Deutsche Post World Net boosts revenue and earnings in first half
- Consolidated revenue climbs 5.4 percent
- EBIT rises by 9 percent to 1.7 billion euros
- EXPRESS and LOGISTICS fuel earnings growth
- Earnings guidance of at least 3.6 billion euros EBIT for full year 2007 confirmed
Deutsche Post World Net, the world's leading provider of logistics services, successfully concluded the first half of 2007, boosting both revenue and EBIT. Consolidated revenue rose by 5.4 percent to 30.9 billion euros, fueled by the contributions of all divisions in the Group. EBIT increased by 9 percent to 1.7 billion euros. Before non-recurring items, the increase totaled 12.4 percent. The earnings growth was fueled by the LOGISTICS and EXPRESS divisions. "The LOGISTICS division continued its strong earnings growth, and the EXPRESS division made major progress," Klaus Zumwinkel, the Chairman and Chief Executive Officer of Deutsche Post World Net, said at the half-year press conference in Bonn. For the entire year, the Group continues to expect a positive business development. "We can confirm our guidance that the underlying EBIT will total at least 3.6 billion euros for the entire fiscal year of 2007," Zumwinkel said.
Consolidated net profit
During the first half, consolidated net profit after minorities totaled 784 million euros, an increase of 7.1 percent over the same period last year. Earnings per share were 65 cents, compared with 61 cents. In the second quarter, consolidated net profit climbed 13.1 percent to 285 million euros. Earnings per share rose to 24 cents from 21 cents, accordingly. Thus, growth of the consolidated net profit outpaced growth in revenue and EBIT. On a quarterly basis, revenue climbed 6.5 percent to 15.4 billion euros, and EBIT totaled 703 million euros, a jump of 9.5 percent over the same period last year.
At the MAIL division, revenue increased by 1.3 percent to 7.5 billion euros in the first half of the year. During the period, positive developments in the international business once again more than offset the anticipated decline in domestic mail activities in Germany. EBIT in the MAIL division fell by 6.3 percent to 949 million euros. In addition to a decrease in work days, last year's price reduction for packages had a negative impact on the results. During the second quarter, the division was pleasantly able to stabilize its business: Cost-cutting and growth in international business lifted EBIT by 3.4 percent to 331 million euros.
During the first half of 2007, the EXPRESS division raised revenue by 2 percent to 6.8 billion euros, thanks to volume growth in both the domestic and international business. But because more than half of the revenue was generated in countries outside Europe, the division experienced negative currency effects of 223 million euros. In local currencies, organic revenue growth of 6.2 percent was achieved. In Europe, the division boosted both revenue and shipping volumes. In the Americas region, revenue rose 3.6 percent in terms of local currency, driven once again by the strong business in Latin America. In the United States, higher income per shipment offset the economy-induced decline in volumes. In the Asia Pacific and EEMEA regions, revenue grew at double-digit levels as a result of strong shipping totals and higher shipping weights.
EBIT in the EXPRESS division reached 161 million euros, compared with 19 million euros in the same period last year. Profitability improved considerably in all regions.
The LOGISTICS division continued to grow during the first six months of the year. Revenue climbed by 6.7 percent to 12.5 billion euros. Excluding negative currency effects and inorganic factors like the sale of the waste-disposal company Vfw AG, revenue grew by 9.2 percent. In the DHL Global Forwarding business unit, revenue remained stable at 4.5 billion euros in the face of negative currency effects. At DHL Exel Supply Chain, the positive trend that started in the first quarter continued in the second: Revenue climbed by 12.8 percent to 6.4 billion euros, bolstered by the 10-year contract with the British health-care agency NHS as well as by higher revenue in Asia. In the DHL Freight business unit, revenue totaled 1.82 billion euros compared with 1.84 billion euros in the year-ago period.
EBIT for the entire LOGISTICS division totaled 414 million euros in the first half, 28.2 percent more than the same period last year. The rise was generated in part by the sale of Vfw AG in the first quarter. In the second quarter, underlying EBIT rose 20.5 percent.
FINANCIAL SERVICES division
The FINANCIAL SERVICES division, which consists primarily of Postbank, boosted revenue by 10.8 percent to 5.1 billion euros in the first half of the year. EBIT totaled 493 million euros, 6.7 percent higher than in the previous period last year. The growth in EBIT and sales was bolstered by Postbank's mobile sales and the bank's mortgage lending business. With the help of successful cost management, Postbank was able to offset the increase in value-added tax as well as non-recurring costs stemming from the integration of mortgage lender BHW. Following the acquisition of 850 outlets from Deutsche Post as well as the majority of BHW, Postbank can now further increase its selling power and raise its market share.
EBIT at the Services division was minus 298 million euros compared with minus 257 million euros in the same period last year. The main reason for the change were non-recurring effects stemming from the arbitration proceedings with Deutsche Telekom and the sale of McPaper AG last year.
Deutsche Post World Net still expects an underlying EBIT of at least 3.6 billion euros for the entire fiscal year of 2007.
In the MAIL division, revenue is expected to be stable or slightly higher. The company still assumes that the revenue decreases experienced in the domestic mail market will continue to be more than offset by the other business units. In terms of earnings, a stable EBIT of around 2 billion euros is expected.
In the EXPRESS division, the Group forecasts EBIT of at least 400 million euros for 2007. This figure contains costs related to the new air-freight hub Leipzig/Halle. The LOGISTICS division is expected to increase EBIT by about 15 percent. The forecast doesn't include the sale of Vfw AG. In the FINANCIAL SERVICES division, EBIT is expected to rise at least 5 percent. For the SERVICES division, EBIT of about minus 700 million euros is forecast.
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.