Deutsche Post World Net (DPWN) today reported that it has met its 2008 profit target thanks tostrict cost management and cash conservation and despite downturns in DHL’s worldwide express and
freight volumes in the fourth quarter.The group’s full-year underlying EBIT, or earnings before interest and tax excludingnon-recurring effects, amounted to just above the targeted €2.4 billion. Reported EBIT wassignificantly better than minus €1 billion, including the already communicated non-recurringnegative effects tied to the restructuring of DHL US Express, one-off charges in other businessesas well as writedowns on goodwill and intangible assets within the Corporate Division SupplyChain/Corporate Information Solutions. Those negative effects were countered by the repayment fromthe German government following successful EU state aid proceedings.
“We have taken vigorous action to minimise costs and conserve cash through our Roadmap toValue initiatives during the past year,” said CFO John Allan. “Those measures enabled us to deliveron our profit expectations, despite the weakening economic climate.”
As expected, fourth-quarter trading volumes in most business units continued to soften in ayear-on-year comparison, DPWN stated. In Germany, mail volumes in the fourth quarter continued thestable development experienced in the first three quarters of the year, however.
Express volumes outside the USA turned negative in the fourth quarter, with only the volumesin the region Eastern Europe, Middle East and Africa (EEMEA) still showing a mid-single digitpercentage increase. Air and ocean freight volumes weakened, with a double-digit decline ratereflecting the slowing of the global economies. Fourth-quarter revenues in the Supply Chain / CISdivision also developed in line with the rate seen in the first nine months of the year.
The restructuring of DHL US Express with the aim of exiting domestic express services isprogressing according to plan, DPWN pointed out. Domestic revenue is eroding somewhat faster thananticipated, which allowed the group to accelerate cost reductions. DPWN will give a more detailedupdate on the progress when reporting its full-year 2008 accounts scheduled for Feb. 26, 2009. DHLwill officially end its US domestic express services on January 30.
Year-end net debt, helped by asset disposals including around €700 million received from LoneStar in December, was approximately €2.4 billion in comparison with €2.9 billion at the end of2007. The cash position stood at around €1.4 billion on Dec. 31, following the successful disposalof assets. Since then, the cash position has further improved with the receipt of €3.1 billion fromDeutsche Bank for a stake in Deutsche Postbank as part of the improved transaction structureannounced last week. Reported cash flow from operating activities improved significantly to above€3 billion, supported by a marked improvement in working capital. With €1.7 billion, capitalexpenditure (Capex) was 16% below the previous year’s level.
Deutsche Post World Net said it does not expect to be able to issue a guidance for 2009before the end of the first quarter. However, it expects business conditions to continue to betough in 2009 due to the impact of the economic downturn on many of its customers. “Fortunately ourcustomer base is highly diversified in terms of both geography and industrial sector,” CFO Allansaid. “We continue to focus on further cost reduction and cash generation and believe that DPWN iswell placed to trade through any further downturn relatively well.”
* Meanwhile, British electrical goods retail group DSG announced today that Allan, who willretire as DPWN CFO in June, will join its board of directors and then take up the position ofchairman in September. The group, formerly known as Dixons, owns well-known chains such as Currysand PC World.
