Consolidation of new acquisitions and continuing international growth helped Austrian Post tocompensate for lost parcel customers and increase revenues and profits in the first half of 2008.
The Austrian postal and logistics group announced today it increased group revenue by 7.3% to€1,198.8 million in the first half-year, with Q2 revenues up 8.8% at €588.9 million. Operatingprofits (Ebit) dropped 3.6% to €81.9 million in the first six months due to provisions for theconsumer parcels restructuring in Austria but improved by 7.4% to €32.1 million over the April-Juneperiod. H1 net profit increased by 3.4% to €70.1 million, while Q2 net profits rose 12.4%.
The first-half revenue growth was driven not only by the initial consolidation ofnewly-acquired subsidiaries but also by organic growth, and the drop in parcel revenues from twolarge customers was more than compensated for, Austrian Post said in a statement.
The Parcel & Logistics Division, which accounts for about 32% of revenues, increased H1revenue by 7.1% to €382.5 million, while Q2 revenue rose 9.8% to €191.3 million. In the B2B sector,generating 84% of divisional sales, growth was driven by the new 24-hour delivery premium parcelservice for business and private customers in Austria and newly-acquired subsidiaries (Road Parcel,Merland, City Express, DDS, VOP). There was moderate growth of specialised logistics in WesternEurope, the core business of German express subsidiary trans-o-flex.
As expected, revenue decreased in the standard parcels (B2C, C2C) segment in Austria, whichcomprises 16% of total division sales, due to the market entry of Germany’s Hermes Logistics. Theredimensioning of parcel logistics initiated at the end of 2007 to increase the profitability ofparcels services is proceeding as planned, Austrian Post said.
In the first half of 2008, the division’s earnings before interest and tax (EBIT) dropped by52.3% to €7.1 million, largely due to the lost large parcel customers in Austria. Q2 Ebit was down54.7% at €2.4 million. The division is expected to end 2008 with an Ebit margin of 2% – 3%.
In the first half of 2008, external sales of the Mail Division climbed by 8.6% to €720.5million. This improvement is chiefly related to the initial consolidation of the Austrian Postsubsidiary meiller direct, which was acquired in July 2007, as well as operational revenue growth.In the second quarter, growth in external sales amounted to 9%, largely compensating for thenegative volume effect in the first quarter of 2008 (one working day less than in Q1 2007). Thedivision’s EBIT in the first half of 2008 was up 1.7% to €135.7 million, and up by 4.4% to €61.6million in Q2.
All in all, Austrian Post said it expects a slight rise in total revenue for the 2008financial year. This improvement includes the integration of the newly-acquired subsidiaries. Thisforecast is based on the assumption of a largely stable development in letter mail and direct mailvolumes, an increase in Austrian Post’s international parcels business, as well as lower volume inthe company’s Austrian parcels business due to the loss of two major mail order customers.
Despite these adverse effects on the parcels segment in Austria, Austrian Post expectsearnings before interest and tax (EBIT) in 2008 to be just slightly below the level achieved in2007, and then continually rise in subsequent years. Accordingly, the EBIT margin will be slightlybelow 7% in 2008, and then improve once again to 7%-8% in the following years.
