Deutsche Post World Net today announced its annual results for 2007recording an operating profit (EBIT) of EUR 3.8 billion before non-recurring effects for the 2007business year recording which equals an increase of 8 % compared to the previous year.
The underlying EBIT was in line with the Group’s business expectationsand guidance. The reported EBIT was 17 % lower at EUR 3.2 billion following a non-cash assetwritedown in the EXPRESS Americas division.
The Group revenues increased 4.9 % to 63.5 billion euros in 2007, DPWNfurther reported.
“The 2007 results again demonstrate the strength of the Group’splatform. We want to continue to build on this basis by enforcing an even stronger customer focusas well as a closer collaboration among our individual businesses and employees on all levels,”said Chairman and Chief Executive Officer Frank Appel at a press conference in Bonn.
Appel reiterated the Group’s financial target for 2008 of around 4.2billion euros in underlying EBIT and confirmed the Board of Management will propose to raise the2007 dividend by 20 percent to 90 euro cents. “Our focus remains on organic growth and improvingcash generation and cash payout to shareholders,” Appel added.
Net income after minorities declined 28 % to EUR 1.4 billion in 2007,mainly due to the writedown on fixed assets in the Express US division in the fourth quarter. As aresult, earnings per share were at EUR 1.15 EUR compared to EUR1.60 in 2006. In the fourth quarter,net income declined to 255 million euros from 649 million a year earlier.
Deutsche Post World Net further reported a good progress on its“Roadmap to Value” capital markets program, which was introduced in November 2007.
“The program is already delivering tangible results and we remainheavily focused on its execution,” said DPWN Chief Financial Officer John Allan.
To help meet its goal of raising profitability, the Group hasidentified more than 100 initiatives, which will underpin EBIT growth by 1 billion euros through2009.
In addition, Deutsche Post World Net in January signed a letter ofintent to transfer parts of its global IT functions to HP, leading to expected savings of at least1 billion euros over the next seven years. Real estate disposals agreed on the amount of EUR 350million since the program was announced.
In the MAIL division, the Group increased its revenues by 1.3 %toEUR15.5 billion from EUR 15.3 billion, driven by growth in Global Mail and Corporate InformationSolutions (Williams Lea) as well as Dialogue Marketing. Growth in those business units acceleratedin the fourth quarter, with an ongoing shift toward higher-value solutions. Full-year revenue inMail Communication declined 4.3 % to EUR 6.1 billion as the trend toward electronic communicationcontinued.
With an EBIT of EUR 2 billion, the MAIL division reached its full-yearearnings target, helped by increased productivity and higher cost flexibility. The 4.3 %declinefrom the year-ago level of EUR 2.1 billion was mainly attributable to the lack of 1.8 working daysin 2007 and price reductions in Parcel Germany.
Following the full liberalization of the German mail market on 1January 2008, the MAIL division was able to maintain its position with major key account clients.With its high quality standards, the division was able to win back more than 30 large customers inthe month of December 2007 alone.
The EXPRESS division increased its revenue by 3.1% to EUR 13.9 billionlast year. Excluding negative currency effects, the division achieved organic growth of 6.4 %. Thedivision reported a 46 % increase to 420 million euros in EBIT before non-recurring effects for2007, excluding the 594 million-euro writedown on fixed assets in the EXPRESS Americas division inthe fourth quarter. The reported EBIT loss amounted to EUR 174 million.
The LOGISTICS revenue rose by 5.5 % to EUR 25.7 billion in 2007, afigure all three business units contributed to with sustained organic growth.
At the DHL Global Forwarding business unit, revenue gained 1.5 % to EUR9.4 billion last year. The strong volume growth at DHL Global Forwarding was countered by lowerfreight rates in the division’s air freight activities.
At DHL Exel Supply Chain, revenue gained 9.2 % to EUR 13.1 billion,boosted by the NHS contract as well as higher operational revenue in all regions. The unitgenerated new business of around EUR 1 billion in annualized revenue last year.
At DHL Freight, revenue grew faster than the market, with an organicgrowth rate of 6.2 %. Reported revenue was at EUR 3.6 billion compared with EUR 3.7 billion a yearearlier, mainly because the 2006 revenue included sales between the Group’s own businesses.
Underlying EBIT at the LOGISTICS division gained 20 % to EUR 898million from EUR 751 million. Reported EBIT rose 27 % to 957 million euros, buoyed by the sale ofVfw AG in the first quarter as well as real-estate sales in the fourth quarter. The divisionexpects to achieve its synergy target of at least EUR 220 million in 2008.
As announced on March 4, the corporate division LOGISTICS will beseparated into two operating divisions with immediate effect: One division comprises the businessunits Supply Chain and Corporate Information Solutions and will be headed by Bruce Edwards. Theother division, to be headed by Hermann Ude, will consist of the Freight and Global Forwardingbusiness units. These changes in the organizational structure at this point in time won’t have animpact on the financial reporting.
The FINANCIAL SERVICES division, which consists primarily of DeutschePostbank, reported a 8.7 %gain in revenue to EUR 10.4 billion. The division raised reported EBIT by7.2 % to EUR 1.1 billion. Deutsche Postbank succeeded in taking away market share from competitorsand won 1 million new customers in 2007.
The SERVICES division reported a 7.1 % increase in revenue to 2.4billion euros in 2007. The EBIT loss totalled 660 million euros compared with EUR 604 million in2006, excluding non-recurring effects.
For the current year, Deutsche Post World Net expects 2008 EBITexcluding non-recurring effects of around EUR 4.2 billion. In its strive to increase transparency,the Group also gave for the first time a forecast for pretax profit: For 2008, Deutsche Post WorldNet expects profit before taxes of around EUR 3.2 billion.
The MAIL division is expected to reach EBIT of around EUR 1.95 billionthis year. The EXPRESS division is targeting EBIT of around EUR 500 million, while EBIT at theLOGISTICS division is likely to reach around EUR 1.05 billion in 2008. The FINANCIAL SERVICESdivision expects EBIT of around EUR 1.2 billion. The company also reiterated its EBIT guidance for2009.
