange rate fluctuations were only 11.8 percent below the previous year's level. The smallest drop in revenues was reported by the Asia Pacific region at 6.0 percent to EUR2.6 billion.
In Europe and the EEMEA region (Eastern Europe, the Middle East and Africa), revenues fell by 15.5 percent and 10.4 percent, respectively, to EUR5.6 billion and EUR1.1 billion. In the Americas region, which includes Latin America and the Caribbean as well as Canada and the U.S., revenues decreased by 58.6 percent. Excluding the U.S., revenues in the region fell by 14.8 percent in the past year.
Unlike the revenue trend, the division's profitability climbed considerably in the past year. Thanks to strict cost management, underlying EBIT was 45.1 percent above the previous year's level at EUR238 million. A key reason for this positive development was the significant reduction in losses previously incurred in the U.S. The target of reducing the annualized loss to less than U.S.$400 million by the fourth quarter has been achieved. In the other regions, underlying EBIT totalled EUR692 million, compared to EUR1.1 billion in the previous year.
GLOBAL FORWARDING, FREIGHT Division: Positive trend
The decline in world trade levels resulted in double-digit decreases in transport volumes in the air and ocean freight markets. Nonetheless, the GLOBAL FORWARDING, FREIGHT Division was able to sequentially increase volumes each quarter during the year. Marketing and sales efforts were increasingly successful, particularly in the areas of life sciences and consumer goods. Due to the initial economic recovery, air freight volumes rose year-on-year for the first time in six quarters during the fourth quarter. In fiscal year 2009, DHL was able to maintain or even expand its market share in the international air and ocean freight markets and in European road transport.
However, as a result of the general decline in freight volumes, lower fuel surcharges and reduced freight rates, revenues in this division were 23.3 percent lower year-on-year at EUR10.9 billion. Thanks to systematic cost management including noteworthy productivity gains, the effect on the division's profitability could be cushioned. The underlying EBIT decreased from EUR403 million in 2008 to EUR272 million.
SUPPLY CHAIN Division: Market position further strengthened
Despite the difficult market conditions, the contract logistics business of Deutsche Post DHL was able to further expand its market position in 2009. Two key reasons for this positive development were new business contracts worth EUR1.1 billion and a continuing high contract-renewal rate of 90 percent. Nonetheless, revenues fell by 8.8 percent to EUR12.5 billion. This decrease resulted from substantial negative currency translation effects and the company's own decision to decline renewal of underperforming contracts or to terminate them prematurely.
With the help of cost-cutting measures, the impact of the economic crisis on the division's profitability could be held in check. While underlying EBIT was indeed EUR-121 million, this loss was exclusively related to charges totalling EUR213 million that were connected with the insolvency of Arcandor. Excluding this effect and additional one-time costs for onerous contracts, underlying EBIT in this division would have been near the previous year's total of EUR196 million.
Deutsche Post CEO: Tax Break Loss Unlawful - March 8, 2010
[Reuters.]A German parliament move to abolish tax break privileges for Deutsche Post is unlawful, the company's chief executive said in an interview.
"We see the proposed legislation as being in contradiction with applicable European law," Frank Appel told Focus magazine.
Germany's lower house of parliament on Friday voted to end the exemption to Value Added Tax at Europe's biggest mail and express delivery company, as demanded by the European Union.
Other companies offering postal services will also enjoy tax exemptions starting in July if they provide at least some general service such as continuous and comprehensive package delivery.
At the same time, many Deutsche Post services that up to now enjoyed favourable tax rates will have to apply full sales tax.
Germany's upper house of parliament, the Bundesrat, has yet to approve the legislation.
In the magazine interview, Appel criticised the idea that comprehensive delivery services for retail and business customers would be taxed differently, and argued that under EU law these should generally be exempted from value added tax.
Insurance Union Issues Petition Against Japan Gov't Postal Reform - March 8, 2010
[Kyodo.]A federation of labor unions of Japanese life insurance companies called on the government Monday to make sure its review on the nation's postal privatization process does not allow the insurance business of state-owned Japan Post Holdings Co. to become too big.
The National Federation of Life Insurance Worker's Unions issued a petition against the postal reform bill the government has been working on as the state is planning to raise the 13 million yen upper limit on postal insurance payments through legal changes.
"It is sure to deal a heavy blow to the private sector," says the petition, which has 864,260 signatures, mainly from employees of life insurance companies.
With the petition, the federation plans to request a meeting with Financial Services Minister Shizuka Kamei, who is also in charge of the nation's postal reforms.
Japan's postal privatization, the symbol of former Prime Minister Junichiro Koizumi's structural reforms, was put on hold after the Democratic Party of Japan-led government took power last September.
The current government has been working to include the increase in the upper limit on postal insurance payments into the postal reform bill.
Magyar Posta Aims To Expand Into Other Regional Countries - March 11, 2010
Liberalise Postal Service And Reform E.I., OECD Tells Canada - March 11, 2010
Italy's Post Office Interested In Fixed-Line Network - March 10, 2010
Deutsche Post Expects Earnings To Rise This Year - March 10, 2010
Rival Becomes Part Of The Package For Royal Mail With New Agreement - March 10, 2010
Insurance Union Issues Petition Against Japan Gov't Postal Reform - March 8, 2010
