Press release BoxID: 158829 (Deutsche Post World Net)
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Deutsche Post World Net 2007 Underlying EBIT at 3.8 billion euros

(PresseBox) (Bonn, ) .
- 2007 Underlying EBIT rises 8 percent; reported EBIT 17 percent lower at 3.2 billion euros on asset writedown in Americas EXPRESS
- Full-year revenue up 4.9 percent at 63.5 billion euros
- Group confirms outlook of around 4.2 billion euros in Underlying EBIT for 2008

Deutsche Post World Net, the world s leading provider of logistics services, today reported earnings before interest and tax (EBIT) of 3.8 billion euros before non-recurring effects for the 2007 business year, an increase of 8 percent compared with the year-earlier level. Underlying EBIT was in line with the Group s business expectations and guidance. Reported EBIT was 17 percent lower at 3.2 billion euros following a noncash asset writedown in the EXPRESS Americas division. Revenue increased 4.9 percent to 63.5 billion euros in 2007.

"The 2007 results again demonstrate the strength of the Group s platform. We want to continue to build on this basis by enforcing an even stronger customer focus as 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 4.2 billion euros in underlying EBIT and confirmed the Board of Management will propose to raise the 2007 dividend by 20 percent to 90 euro cents. "Our focus remains on organic growth and improving cash generation and cash payout to shareholders," Appel said.

Net income and cash flow

Net income after minorities declined 28 percent to 1.4 billion euros in 2007, mainly due to the writedown on fixed assets in the EXPRESS Americas division in the fourth quarter. As a result, earnings per share were at 1.15 euros compared with 1.60 euros. In the fourth quarter, net income declined to 255 million euros from 649 million a year earlier. Fourthquarter earnings per share totaled 21 cents, down from 54 cents. Revenue increased by 3.9 percent in the quarter to 16.97 billion euros from 16.3 billion euros. Operating cash flow after changes in working capital was at 2.8 billion euros at the end of 2007 compared with 2.2 billion euros a year earlier, and free cash flow totaled 1.9 billion euros, up from 1.3 billion euros, helped by working capital improvements.

"Roadmap to Value"

Deutsche Post World Net is making 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 remain heavily focused on its execution," said Chief Financial Officer John Allan.

To help meet its goal of raising profitability, the Group has identified more than 100 initiatives, which will underpin EBIT growth by 1 billion euros through 2009. In addition, Deutsche Post World Net in January signed a letter of intent to transfer parts of its global IT functions to HP, leading to expected savings of at least 1 billion euros over the next seven years. Real estate disposals agreed on since the program was announced amount to 350 million euros. The Group also introduced EBIT after asset charge as a new performance measure at the beginning of the year and has already integrated the new concept into the compensation structure of 3,200 managers worldwide.

To deliver on its commitment to increase transparency, the Group presented restated divisional figures for the past four quarters to reflect the SERVICES unit unbundling.

MAIL division

Revenue at the MAIL division rose by 1.3 percent to 15.5 billion euros from 15.3 billion euros, driven by growth in Global Mail and Corporate Information Solutions (Williams Lea) as well as Dialogue Marketing. Growth in those business units accelerated in the fourth quarter, with an ongoing shift toward higher-value solutions. Full-year revenue in Mail Communication declined 4.3 percent to 6.1 billion euros as the trend toward electronic communication continued. With an EBIT of 2 billion euros, the MAIL division reached its full-year earnings target, helped by increased productivity and higher cost flexibility. The 4.3 percent decline from the year-ago level of 2.1 billion euros was mainly attributable to the lack of 1.8 working days in 2007 and price reductions in Parcel Germany.

Following the full liberalization of the German mail market on Jan. 1, 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 in the month of December 2007 alone.

EXPRESS division

Revenue in the EXPRESS division increased by 3.1 percent to 13.9 billion euros last year. Excluding negative currency effects, the division achieved organic growth of 6.4 percent. Shipping volume in both the international and the national businesses gained 4.2 percent in 2007. In Europe, revenue grew by 3.8 percent to 6.6 billion euros. In the Americas region, revenue fell 4.9 percent to 4.2 billion euros due to negative currency effects. In local currencies, organic revenue grew 2.9 percent. In the U.S., revenue was little changed as performance improvements in the Ground and International products were offset by the decline in the Domestic Air business, especially in the second half of the year. Revenue in the Asia Pacific region climbed 5.4 percent to 2.6 billion euros.

The EXPRESS division reported a 46 percent increase to 420 million euros in EBIT before non-recurring effects for 2007, excluding the 594 million-euro writedown on fixed assets in the EXPRESS Americas division in the fourth quarter. The reported EBIT loss amounted to 174 million euros.

LOGISTICS division

LOGISTICS revenue increased 5.5 percent to 25.7 billion euros in 2007. Organic revenue rose 9.1 percent. At the DHL Global Forwarding business unit, revenue gained 1.5 percent to 9.4 billion euros last year. The strong volume growth at DHL Global Forwarding was countered by lower freight rates in the division s air freight activities. At DHL Exel Supply Chain, revenue gained 9.2 percent to 13.1 billion euros, boosted by the NHS contract as well as higher operational revenue in all regions. The unit generated new business of around 1 billion euros in annualized revenue last year. At DHL Freight, revenue grew faster than the market, with an organic growth rate of 6.2 percent. Reported revenue was at 3.6 billion euros compared with 3.7 billion euros a year earlier, mainly because the 2006 revenue included sales between the Group s own businesses.

Underlying EBIT at the LOGISTICS division gained 20 percent to 898 million euros from 751 million euros. Reported EBIT rose 27 percent to 957 million euros, buoyed by the sale of Vfw AG in the first quarter as well as real-estate sales in the fourth quarter. The division expects to achieve its synergy target of at least 220 million euros in 2008.

As announced on March 4, the corporate division LOGISTICS will be separated into two operating divisions with immediate effect: One division comprises the business units Supply Chain and Corporate Information Solutions and will be headed by Bruce Edwards. The other division, to be headed by Hermann Ude, will consist of the Freight and Global Forwarding business units. These changes in the organizational structure at this point in time won t have an impact on the financial reporting.


The FINANCIAL SERVICES division, which consists primarily of Deutsche Postbank, reported a 8.7 percent gain in revenue to 10.4 billion euros. The division raised reported EBIT by 7.2 percent to 1.1 billion euros. Deutsche Postbank succeeded in taking away market share from competitors and won 1 million new customers in 2007. Pretax return on equity rose to 19.3 percent at the end of 2007 from 18.9 percent a year earlier. The costincome ratio of the whole bank improved to 67.2 percent from 68.3 percent. With total writedowns of 112 million euros in 2007, the U.S. subprime crisis had limited impact on Postbank.

Deutsche Postbank reported earnings separately on February 15.

SERVICES division

The SERVICES division, which under the reported structure includes Global Business Services, the Corporate Center and the retail outlets of Deutsche Post as well as nonoperating income and expenses of Deutsche Post AG, reported a 7.1 percent increase in revenue to 2.4 billion euros in 2007. The EBIT loss totalled 660 million euros compared with 604 million euros in 2006, excluding non-recurring effects. The reported EBIT loss was at 229 million euros in 2006 due to the exercise of bonds exchangeable into Postbank shares in the third quarter of that year and non-recurring gains following the arbitration proceedings with Deutsche Telekom AG as well as the disposal of McPaper AG.

Since Jan. 1, 2008, all costs of Global Business Services are allocated to the operating divisions. The divisional forecasts were adjusted according to the new business structure. The result of the former SERVICES division is now a clean Corporate Center / Others segment.


Deutsche Post World Net confirmed it expects 2008 EBIT excluding non-recurring effects of around 4.2 billion euros. In its strive to increase transparency, the Group also for the first time gave a forecast for pretax profit: For 2008, Deutsche Post World Net expects profit before taxes of around 3.2 billion euros.

The MAIL division is now expected to reach EBIT of around 1.95 billion euros this year. The EXPRESS division is targeting EBIT of around 500 million euros, while EBIT at the LOGISTICS division is likely to reach around 1.05 billion euros in 2008. The FINANCIAL SERVICES division expects EBIT of around 1.2 billion euros, while for the Corporate Center / Others division a loss of around 550 million euros is forecast.

The company also reiterated its EBIT guidance for 2009.

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Deutsche Post World Net

Deutsche Post World Net is the world's leading logistics group. Its integrated Deutsche Post, DHL and Postbank brands offer tailored, customer-focused solutions for the management and transport of goods, information and payments through a global network combined with local expertise. Deutsche Post World Net is also the leading provider of dialogue marketing services, with a unique portfolio of efficient outsourcing and system solutions for the mail business. The Group generated revenue of ¤63 billion in 2007. With currently some 500,000 employees in more than 220 countries and territories Deutsche Post World Net is one of the largest employers worldwide.