Quarterly Report • Sep 1, 2016
Quarterly Report
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as at 30 June 2016
PeP EBIT strongly up, driven mainly by Parcel growth and stamp price increase; international parcel network invest ments continue page 7 f.
Express EBIT growth refl ects continued strong TDI volume development and yield management, offsetting FX headwinds
Global Forwarding with further operating improvements driven by turnaround measures; market growth remains subdued
Supply Chain with further attractive new business wins; continued investments in its restructuring agenda
Strong Q 2 cash fl ow performance; net debt increase refl ecting usual timing of dividend payment as well as pension funding
E-commerce megatrend continues to drive PeP and Express volume and revenue growth
Continued progress in operational and margin recovery at Global Forwarding
Good underlying free cash fl ow development; unchanged fi nance policy
CLEAR AGENDA DRIVEN BY OUR LONG-TERM STRATEGIC AND FINANCIAL GOALS:
,
,
Mail items (millions)
Q
Q , adjusted
Q Q
(Q 2 2015: € 14,700 million)
| € | ||
|---|---|---|
| Q | ||
| . | ||
| Q | . | |
Basic earnings per share.
(Q 2 2015: 3.7 %)
€ m
EBIT, Q
Q Q
After deduction of non-controlling interests.
| H 1 2015 | H 1 2016 | + / – % | Q 2 2015 | Q 2 2016 | + / – % | ||
|---|---|---|---|---|---|---|---|
| Revenue | € m | 29,467 | 28,062 | −4.8 | 14,700 | 14,190 | −3.5 |
| Profi t from operating activities (EBIT) | € m | 1,257 | 1,625 | 29.3 | 537 | 752 | 40.0 |
| Return on sales 1 | % | 4.3 | 5.8 | – | 3.7 | 5.3 | – |
| EBIT after asset charge (EAC) | € m | 480 | 856 | 78.3 | 148 | 366 | >100 |
| Consolidated net profi t for the period 2 | € m | 821 | 1,180 | 43.7 | 326 | 541 | 66.0 |
| Free cash fl ow | € m | –310 | –1,300 | < –100 | 67 | – 600 | < –100 |
| Net debt 3 | € m | 1,093 | 3,508 | >100 | – | − | − |
| Earnings per share 4 | € | 0.68 | 0.98 | 44.1 | 0.27 | 0.45 | 66.7 |
| Number of employees 5 | 497,745 | 494,893 | – 0.6 | – | − | – | |
1 EBIT / revenue.
2 After deduction of non-controlling interests.
3 Prior-period amount as at 31 December, for the calculation page 6 of the Interim Group Management Report.
4 Basic earnings per share.
5 Headcount at the end of the fi rst half, including trainees; prior-period amount as at 31 December.
No organisational changes were made in the second quarter of 2016 that would have a material impact on the Group's structure.
Tim Scharwath was appointed as the new member of the Group Board of Management for Global Forwarding, Freight in May 2016. He will have assumed office by June 2017.
At his own request, Lawrence Rosen will retire and resign as the member of the Group Board of Management responsible for Finance, Global Business Services, on 30 September 2016. Melanie Kreis has been appointed as his successor; she will retain her responsibility as the Board Member for Human Resources and as Group Labour Director until further notice.
As a service provider, Deutsche Post DHL Group does not engage in research and development activities in the narrower sense and therefore has no significant expenses to report in this connection.
The global economy grew moderately in the first half of the year. In the industrial countries, growth slowed somewhat compared with the previous year. Although growth in the emerging economies was much stronger, the rate of growth was again only moderate.
In Asia, growth remained overall robust. However, the Chinese economy weakened further while the Japanese economy saw a slight recovery.
The weak US economy gradually began to revive in the second quarter, with private consumption remaining the main growth driver. At the same time, the negative impact of foreign trade on growth abated. The US Federal Reserve kept its key interest rate at between 0.25% and 0.50%.
In the euro zone, the moderate upswing was sustained overall with growth continuing to be driven by domestic demand. The inflation rate temporarily dipped into negative figures following a further decline in the oil price. The European Central Bank reduced its key interest rate to 0.00% and substantially expanded its government bond-buying programme.
The German economy again saw solid growth, with domestic demand providing most of the momentum. In the second quarter, the ifo German Business Climate Index made up the decline it experienced at the start of the year.
At the end of January 2016, we sold the remaining shares in UK property development companies King's Cross Central Property Trust and King's Cross Central General Partner Ltd.
On 1 April, the Group placed two bonds with a total volume of €1.25 billion on the capital market. Of the capital raised, €1 billion was used for the further funding of pension obligations.
Pension provisions declined in the first half of 2016 despite decreasing discount rates, which was largely the result of the further funding of pension obligations in the amount
of €1 billion. A measurement-related reversal had already been recognised in the first quarter due to changes in the occupational retirement arrangement in Germany. This was offset by a number of other human resources measures, including the early retirement scheme for civil servants, with the result that, overall, there was no effect on earnings.
| H1 2015 | H1 2016 | Q2 2015 | Q2 2016 | ||
|---|---|---|---|---|---|
| Revenue | €m | 29,467 | 28,062 | 14,700 | 14,190 |
| Profit from operating activities (EBIT) | €m | 1,257 | 1,625 | 537 | 752 |
| Return on sales1 | % | 4.3 | 5.8 | 3.7 | 5.3 |
| EBIT after asset charge (EAC) | €m | 480 | 856 | 148 | 366 |
| Consolidated net profit for the period2 | €m | 821 | 1,180 | 326 | 541 |
| Earnings per share3 | € | 0.68 | 0.98 | 0.27 | 0.45 |
1 EBIT/revenue.
2 After deduction of non-controlling interests.
3 Basic earnings per share.
In January 2016, we acquired 27.5% of the shares in French logistics provider Relais Colis. The company is accounted for using the equity method.
In the first quarter of 2016, we sold all of our shares in nugg.ad GmbH.
There were no changes in reporting.
Consolidated revenue in the first half of 2016 fell by €1,405 million to €28,062 million. The change to the way in which revenue and expenses are reported as a result of revised terms of the UK National Health Service (NHS) contract reduced revenue by €945 million. In addition, negative currency effects led to a drop of €834 million. The proportion of revenue generated abroad declined from 71.2% to 68.7%. Revenue for the second quarter of 2016 was down by 3.5% year-on-year to €14,190 million.
Other operating income dropped by €203 million to €978 million. The prior-year figure included income from the sale of equity interests in Sinotrans and King's Cross; the figure for the reporting period includes a gain of €63 million on the disposal of the remaining shares in King's Cross.
Materials expense showed a marked fall of €1,839 million to €14,808 million. The cost of goods purchased and held for resale dropped considerably as a result of the revised NHS contract. This item was also reduced by lower transportation and fuel costs as well as currency effects. Mainly positive currency effects reduced other operating expenses from €2,214 million to €2,125 million.
| €m | +/–% | ||
|---|---|---|---|
| Revenue | 28,062 | −4.8 • Currency effects lead to a sharp fall of €834 million • Decrease due to revised NHS contract |
|
| Other operating income | 978 | −17.2 • Prior-year figure included higher income from the sale of equity interests | |
| Materials expense | 14,808 | −11.0 • Substantial €936 million drop in cost of goods purchased and held for resale due to revised NHS contract • Lower transportation and fuel costs • Positive currency effects |
|
| Staff costs | 9,830 | −0.6 • Slight decline due to currency effects | |
| Depreciation, amortisation and impairment losses | 653 | 1.2 • Up slightly on prior-year level, due mainly to investments in the Express aircraft fleet |
|
| Other operating expenses | 2,125 | −4.0 • Lower mainly due to positive currency effects |
At €1,625 million, profit from operating activities (EBIT) in the first half of 2016 was up 29.3% on the previous year (€1,257 million). In the second quarter, EBIT rose 40.0% above the prior-year figure to €752 million. Net finance costs, on the other hand, widened slightly, from €−165 million to €−171 million in the reporting period. Profit before income taxes climbed by €362 million to €1,454 million. Although the tax rate was lower, income taxes likewise rose by €23 million to €203 million.
Consolidated net profit for the period showed a sharp improvement, rising from €912 million to €1,251 million in the first half of the year. Of this amount, €1,180 million is attributable to shareholders of Deutsche Post AG and €71 million to non-controlling interest holders. Basic earnings per share improved from €0.68 to €0.98 and diluted earnings per share from €0.65 to €0.94.
In the first half of 2016, EBIT after asset charge (EAC) climbed from €480 million to €856 million, mainly as a result of the company's increased profitability. The imputed asset charge remained stable year-on-year, with investments in property, plant and equipment and lower provisions being offset by a decline in net working capital.
€m
| EAC | 480 | 856 | 78.3 |
|---|---|---|---|
| Asset charge | −777 | −769 | 1.0 |
| EBIT | 1,257 | 1,625 | 29.3 |
| H1 2015 | H1 2016 | +/–% | |
The principles and aims of our financial management as presented in the 2015 Annual Report, beginning on page 53 remain valid and continue to be pursued as part of our finance strategy.
As expected, the FFO to debt performance metric decreased in the first half of 2016, as a result of the increase in debt. Reported financial liabilities rose due to the issue of two bonds in April. The capital raised is largely being used for the further funding of pension obligations. The total of surplus cash and near-cash investments declined, mainly as a result of the annual pension-related prepayment to the Bundesanstalt für Post und Telekommunikation and the dividend paid for financial year 2015. Funds from operations rose as the funding of pension obligations led to an increase in the adjustment for pensions. The amount of interest paid increased, mainly as a result of the interest income generated from unwinding interest rate swaps related to outstanding bonds in the first quarter of 2015.
Our credit quality as rated by Moody's Investors Service and Fitch Ratings has not changed from the ratings described and projected in the 2015 Annual Report on page 56. In view of our solid liquidity, the five-year syndicated credit facility with a total volume of €2 billion was not drawn down during the reporting period. On 30 June 2016, the Group had cash and cash equivalents of €2.1 billion.
| €m | 1 Jan. to 31 Dec. 2015 adjusted1 |
1 July 2015 to 30 June 2016 |
|---|---|---|
| Operating cash flow before changes in working capital |
2,656 | 2,232 |
| Interest received | 47 | 49 |
| Interest paid | 76 | 144 |
| Adjustment for operating leases | 1,413 | 1,476 |
| Adjustment for pensions | 239 | 949 |
| Funds from operations (FFO) | 4,279 | 4,562 |
| Reported financial liabilities2 | 5,178 | 6,439 |
| Financial liabilities at fair value through profit or loss2 |
125 | 180 |
| Adjustment for operating leases2 | 6,394 | 6,713 |
| Adjustment for pensions2 | 6,103 | 6,124 |
| Surplus cash and near-cash investments2, 3 | 2,641 | 1,022 |
| Debt | 14,909 | 18,074 |
| FFO to debt (%) | 28.7 | 25.2 |
1 Non-recurring income or expense is no longer reported separately since it is no longer generated or incurred in a relevant scope.
2 As at 31 December 2015/30 June 2016.
3 Reported cash and cash equivalents and investment funds callable at sight, less cash needed for operations.
| PeP | Express | Global Forwarding, Freight |
Supply Chain | Corporate Center/ Other |
Consolidation1 | Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | |
| Capex (€m) | 191 | 187 | 229 | 396 | 74 | 22 | 136 | 184 | 64 | 77 | 1 | 1 | 695 | 867 |
| Depreciation, amortisation and impairment losses (€m) |
154 | 156 | 185 | 208 | 44 | 40 | 149 | 147 | 114 | 101 | −1 | 1 | 645 | 653 |
| Ratio of capex to depreciation, amortisation and impairment losses |
1.24 | 1.20 | 1.24 | 1.90 | 1.68 | 0.55 | 0.91 | 1.25 | 0.56 | 0.76 | – | – | 1.08 | 1.33 |
1 Including rounding.
| PeP | Express | Global Forwarding, Freight |
Supply Chain | Corporate Center/ Other |
Consolidation1 | Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | |
| Capex (€m) | 127 | 113 | 154 | 205 | 34 | 12 | 63 | 84 | 42 | 40 | 1 | 2 | 421 | 456 |
| Depreciation, amortisation and impairment losses (€m) |
78 | 79 | 94 | 104 | 21 | 20 | 76 | 73 | 57 | 50 | 0 | 1 | 326 | 327 |
| Ratio of capex to depreciation, amortisation and impairment losses |
1.63 | 1.43 | 1.64 | 1.97 | 1.62 | 0.60 | 0.83 | 1.15 | 0.74 | 0.80 | – | – | 1.29 | 1.39 |
1 Including rounding.
Investments in property, plant and equipment and intangible assets (not including goodwill) amounted to €867 million in the first half of 2016 (previous year: €695 million). Please refer to Notes 8 and 13 to the consolidated financial statements for a breakdown of capex into asset classes and regions.
In the Post - eCommerce - Parcel division, the largest capex portion continued to be attributable to the expansion of our domestic and international parcel network and production of our StreetScooter electric vehicle.
In the Express division, a significant portion of investment spending went towards the continuous maintenance and renewal of our aircraft fleet. We also expanded our hubs, particularly in Leipzig and East Midlands.
In the Global Forwarding, Freight division, we continued to invest in turnaround measures. We also modernised and refurbished warehouses and office buildings across all regions.
In the Supply Chain division, the majority of funds was used to support new business, mostly in the Americas and EMEA regions where we made notable investments in the Consumer and Retail sectors.
Cross-divisional capital expenditure increased due to higher expenses for the vehicle fleet.
Calculation of free cash flow
Funding of pension obligations impacts operating cash flow
Net cash used in operating activities in the first half of 2016 amounted to €373 million, compared with net cash from operating activities of €345 million in the previous year. The income from the sale of equity interests contained in the EBIT figure has been eliminated in net cash used in operating activities and is instead reported in cash flow from investing activities. In the previous year, this comprised €228 million mainly from the sale of equity interests in Sinotrans and King's Cross; in the reporting period, it comprised €63 million from the sale of the remaining shares in King's Cross. The cash outflow from changes in working capital rose by €294 million to €1,021 million, due in particular to the reduction in liabilities and other items. The change in provisions widened from €−358 million to €−1,351 million, mainly because we funded pension obligations in the amount of €1 billion. Excluding this, net cash from operating activities in the amount of €627 million would have been generated, clearly surpassing the prior-year figure. In the previous year, higher divestitures and the sale of money market funds reduced net cash used in investing activities, which then amounted to €472 million; in the reporting period, net cash used in investing activities totalled €870 million.
| €m | ||||
|---|---|---|---|---|
| H1 2015 | H1 2016 | Q2 2015 | Q2 2016 | |
| Net cash from/used in operating activities | 345 | −373 | 266 | −161 |
| Sale of property, plant and equipment and intangible assets | 64 | 60 | 25 | 27 |
| Acquisition of property, plant and equipment and intangible assets | −972 | −1,016 | −407 | −439 |
| Cash outflow arising from change in property, plant and equipment and intangible assets | −908 | −956 | −382 | −412 |
| Disposals of subsidiaries and other business units | −2 | 0 | −2 | 0 |
| Disposals of investments accounted for using the equity method and other investments | 221 | 80 | 221 | 0 |
| Acquisition of investments accounted for using the equity method and other investments | 0 | −19 | 0 | 0 |
| Cash inflow arising from acquisitions/divestitures | 219 | 61 | 219 | 0 |
| Interest received | 22 | 24 | 10 | 13 |
| Interest paid | 12 | −56 | −46 | −40 |
| Net interest paid | 34 | −32 | −36 | −27 |
| Free cash flow | −310 | −1,300 | 67 | −600 |
Free cash flow decreased significantly, from €−310 million to €−1,300 million, due primarily to net cash used in operating activities in the amount of €373 million. By contrast, net cash from operating activities of €345 million was generated in the prior-year period. In addition, positive net interest payments were generated in the prior year, whereas
in the reporting period net cash flows from acquisitions and divestitures lifted the figure. Excluding the funding of pension obligations, free cash flow was €−300 million, slightly above the prior-year figure.
At €219 million, net cash used in financing activities was €863 million lower than in the previous year (€1,082 million). Through the bond placement in April, we issued non-current financial liabilities, raising capital in the amount of €1.239 billion. Net cash used to purchase treasury shares rose from €31 million to €221 million. In addition, in the previous year, we unwound interest rate swaps on outstanding bonds, which led to a cash inflow. At €1,027 million, the dividend paid to our shareholders was the largest payment item.
Cash and cash equivalents declined from €3,608 million on 31 December 2015 to €2,072 million on 30 June 2016.
| 31 Dec. 2015 | 30 June 2016 | ||
|---|---|---|---|
| Equity ratio | % | 29.8 | 26.0 |
| Net debt | €m | 1,093 | 3,508 |
| Net interest cover1 | −37.0 | 50.8 | |
| Net gearing | % | 8.8 | 27.0 |
| FFO to debt2 | % | 28.7 | 25.2 |
1 In the first half of the year.
2 For the calculation Financial position, page 4.
The Group's total assets amounted to €36,353 million on 30 June 2016, €1,517 million lower than on 31 December 2015 (€37,870 million).
A decrease in goodwill due to exchange rate movements was the main cause of the decrease in intangible assets, which fell from €12,490 million to €12,242 million. In addition, trade receivables declined by €199 million to €7,495 million. Conversely, other current assets climbed by €511 million to €2,683 million: this includes the accrual of the prepaid annual contribution to the Bundesanstalt für Post und Telekommunikation in the amount of €250 million. The €378 million paid in connection with the state aid proceedings, Note 17 to the consolidated financial statements, was reclassified from non-current to current financial assets. The €1,536 million decrease in cash and cash equivalents to €2,072 million was the key reason for the reduction in total assets. For further details, please refer to the Financial position, page 5 f.
On the equity and liabilities side of the balance sheet, equity attributable to Deutsche Post AG shareholders declined by €1,884 million to €9,150 million. While consolidated net profit for the period increased equity, it was mainly the actuarial losses on pension obligations, the dividend payment and negative currency effects that reduced the figure. Trade payables fell considerably from €7,069 million to €6,075 million. Provisions for pensions and similar obligations dropped slightly, from €6,221 million to €6,126 million; actuarial losses increased these provisions, while the partial funding of pension obligations in particular reduced them. Financial liabilities rose from €5,178 million to €6,439 million due to the bond placement in April.
Our net debt rose from €1,093 million on 31 December 2015 to €3,508 million on 30 June 2016, in part because we disbursed the dividend of €1,027 million for financial year 2015 and pay the regular annual contribution of €517 million to the Bundesanstalt für Post und Telekommunikation in the first half of the year. In addition, we issued bonds in a total principal amount of €1.25 billion. At 26.0%, the equity ratio was lower than on 31 December 2015 (29.8%). Net interest cover shows the extent to which net interest obligations are covered by EBIT. It rose from −37.0 to 50.8. Net gearing was 27.0% on 30 June 2016.
| €m | ||
|---|---|---|
| 31 Dec. 2015 | 30 June 2016 | |
| Non-current financial liabilities | 4,578 | 5,041 |
| Current financial liabilities | 440 | 1,253 |
| Financial liabilities | 5,018 | 6,294 |
| Cash and cash equivalents | 3,608 | 2,072 |
| Current financial assets | 179 | 571 |
| Positive fair value of non-current financial | ||
| derivatives1 | 138 | 143 |
| Financial assets | 3,925 | 2,786 |
| Net debt | 1,093 | 3,508 |
1 Reported in non-current financial assets in the balance sheet.
| H1 2015 | H1 2016 | +/– % | Q2 2015 | Q2 2016 | +/– % | |
|---|---|---|---|---|---|---|
| Revenue | 7,813 | 8,201 | 5.0 | 3,712 | 4,000 | 7.8 |
| of which Post | 4,816 | 4,864 | 1.0 | 2,252 | 2,332 | 3.6 |
| eCommerce - Parcel | 2,997 | 3,337 | 11.3 | 1,460 | 1,668 | 14.2 |
| Profit from operating activities (EBIT) | 474 | 659 | 39.0 | 75 | 247 | >100 |
| of which Germany | 463 | 658 | 42.1 | 70 | 248 | >100 |
| International Parcel and eCommerce | 11 | 1 | −90.9 | 5 | −1 | <−100 |
| Return on sales (%)1 | 6.1 | 8.0 | – | 2.0 | 6.2 | – |
| Operating cash flow | 354 | −521 | <−100 | 169 | −601 | <−100 |
1 EBIT/revenue.
In the first half of 2016, with 2.0 additional working days in Germany, revenue in the division was €8,201 million, 5.0% above the prior-year figure of €7,813 million. Most of the growth again originated in the eCommerce - Parcel business unit. Excluding negative currency effects of €24 million, revenue growth was 5.3%.
Revenue in the Post business unit increased in the first half of 2016 by 1.0% to €4,864 million (previous year: €4,816 million), despite a decline in volume of 2.8%.
The price increases for Standardbrief and Maxibrief letter items and for additional services at the beginning of the year offset the decrease in revenue resulting from the overall decline in Mail Communication volumes. The cross-border mail business continued to perform well, particularly as a result of the increase in small-goods shipments and the price increases for the Standardbrief and Großbrief International products at the beginning of the year.
First-half revenue in the Dialogue Marketing business was on par with the previous year. Volumes fell by 2.0%, especially in unaddressed advertising mail.
| €m | H1 2015 adjusted1 |
H1 2016 | +/– % | Q2 2015 adjusted1 |
Q2 2016 | +/– % |
|---|---|---|---|---|---|---|
| Mail Communication | 3,242 | 3,301 | 1.8 | 1,518 | 1,577 | 3.9 |
| Dialogue Marketing | 1,053 | 1,055 | 0.2 | 503 | 508 | 1.0 |
| Other | 521 | 508 | −2.5 | 231 | 247 | 6.9 |
| Total | 4,816 | 4,864 | 1.0 | 2,252 | 2,332 | 3.6 |
1 Adjusted due to changed product allocations.
Post: volumes
| Mail items (millions) | H1 2015 adjusted1 |
H1 2016 | +/–% | Q2 2015 adjusted1 |
Q2 2016 | +/–% |
|---|---|---|---|---|---|---|
| Total | 9,546 | 9,277 | −2.8 | 4,470 | 4,394 | −1.7 |
| of which Mail Communication | 4,334 | 4,170 | −3.8 | 1,973 | 1,945 | −1.4 |
| of which Dialogue Marketing | 4,251 | 4,165 | −2.0 | 2,011 | 1,972 | −1.9 |
1 Adjusted due to changed product allocations.
In the first half of 2016, revenue in the business unit was €3,337 million, exceeding the prior-year figure of €2,997 million by 11.3%. The gain in the second-quarter was even 14.2%.
Parcel Germany's revenue increased by 10.9% to €2,276 million (previous year: €2,052 million). Volumes rose by 8.7%, to 574 million parcels in the reporting period.
In the Parcel Europe business revenue grew by 16.0% to €406 million (previous year: €350 million). Expansion of
the network for cross-border e-commerce continues; collaboration has allowed us to offer a B2C parcel delivery infrastructure in Scandinavia, Finland and the Baltic states. We are already present in 16 European countries.
In the DHL eCommerce business, revenue was €655 million in the first half of the year, exceeding the prior-year figure by 10.1%. Excluding currency effects, growth amounted to 12.9% and continues to be driven by the US domestic business and cross-border business in Asia.
| €m | ||||||
|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | +/–% | Q2 2015 | Q2 2016 | +/–% | |
| Parcel Germany | 2,052 | 2,276 | 10.9 | 990 | 1,141 | 15.3 |
| Parcel Europe1 | 350 | 406 | 16.0 | 177 | 209 | 18.1 |
| DHL eCommerce2 | 595 | 655 | 10.1 | 293 | 318 | 8.5 |
| Total | 2,997 | 3,337 | 11.3 | 1,460 | 1,668 | 14.2 |
| 1 Excluding Germany. 2 Outside Europe. |
||||||
| Parcel Germany: volumes | ||||||
| Parcels (millions) | ||||||
| H1 2015 | H1 2016 | +/–% | Q2 2015 | Q2 2016 | +/–% | |
| Total | 528 | 574 | 8.7 | 255 | 286 | 12.2 |
EBIT in the division improved by 39.0% to €659 million (previous year: €474 million) in the first half of 2016. Higher revenue and strict cost management contributed to this EBIT performance. In addition, the effects of the strike in Germany had a negative impact on the prior-year figure, and resulted in an adjustment of our earnings forecast by €100 million in the previous year. The majority of our EBIT is generated in Germany; earnings in our international business reflect the investments in the expansion of the Euro-
pean and worldwide parcel business. Return on sales rose to 8.0% in the first half of 2016 (previous year: 6.1%). Second-quarter EBIT was €247 million (previous year: €75 million).
Operating cash flow decreased from €354 million to €−521 million, mainly as a result of a payment of €955 million made to increase pension assets. Working capital decreased to €−263 million, down on the prior-year figure of €−186 million.
| €m | ||||||
|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | +/– % | Q2 2015 | Q2 2016 | +/– % | |
| Revenue | 6,695 | 6,774 | 1.2 | 3,455 | 3,523 | 2.0 |
| of which Europe | 2,938 | 3,078 | 4.8 | 1,511 | 1,601 | 6.0 |
| Americas | 1,233 | 1,313 | 6.5 | 643 | 683 | 6.2 |
| Asia Pacific | 2,450 | 2,495 | 1.8 | 1,273 | 1,308 | 2.7 |
| MEA (Middle East and Africa) | 522 | 530 | 1.5 | 268 | 269 | 0.4 |
| Consolidation/Other | −448 | −642 | −43.3 | −240 | −338 | −40.8 |
| Profit from operating activities (EBIT) | 708 | 777 | 9.7 | 376 | 420 | 11.7 |
| Return on sales (%)1 | 10.6 | 11.5 | – | 10.9 | 11.9 | – |
| Operating cash flow | 596 | 634 | 6.4 | 262 | 400 | 52.7 |
1 EBIT/revenue.
Revenue in the division increased by 1.2% to €6,774 million in the first half of 2016 (previous year: €6,695 million). As a significant portion of our business activities take place outside the euro zone, we recorded negative currency effects of €277 million. Excluding these effects, revenue growth was 5.3%. This also reflects the fact that fuel surcharges were lower in all regions as the price of crude oil fell compared with the previous year. Revenue increased by 6.6% excluding the negative effects resulting from both foreign currency losses and lower fuel surcharges.
In the Time Definite International (TDI) product line, revenues per day increased by 4.7% and per-day shipment volumes by 8.0% in the first half of the year. Revenues per day for the second quarter were up by 4.3% and per-day shipment volumes by 8.2%.
In the Time Definite Domestic (TDD) product line, revenues per day improved by 10.5% and per-day shipment volumes by 9.9% in the first half of the year. Growth in the second quarter of 2016 amounted to 10.3% for revenues per day and 9.0% for per-day volumes.
| €m per day 1 | H1 2015 adjusted |
H1 2016 | +/– % | Q2 2015 adjusted |
Q2 2016 | +/– % |
|---|---|---|---|---|---|---|
| Time Definite International (TDI) | 40.3 | 42.2 | 4.7 | 42.0 | 43.8 | 4.3 |
| Time Definite Domestic (TDD) | 3.8 | 4.2 | 10.5 | 3.9 | 4.3 | 10.3 |
1 To improve comparability, product revenues were translated at uniform exchange rates. Those revenues are also the basis for the weighted calculation of working days.
| Thousands of items per day 1 | H1 2015 adjusted |
H1 2016 | +/– % | Q2 2015 adjusted |
Q2 2016 | +/– % |
|---|---|---|---|---|---|---|
| Time Definite International (TDI) | 733 | 792 | 8.0 | 758 | 820 | 8.2 |
| Time Definite Domestic (TDD) | 384 | 422 | 9.9 | 389 | 424 | 9.0 |
1 To improve comparability, product revenues were translated at uniform exchange rates.
Those revenues are also the basis for the weighted calculation of working days.
Revenue in the Europe region improved by 4.8% in the first half of 2016 to €3,078 million (previous year: €2,938 million). This included negative currency effects of €81 million, which related mainly to the UK and Russia. Excluding these effects, revenue growth was 7.5%. TDI revenues per day rose by 5.0% and per-day TDI shipment volumes by 9.2% in the first half of the year. International per-day shipment revenues were up by 4.3% and per-day shipment volumes by 8.9% in the second quarter.
Revenue in the Americas region grew by 6.5% to €1,313 million in the first six months of 2016 (previous year: €1,233 million). This figure includes negative currency effects of €90 million, which resulted primarily from Mexico and South America. Excluding these effects, revenue growth was 13.8% compared with the previous year. In the TDI area, we increased revenues per day by 8.4% in the first half of the year and per-day volumes by 9.0%. Revenues per day for the second quarter of 2016 rose by 6.9%, while per-day volumes increased by 9.0%.
Revenue in the Asia Pacific region rose by 1.8% to €2,495 million in the first half (previous year: €2,450 million). This included negative currency effects of €82 million that related primarily to China as well as other countries in the region. Excluding these effects, the revenue increase was
5.2% for the first half of the year. Revenues per day in the TDI area improved by 2.9%, due primarily to the 7.0% increase in per-day shipment volumes. Growth in the second quarter of 2016 amounted to 3.2% for revenues per day and 6.9% for per-day volumes.
Revenue in the MEA region (Middle East and Africa) was up by 1.5% to €530 million (previous year: €522 million) in the first six months of 2016. This included negative currency effects of €25 million, which resulted mainly from South Africa as well as other countries in the region. Excluding these effects, revenue for the first half increased by 6.3%. In the TDI area, revenues per day were up by 5.4% and per-day volumes by 5.0%. Growth in the second quarter of 2016 amounted to 4.6% for revenues per day and 6.6% for perday volumes.
EBIT for the division rose by 9.7% to €777 million in the first half of 2016 (previous year: €708 million). Network improvement, strong international business growth and pricing initiatives all contributed to an expanded EBIT margin and increased profitability. Return on sales for the first half rose from 10.6% to 11.5%. EBIT for the second quarter grew by 11.7% to €420 million and return on sales increased from 10.9% to 11.9%. Operating cash flow rose by 6.4% to €634 million in the first half of the year (previous year: €596 million).
| €m | ||||||
|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | +/– % | Q2 2015 | Q2 2016 | +/– % | |
| Revenue | 7,567 | 6,752 | −10.8 | 3,778 | 3,425 | −9.3 |
| of which Global Forwarding | 5,554 | 4,684 | −15.7 | 2,763 | 2,359 | −14.6 |
| Freight | 2,096 | 2,151 | 2.6 | 1,057 | 1,107 | 4.7 |
| Consolidation/Other | −83 | −83 | 0.0 | −42 | −41 | 2.4 |
| Profit from operating activities (EBIT) | 57 | 120 | >100 | 40 | 69 | 72.5 |
| Return on sales (%)1 | 0.8 | 1.8 | – | 1.1 | 2.0 | – |
| Operating cash flow | −35 | −64 | −82.9 | 125 | 102 | −18.4 |
1 EBIT/revenue.
Impacted by negative currency effects, lower fuel surcharges and the generally low level of air and ocean freight rates, division revenue decreased by 10.8% to €6,752 million in the first half of 2016 (previous year: €7,567 million). Excluding currency effects of €−216 million, revenue was down year-on-year by 7.9%. In the Global Forwarding business unit, first-half revenue declined by 15.7% to €4,684 million (previous year: €5,554 million). Excluding currency effects of €−203 million, the decline was 12.0%. However, gross profit remained at the prior-year level at €1,203 million (previous year: €1,208 million).
Revenues in air and ocean freight decreased again year-onyear. Ocean freight volumes rose and air freight volumes declined.
Air freight volumes fell by 7.7% in the first half of the year. The market was declining overall, especially in the Technology sector. We had also implemented measures in the previous year which included withdrawing from selected business activities with insufficient margins. We have secured additional new business during the first half of the year, which will be implemented as the year progresses and that should have a positive impact on volume growth. Air freight
prices remain under pressure due to large surplus capacities and low fuel costs, which reduced our revenue by 17.3% and gross profit by 4.5% in the first half of 2016. Revenue for the second quarter decreased by 16.2% and volumes fell by 4.7%.
Ocean freight volumes were up by 2.8% in the first half of the year, driven mainly by growth on the trade lanes between Asia and Europe, in intra-Asia volumes and the trans-Pacific market. Freight rates on our major routes continued to be volatile and remained at a low level, although the initial signs of an increase are evident thanks to artificially reduced capacities. Our ocean freight revenue fell by 13.6% in the first half of the year while gross profit rose by 16.8%. In the second quarter, ocean freight revenue declined by 13.6% and volumes increased 3.1% year-on-year.
The performance of our industrial project business (shown in the following table, reported as part of Other in the Global Forwarding business unit) was considerably weaker than in the previous year, due in part to the conclusion of projects started in previous years and in part to low oil prices reducing customer demand for new projects, particularly in the Oil & Energy sector. The share of revenue related to industrial project business and reported under Other was 20.6% and therefore reduced compared with the previous year (29.2%); gross profit declined by 30.0% compared with the first half of the previous year.
Global Forwarding: revenue
| €m | ||||||
|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | +/–% | Q2 2015 | Q2 2016 | +/–% | |
| Air freight | 2,565 | 2,122 | −17.3 | 1,275 | 1,069 | −16.2 |
| Ocean freight | 1,881 | 1,625 | −13.6 | 941 | 813 | −13.6 |
| Other | 1,108 | 937 | −15.4 | 547 | 477 | −12.8 |
| Total | 5,554 | 4,684 | −15.7 | 2,763 | 2,359 | −14.6 |
| Thousands | |||||||
|---|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | +/–% | Q2 2015 | Q2 2016 | +/–% | ||
| Air freight | tonnes | 1,868 | 1,725 | −7.7 | 933 | 889 | −4.7 |
| of which exports | tonnes | 1,052 | 983 | −6.6 | 530 | 507 | −4.3 |
| Ocean freight | TEUs1 | 1,454 | 1,495 | 2.8 | 750 | 773 | 3.1 |
1 Twenty-foot equivalent units.
In the Freight business unit, revenue rose by 2.6% to €2,151 million in the first half of 2016 (previous year: €2,096 million) despite negative currency effects of €15 million. Transport volumes increased by 9.8%, driven mainly by e-commerce-related business in Sweden and less-thantruckload business in Germany. Business restrictions with some members of the CIS region continued to adversely affect our performance. Gross profit rose to €559 million, thus surpassing the prior-year figure of €548 million.
EBIT in the division improved significantly in the first half of 2016, rising from €57 million to €120 million. The turnaround measures and cost controls are increasingly evident, which has also improved gross profit margins. Return on sales rose to 1.8% (previous year: 0.8%). EBIT for the second quarter increased from €40 million to €69 million and return on sales rose to 2.0% (previous year: 1.1%).
Net working capital declined in the reporting period thanks to improved receivables management. Operating cash flow amounted to €−64 million (previous year: €−35 million).
| €m | ||||||
|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | +/– % | Q2 2015 | Q2 2016 | +/– % | |
| Revenue | 7,987 | 6,934 | −13.2 | 4,045 | 3,541 | −12.5 |
| of which EMEA (Europe, Middle East and Africa) | 4,855 | 3,714 | −23.5 | 2,459 | 1,869 | −24.0 |
| Americas | 2,137 | 2,195 | 2.7 | 1,091 | 1,146 | 5.0 |
| Asia Pacific | 1,017 | 1,042 | 2.5 | 507 | 534 | 5.3 |
| Consolidation/Other | −22 | −17 | 22.7 | −12 | −8 | 33.3 |
| Profit from operating activities (EBIT) | 172 | 229 | 33.1 | 119 | 102 | −14.3 |
| Return on sales (%)1 | 2.2 | 3.3 | – | 2.9 | 2.9 | – |
| Operating cash flow | −146 | 14 | >100 | −34 | 155 | >100 |
1 EBIT/revenue.
Revenue in the division decreased by 13.2% to €6,934 million in the first half of 2016 (previous year: €7,987 million). This decline was due mainly to the change in revenue recognition in connection with the UK National Health Service (NHS) in the fourth quarter of 2015 as a result of the revised terms of the contract. Furthermore, negative currency effects decreased revenue in the reporting period by €325 million. Excluding these effects, revenue growth was 2.7%. Compared with the previous year, the Automotive sector achieved the highest revenue growth. Revenue for the second quarter declined by 12.5%, from €4,045 million to €3,541 million, likewise impacted by the aforementioned effects.
In the EMEA region, revenue increased in the Automotive sector in the first half of the year, driven by both higher volumes and new business. By contrast, revenue in the Life Sciences & Healthcare sector declined, reflecting the change in NHS revenue reporting in the UK.
In the Americas region, we gained revenue from new business in the United States, driven predominantly by the Consumer sector.
In Asia Pacific, overall revenue increased, due primarily to growth from new and additional business, mainly in Japan, Hong Kong, Indonesia and Vietnam. Revenue increased in Japan in the Retail sector and in Hong Kong in the Technology sector. Revenue growth in Indonesia and Vietnam came primarily from the Consumer and Technology sectors. This growth was partly offset by lower volumes in Australia and negative currency effects across the region.
Total revenue: €6,934 million
| of which Retail | 25% |
|---|---|
| Consumer | 24% |
| Automotive | 14% |
| Technology | 11% |
| Life Sciences & Healthcare | 9% |
| Others | 8% |
| Engineering & Manufacturing | 5% |
| Financial Services | 4% |
| of which Europe/Middle East/Africa/Consolidation | 53% |
| Americas | 32% |
| Asia Pacific | 15% |
In the first half of 2016, the division concluded additional contracts worth around €572 million in annualised revenue with both new and existing customers. The Retail, Consumer, Automotive and Technology sectors accounted for the majority of the gains. The annualised contract renewal rate remained at a consistently high level.
Positive effects from strategic initiatives stimulate EBIT growth EBIT in the division was €229 million in the first half of 2016 (previous year: €172 million). The strong EBIT growth was due mainly to positive effects from strategic initiatives. Return on sales rose to 3.3% (previous year: 2.2%). EBIT was €102 million in the second quarter of 2016 (previous year: €119 million). The lower EBIT predominantly reflects the gain on the disposal of shares in King's Cross in the second quarter of 2015. Operating cash flow increased to €14 million in the first half of the year (previous year: €−146 million) due principally to an improvement in net working capital levels.
On 14 July 2016, the General Court of the European Union set aside the European Commission's state aid decision dated 25 January 2012. The effects on our risk exposure are described in the following chapter.
The Group's overall opportunity and risk situation did not change significantly during the first six months of 2016 as compared with the situation described in the 2015 Annual Report, beginning on page 83. No new risks were identified that could have a significant impact on the Group's results. Based upon the Group's early warning system and in the estimation of its Board of Management, there were no identifiable risks for the Group in the current forecast period which, individually or collectively, cast doubt upon the Group's ability to continue as a going concern. Nor are any such risks apparent in the foreseeable future.
EU court sets aside European Commission's state aid decision In a judgement dated 14 July 2016, the General Court of the
European Union (EGC) set aside the European Commission's decision dated 25 January 2012 in an action brought by the Federal Republic of Germany. In its state aid decision, the European Commission had argued that the financing of civil servant pensions in part constituted unlawful state aid that had to be repaid to the federal government. We have described this in detail in the 2015 Annual Report in Notes 49 and 51 to the consolidated financial statements. In their actions, Deutsche Post AG and the federal government asserted that the state aid decision was unlawful. The EGC has now followed this argument in the action brought by the federal government. The action brought by Deutsche Post AG is still pending. As a result of the EGC's judgement, there are now no longer any grounds for the obligation to repay the alleged state aid under the state aid decision. The European Commission has the right to appeal this judgement at the European Court of Justice.
The economic outlook for full-year 2016 as reported in the 2015 Annual Report, beginning on page 94 deteriorated slightly in the first half. The International Monetary Fund (IMF) now expects global economic output to grow by 3.1% and global trade by 2.7% in 2016. The downward correction of the growth forecast takes account of the expected negative impact of the vote by the UK electorate to leave the European Union.
In China, gross domestic product (GDP) is likely to grow more slowly than in the previous year (IMF: 6.6%) whereas GDP growth is expected to remain quite moderate in Japan (IMF: 0.3%; IHS: 0.5%).
In the United States, full-year GDP growth is expected to be slower than in the previous year (IMF: 2.2%; IHS: 1.9%).
In the euro zone, GDP growth in 2016 is projected to be on par with the previous year (IMF: 1.6%; ECB: 1.6%; IHS: 1.5%).
In Germany, early indicators suggest that the underlying growth momentum will not change significantly from the first half of the year. Domestic demand is expected to provide strong momentum. By contrast, exports are likely to only increase moderately as the positive effects of the weak euro dissipate. GDP growth of slightly below prior-year levels is expected for 2016 as a whole (IMF: 1.6%; Sachverständigenrat 1.5%; IHS: 1.6%).
We are reconfirming the revenue and earnings forecast for full-year 2016 as described in the 2015 Annual Report on page 97.
We are reconfirming the expected financial position for full-year 2016 as described in the 2015 Annual Report, beginning on page 97.
We are similarly reconfirming our forecasts relating to the performance of our other indicators relevant to full-year 2016 performance as described in the 2015 Annual Report on page 98. As in previous years, free cash flow is again expected to more than cover the dividend payment for financial year 2015 made in May 2016, provided the further funding of pension obligations of €1 billion is excluded from this measurement.
This Interim Report contains forward-looking statements that relate to the business, financial performance and results of operations of Deutsche Post AG. Forward-looking statements are not historical facts and may be identified by words such as "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets" and similar expressions. As these statements are based upon current plans, estimates and projections, they are subject to risks and uncertainties that could cause actual results to be materially different from the future development, performance or results expressly or implicitly assumed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as at the date of this presentation. Deutsche Post AG does not intend or assume any obligation to update these forward-looking statements to reflect events or circumstances after the date of this Interim Report.
Any internet sites referred to in the Interim Report by the Board of Management do not form part of the report.
1 January to 30 June
| €m | ||||
|---|---|---|---|---|
| H1 2015 | H1 2016 | Q2 2015 | Q2 2016 | |
| Revenue | 29,467 | 28,062 | 14,700 | 14,190 |
| Other operating income | 1,181 | 978 | 592 | 430 |
| Total operating income | 30,648 | 29,040 | 15,292 | 14,620 |
| Materials expense | −16,647 | −14,808 | −8,326 | −7,507 |
| Staff costs | −9,886 | −9,830 | −4,972 | −4,909 |
| Depreciation, amortisation and impairment losses | −645 | −653 | −326 | −327 |
| Other operating expenses | −2,214 | −2,125 | −1,132 | −1,125 |
| Total operating expenses | −29,392 | −27,416 | −14,756 | −13,868 |
| Net income from investments accounted for using the equity method | 1 | 1 | 1 | 0 |
| Profit from operating activities (EBIT) | 1,257 | 1,625 | 537 | 752 |
| Financial income | 45 | 45 | 19 | 17 |
| Finance costs | −196 | −184 | −103 | −87 |
| Foreign currency result | −14 | −32 | −17 | −8 |
| Net finance costs | −165 | −171 | −101 | −78 |
| Profit before income taxes | 1,092 | 1,454 | 436 | 674 |
| Income taxes | −180 | −203 | −65 | −94 |
| Consolidated net profit for the period | 912 | 1,251 | 371 | 580 |
| attributable to Deutsche Post AG shareholders | 821 | 1,180 | 326 | 541 |
| attributable to non-controlling interests | 91 | 71 | 45 | 39 |
| Basic earnings per share (€) | 0.68 | 0.98 | 0.27 | 0.45 |
| Diluted earnings per share (€) | 0.65 | 0.94 | 0.26 | 0.43 |
1 January to 30 June
| €m | ||||
|---|---|---|---|---|
| H1 2015 | H1 2016 | Q2 2015 | Q2 2016 | |
| Consolidated net profit for the period | 912 | 1,251 | 371 | 580 |
| Items that will not be reclassified to profit or loss | ||||
| Change due to remeasurements of net pension provisions | 1,024 | −1,490 | 2,550 | −513 |
| Other changes in retained earnings | 0 | 0 | 0 | 0 |
| Income taxes relating to components of other comprehensive income | −55 | 49 | −97 | 17 |
| Share of other comprehensive income of investments accounted for using the equity method (after tax) | 0 | 0 | 0 | 0 |
| Total (after tax) | 969 | −1,441 | 2,453 | −496 |
| Items that may be subsequently reclassified to profit or loss IAS 39 revaluation reserve |
||||
| Changes from unrealised gains and losses | 61 | −7 | 28 | 0 |
| Changes from realised gains and losses | −172 | −63 | −172 | 0 |
| IAS 39 hedging reserve | ||||
| Changes from unrealised gains and losses | −122 | 21 | 43 | −21 |
| Changes from realised gains and losses | 63 | 12 | 35 | 4 |
| Currency translation reserve Changes from unrealised gains and losses |
602 | −394 | −230 | 47 |
| Changes from realised gains and losses | 0 | 0 | 0 | 0 |
| Income taxes relating to components of other comprehensive income | 25 | 3 | −8 | 5 |
| Share of other comprehensive income of investments accounted for using the equity method (after tax) | 2 | 1 | 1 | 1 |
| Total (after tax) | 459 | −427 | −303 | 36 |
| Other comprehensive income (after tax) | 1,428 | −1,868 | 2,150 | −460 |
| Total comprehensive income | 2,340 | −617 | 2,521 | 120 |
| attributable to Deutsche Post AG shareholders | 2,239 | −678 | 2,494 | 81 |
| attributable to non-controlling interests | 101 | 61 | 27 | 39 |
| €m | ||
|---|---|---|
| 31 Dec. 2015 | 30 June 2016 | |
| ASSETS | ||
| Intangible assets | 12,490 | 12,242 |
| Property, plant and equipment | 7,795 | 7,898 |
| Investment property | 25 | 20 |
| Investments accounted for using the equity method | 76 | 95 |
| Non-current financial assets | 1,113 | 665 |
| Other non-current assets | 221 | 107 |
| Deferred tax assets | 2,007 | 2,024 |
| Non-current assets | 23,727 | 23,051 |
| Inventories | 281 | 261 |
| Current financial assets | 179 | 571 |
| Trade receivables | 7,694 | 7,495 |
| Other current assets | 2,172 | 2,683 |
| Income tax assets | 197 | 204 |
| Cash and cash equivalents | 3,608 | 2,072 |
| Assets held for sale | 12 | 16 |
| Current assets | 14,143 | 13,302 |
| Total ASSETS | 37,870 | 36,353 |
| EQUITY AND LIABILITIES Issued capital |
1,211 | 1,205 |
| Capital reserves | 2,385 | 2,374 |
| Other reserves | 11 | −406 |
| Retained earnings | 7,427 | 5,977 |
| Equity attributable to Deutsche Post AG shareholders | 11,034 | 9,150 |
| Non-controlling interests | 261 | 318 |
| Equity | 11,295 | 9,468 |
| Provisions for pensions and similar obligations | 6,221 | 6,126 |
| Deferred tax liabilities | 142 | 79 |
| Other non-current provisions | 1,512 | 1,598 |
| Non-current provisions | 7,875 | 7,803 |
| Non-current financial liabilities | 4,625 | 5,089 |
| Other non-current liabilities | 234 | 258 |
| Non-current liabilities | 4,859 | 5,347 |
| Non-current provisions and liabilities | 12,734 | 13,150 |
| Current provisions | 1,486 | 1,526 |
| Current financial liabilities | 553 | 1,350 |
| Trade payables | 7,069 | 6,075 |
| Other current liabilities | 4,255 | 4,289 |
| Income tax liabilities | 476 | 494 |
| Liabilities associated with assets held for sale | 2 | 1 |
| Current liabilities | 12,355 | 12,209 |
| Current provisions and liabilities | 13,841 | 13,735 |
| Total EQUITY AND LIABILITIES | 37,870 | 36,353 |
1 January to 30 June
| €m | ||||
|---|---|---|---|---|
| H1 2015 | H1 2016 | Q2 2015 | Q2 2016 | |
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders | 821 | 1,180 | 326 | 541 |
| Consolidated net profit for the period attributable to non-controlling interests | 91 | 71 | 45 | 39 |
| Income taxes | 180 | 203 | 65 | 94 |
| Net finance costs | 165 | 171 | 101 | 78 |
| Profit from operating activities (EBIT) | 1,257 | 1,625 | 537 | 752 |
| Depreciation, amortisation and impairment losses | 645 | 653 | 326 | 327 |
| Net income from disposal of non-current assets | −228 | −59 | −197 | 13 |
| Non-cash income and expense | 45 | −10 | 20 | −17 |
| Change in provisions | −358 | −1,351 | −218 | −1,173 |
| Change in other non-current assets and liabilities | −12 | 13 | −3 | 28 |
| Dividend received | 0 | 1 | 0 | 0 |
| Income taxes paid | −277 | −224 | −130 | −135 |
| Net cash from/used in operating activities before changes in working capital | 1,072 | 648 | 335 | −205 |
| Changes in working capital Inventories |
8 | 12 | −2 | 41 |
| Receivables and other current assets | −542 | −503 | 89 | 43 |
| Liabilities and other items | −193 | −530 | −156 | −40 |
| Net cash from/used in operating activities | 345 | −373 | 266 | −161 |
| Subsidiaries and other business units | −2 | 0 | −2 | 0 |
| Property, plant and equipment and intangible assets | 64 | 60 | 25 | 27 |
| Investments accounted for using the equity method and other investments | 221 | 80 | 221 | 0 |
| Other non-current financial assets | 11 | 12 | 5 | 2 |
| Proceeds from disposal of non-current assets | 294 | 152 | 249 | 29 |
| Subsidiaries and other business units | 0 | 0 | 0 | 0 |
| Property, plant and equipment and intangible assets | −972 | −1,016 | −407 | −439 |
| Investments accounted for using the equity method and other investments | 0 | −19 | 0 | 0 |
| Other non-current financial assets | −37 | −27 | −8 | −3 |
| Cash paid to acquire non-current assets | −1,009 | −1,062 | −415 | −442 |
| Interest received | 22 | 24 | 10 | 13 |
| Current financial assets | 221 | 16 | 185 | −3 |
| Net cash used in/from investing activities | −472 | −870 | 29 | −403 |
| Proceeds from issuance of non-current financial liabilities | 6 | 1,260 | 2 | 1,250 |
| Repayments of non-current financial liabilities | −17 | −20 | −8 | −9 |
| Change in current financial liabilities | 35 | −51 | 44 | −39 |
| Other financing activities | −45 | −101 | −18 | −41 |
| Cash paid for transactions with non-controlling interests | −6 | 0 | −6 | 0 |
| Dividend paid to Deutsche Post AG shareholders | −1,030 | −1,027 | −1,030 | −1,027 |
| Dividend paid to non-controlling interest holders | −6 | −3 | −6 | −3 |
| Purchase of treasury shares | −31 | −221 | −9 | −196 |
| Interest paid | 12 | −56 | −46 | −40 |
| Net cash used in financing activities | −1,082 | −219 | −1,077 | −105 |
| Net change in cash and cash equivalents | −1,209 | −1,462 | −782 | −669 |
| Effect of changes in exchange rates on cash and cash equivalents | 44 | −75 | −51 | 10 |
| Changes in cash and cash equivalents associated with assets held for sale | 0 | 0 | 0 | −1 |
| Changes in cash and cash equivalents due to changes in consolidated group | 0 | 1 | 0 | 0 |
| Cash and cash equivalents at beginning of reporting period | 2,978 | 3,608 | 2,646 | 2,732 |
| Cash and cash equivalents at end of reporting period | 1,813 | 2,072 | 1,813 | 2,072 |
| €m | Other reserves | Equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| attributable | |||||||||
| IAS 39 | IAS 39 | Currency | to Deutsche | Non | |||||
| Issued capital |
Capital reserves |
revaluation reserve |
hedging reserve |
translation reserve |
Retained earnings |
Post AG shareholders |
controlling interests |
Total equity | |
| Balance at 1 January 2015 | 1,210 | 2,339 | 170 | −28 | −483 | 6,168 | 9,376 | 204 | 9,580 |
| Capital transactions with owner Dividend |
−1,030 | −1,030 | −7 | −1,037 | |||||
| Transactions with non-controlling interests | 0 | 0 | 0 | 1 | 1 | −1 | 0 | ||
| Changes in non-controlling interests due to changes in consolidated group |
0 | 0 | 0 | ||||||
| Issue of shares or other equity instruments | 0 | 0 | 0 | 0 | 0 | 0 | |||
| Purchase of treasury shares | −1 | 0 | −30 | −31 | 0 | −31 | |||
| Share-based payment schemes (issuance) | 0 | 35 | 0 | 35 | 0 | 35 | |||
| Share-based payment schemes (exercise) | 2 | −48 | 46 | 0 | 0 | 0 | |||
| −1,025 | −8 | −1,033 | |||||||
| Total comprehensive income | |||||||||
| Consolidated net profit for the period | 821 | 821 | 91 | 912 | |||||
| Currency translation differences | 589 | 0 | 589 | 15 | 604 | ||||
| Change due to remeasurements of net pension provisions |
974 | 974 | −5 | 969 | |||||
| Other changes | 0 | 0 | −104 | −41 | 0 | −145 | 0 | −145 | |
| 2,239 | 101 | 2,340 | |||||||
| Balance at 30 June 2015 | 1,211 | 2,326 | 66 | −69 | 106 | 6,950 | 10,590 | 297 | 10,887 |
| Balance at 1 January 2016 | 1,211 | 2,385 | 67 | −41 | −15 | 7,427 | 11,034 | 261 | 11,295 |
| Capital transactions with owner Dividend |
−1,027 | −1,027 | −5 | −1,032 | |||||
| Transactions with non-controlling interests | 0 | 0 | 0 | −1 | −1 | 1 | 0 | ||
| Changes in non-controlling interests | |||||||||
| due to changes in consolidated group | 0 | 0 | 0 | ||||||
| Issue of shares or other equity instruments | 0 | 0 | 0 | 0 | 0 | 0 | |||
| Purchase of treasury shares | −9 | 0 | −212 | −221 | 0 | −221 | |||
| Share-based payment schemes (issuance) | 0 | 43 | 0 | 43 | 0 | 43 | |||
| Share-based payment schemes (exercise) | 3 | −54 | 51 | 0 | 0 | 0 | |||
| −1,206 | −4 | −1,210 | |||||||
| Total comprehensive income Consolidated net profit for the period |
1,180 | 1,180 | 71 | 1,251 | |||||
| Currency translation differences | −383 | 0 | −383 | −10 | −393 | ||||
| Change due to remeasurements of net pension provisions |
−1,441 | −1,441 | 0 | −1,441 | |||||
| Other changes | 0 | 0 | −57 | 23 | 0 | −34 | 0 | −34 | |
| −678 | 61 | −617 | |||||||
| Balance at 30 June 2016 | 1,205 | 2,374 | 10 | −18 | −398 | 5,977 | 9,150 | 318 | 9,468 |
Deutsche Post AG is a listed corporation domiciled in Bonn, Germany. The condensed consolidated interim financial statements of Deutsche Post AG and its subsidiaries cover the period from 1 January to 30 June 2016 and have been reviewed.
The accompanying condensed consolidated interim financial statements as at 30 June 2016 were prepared in accordance with section 37w of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act) and the International Financial Reporting Standards (IFRS s) and related interpretations issued by the International Accounting Standards Board (IASB) for interim financial reporting, as adopted by the European Union. These interim financial statements thus include all information and disclosures required by IFRSs to be presented in condensed interim financial statements.
Preparation of the consolidated interim financial statements for interim financial reporting in accordance with IAS 34 requires the Board of Management to exercise judgement and make estimates and assumptions that affect the application of accounting policies in the Group and the presentation of assets, liabilities, income and expenses. Actual amounts may differ from these estimates. The results obtained thus far in financial year 2016 are not necessarily an indication of how business will develop in the future.
The accounting policies applied to the consolidated interim financial statements are generally based on the same accounting policies used in the consolidated financial statements for financial year 2015.
The income tax expense for the reporting period was deferred on the basis of the tax rate expected to apply to the full financial year.
For further information on the accounting policies applied, please refer to the consolidated financial statements for the year ended 31 December 2015, on which these interim financial statements are based.
Departures from the accounting policies applied in financial year 2015 consist of the new or amended international accounting pronouncements under IFRSs required to be applied for the first time since financial year 2016.
| Standard | Subject matter and significance |
|---|---|
| Amendments to IAS 19, Defined Benefit Plans: Employee Contributions |
The amendments apply to the recognition of employee contributions to defined benefit retirement plans. Their objective is to simplify accounting for employee contributions that are independent of the number of years of service. In such cases, the service cost in the period in which the correspond ing service is rendered may be reduced. The new requirements must be applied retrospectively. Application did not lead to any significant effects. |
| Annual Improvements to IFRS s (2010−2012 Cycle) |
The annual improvement process refers to the following standards: IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24, IAS 37, IAS 38 and IAS 39. The amend ments do not have a significant influence on the consolidated financial statements. |
| Amendments to IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets: Clari fication of Acceptable Methods of Depreciation and Amortisation |
The amendments expand the existing requirements relating to the permitted depreciation and amortisation methods for intangible assets and for property, plant and equipment. The amendments specify that revenue-based depreciation and amortisation methods are not permitted for property, plant and equipment and may only be used for intangible assets in certain exceptional circumstances. In addition, the amendments clarify that a reduction in the selling price of goods and services could signal obsolescence, which could in turn reflect a reduction in the economic benefits available from the asset. The requirements must be applied prospectively. The effects of this interpretation on the consolidated financial statements are immaterial. |
| Amendments to IFRS 11, Joint Arrangements – Acquisition of Interests in Joint Operations |
The amendment clarifies that the acquisition and additional acquisition of interests in joint operations in which the activity constitutes a business, as defined in IFRS 3, Business Combinations, must be recognised in accordance with the principles governing business combinations accounting in IFRS 3 and other relevant IFRSs, with the exception of those principles that conflict with the requirements of IFRS 11. The amendments do not apply if the reporting entity and the other parties involved are under the common control of the same ultimate controlling party. The new requirements must be applied prospectively. The amendment has no significant effect on the Group. |
| Annual Improvements to IFRS s (2012−2014 Cycle) |
The annual improvement process refers to the following standards: IFRS 5, IFRS 7, IAS 19 and IAS 34. The amendments do not have a significant influence on the consolidated financial statements. |
| Amendments to IAS 1, Presentation of Financial Statements: Disclosure Initiative |
The changes comprise clarifications relating to the materiality of the items presented in all components of IFRS financial statements. Information that is not material need not be presented. This applies even if disclosure is explicitly required in other standards. In addition, the revised version of IAS 1 includes new rules or clarifications of existing requirements concerning the presentation of subtotals, the structure of the notes and the disclosures on accounting policies. The presentation of the interest in equity-accounted investments in other comprehensive income is also clarified. The amendments do not have a significant effect on the financial statements. |
| The following are not relevant for the consolidated financial statements: amendments to IAS 27, Equity Method in Separate Financial Statements. |
The consolidated group includes all companies controlled by Deutsche Post AG.
The Group companies are consolidated from the date on which Deutsche Post DHL Group is able to exercise control.
The companies listed in the table below are consolidated in addition to the parent company Deutsche Post AG.
| 31 Dec. 2015 | 30 June 2016 | |
|---|---|---|
| Number of fully consolidated companies (subsidiaries) |
||
| German | 139 | 139 |
| Foreign | 658 | 657 |
| Number of joint operations German |
1 | 1 |
| Foreign | 1 | 1 |
| Number of investments accounted for using the equity method |
||
| German | 1 | 1 |
| Foreign | 15 | 14 |
In January 2016, Deutsche Post DHL Group acquired a minority interest of 27.5% in French e-commerce logistics specialist Relais Colis. Relais Colis is accounted for in the consolidated financial statements using the equity method. In addition, two companies accounted for using the equity method have been liquidated.
No acquisitions were made in the period to 30 June 2016.
Disposal and deconsolidation effects in the first half of 2016 were as follows:
| €m | |
|---|---|
| 1 January to 30 June | nugg.ad GmbH |
| Non-current assets | 0 |
| Current assets | 2 |
| Cash and cash equivalents | 3 |
| ASSETS | 5 |
| Non-current provisions and liabilities | 0 |
| Current provisions and liabilities | 2 |
| EQUITY AND LIABILITIES | 2 |
| Net assets | 3 |
| Total consideration received | 3 |
| Deconsolidation gain (+)/loss (–) | 0 |
In January 2016, Deutsche Post DHL Group sold its 100% interest in e-commerce company nugg.ad GmbH, Germany, to Zalando Media Solutions GmbH. The assets and liabilities had previously been reclassified as assets held for sale and liabilities associated with assets held for sale in accordance with IFRS 5. The most recent measurement prior to reclassification did not indicate any impairment.
In the first quarter of 2016, the remaining shares in the property development companies King's Cross Central Property Trust and King's Cross Central General Partner Ltd. (King's Cross companies), UK, were sold. The gains on the disposal of the shares are reported in other operating income, Note 4.
Pension provisions decreased in the first half of 2016 despite a considerable reduction in discount rates. This decrease is due largely to additions to plan assets and a measurement-related reversal resulting from changes in the occupational retirement arrangement in Germany in the first quarter, which was offset by a number of other human resources measures (early retirement scheme for civil servants, etc.) and meant that, overall, there was no effect on earnings.
In addition, on 1 April 2016, the Group placed two senior bonds with a total volume of €1.25 billion. Of the capital raised, €1 billion is being used for the further funding of pension obligations. The five-year bond has a volume of €750 million and an annual coupon of 0.375%. The €500 million bond has a term of ten years and an annual coupon of 1.250%.
On 1 March 2016, the Board of Management of Deutsche Post AG resolved a share buyback programme to be initiated on 1 April 2016, Note 10.
Of the gains on the disposal of non-current assets, €63 million relates to the sale of the remaining shares in the King's Cross companies in the UK. The prior-year disposal gains included €99 million from the sale of equity interests in Sinotrans Ltd., China, and €74 million from the sale of shares in the King's Cross companies.
The decrease in income from currency translation is due largely to the change in the exchange rate of the euro.
Miscellaneous other operating income includes a large number of smaller individual items.
| €m | ||
|---|---|---|
| H1 2015 | H1 2016 | |
| Income from currency translation | 148 | 117 |
| Insurance income | 89 | 98 |
| Income from the reversal of provisions | 125 | 96 |
| Gains on disposal of non-current assets | 244 | 94 |
| Reversals of impairment losses on receivables and other assets |
51 | 77 |
| Commission income | 72 | 61 |
| Income from fees and reimbursements | 68 | 61 |
| Rental and lease income | 59 | 51 |
| Income from the remeasurement of liabilities | 28 | 48 |
| Income from work performed and capitalised | 63 | 33 |
| Income from derivatives | 16 | 25 |
| Income from prior-period billings | 14 | 14 |
| Income from loss compensation | 13 | 13 |
| Income from the derecognition of liabilities | 16 | 7 |
| Recoveries on receivables previously written off | 4 | 6 |
| Subsidies | 3 | 3 |
| Miscellaneous | 168 | 174 |
| Total | 1,181 | 978 |
Of the €653 million in depreciation, amortisation and impairment losses, €3 million relates to impairment losses on property, plant and equipment in the Supply Chain segment. In the prior-year period, the depreciation, amortisation and impairment losses item did not include any impairment losses.
| €m | ||
|---|---|---|
| H1 2015 | H1 2016 | |
| Cost of purchased cleaning and security services | 179 | 177 |
| Expenses for advertising and public relations | 195 | 172 |
| Insurance costs | 164 | 172 |
| Travel and training costs | 170 | 151 |
| Warranty expenses, refunds and compensation payments |
127 | 137 |
| Other business taxes | 115 | 126 |
| Currency translation expenses | 143 | 119 |
| Telecommunication costs | 119 | 116 |
| Write-downs of current assets | 126 | 107 |
| Office supplies | 91 | 78 |
| Entertainment and corporate hospitality expenses | 74 | 71 |
| Consulting costs (including tax advice) | 97 | 65 |
| Services provided by Bundesanstalt für Post und Telekommunikation (German federal post and |
||
| telecommunications agency) | 55 | 61 |
| Customs clearance-related charges | 51 | 51 |
| Contributions and fees | 48 | 49 |
| Voluntary social benefits | 42 | 38 |
| Losses on disposal of assets | 15 | 33 |
| Commissions paid | 30 | 31 |
| Legal costs | 30 | 31 |
| Expenses from derivatives | 72 | 27 |
| Monetary transaction costs | 24 | 23 |
| Audit costs | 16 | 16 |
| Donations | 13 | 11 |
| Prior-period other operating expenses | 8 | 8 |
| Miscellaneous | 210 | 255 |
| Total | 2,214 | 2,125 |
Miscellaneous other operating expenses include a large number of smaller individual items.
Basic earnings per share in the reporting period were €0.98 (previous year: €0.68).
| H1 2015 | H1 2016 | ||
|---|---|---|---|
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders |
€m | 821 | 1,180 |
| Weighted average number of shares outstanding |
number | 1,210,055,169 | 1,209,234,626 |
| Basic earnings per share | € | 0.68 | 0.98 |
Diluted earnings per share in the reporting period were €0.94 (previous year: €0.65).
| H1 2015 | H1 2016 | ||
|---|---|---|---|
| Consolidated net profit for the period attributable to |
|||
| Deutsche Post AG shareholders | €m | 821 | 1,180 |
| Plus interest expense on convertible | |||
| bond | €m | 2 | 2 |
| Less income taxes | €m | 01 | 01 |
| Adjusted consolidated net profit for the period attributable to |
|||
| Deutsche Post AG shareholders | €m | 823 | 1,182 |
| Weighted average number | |||
| of shares outstanding | number | 1,210,055,169 | 1,209,234,626 |
| Potentially dilutive shares | number | 53,024,591 | 51,189,641 |
| Weighted average number | |||
| of shares for diluted earnings | number | 1,263,079,760 | 1,260,424,267 |
| Diluted earnings per share | € | 0.65 | 0.94 |
1 Rounded below €1 million.
Investments in intangible assets (not including goodwill) and property, plant and equipment amounted to €867 million in the first half of 2016 (previous year: €695 million).
| €m | ||
|---|---|---|
| 30 June 2015 | 30 June 2016 | |
| Intangible assets (not including goodwill) | 120 | 77 |
| Property, plant and equipment | ||
| Land and buildings (incl. leasehold improvements) | 32 | 43 |
| Technical equipment and machinery | 33 | 49 |
| Transport equipment | 38 | 74 |
| Aircraft | 19 | 38 |
| IT equipment | 53 | 36 |
| Operating and office equipment | 33 | 35 |
| Advance payments and assets under development | 367 | 515 |
| 575 | 790 | |
| Total | 695 | 867 |
| €m | ||
|---|---|---|
| 2015 | 2016 | |
| Cost | ||
| Balance at 1 January | 12,247 | 12,704 |
| Disposals | −4 | 0 |
| Currency translation differences | 461 | −214 |
| Balance at 31 December/30 June | 12,704 | 12,490 |
| Depreciation, amortisation and impairment losses Balance at 1 January |
1,138 | 1,159 |
| Disposals | −1 | 0 |
| Currency translation differences | 22 | −26 |
| Balance at 31 December/30 June | 1,159 | 1,133 |
| Carrying amount at 31 December/30 June | 11,545 | 11,357 |
The change in goodwill in the first half of 2016 is due to currency translation differences.
The amounts reported under this balance sheet item relate mainly to the following:
| €m | Assets | Liabilities | |||
|---|---|---|---|---|---|
| 31 Dec. 2015 | 30 June 2016 | 31 Dec. 2015 | 30 June 2016 | ||
| Exel Inc., USA – real estate (Supply Chain segment) | 6 | 6 | 0 | 0 | |
| Deutsche Post DHL Corporate Real Estate Management GmbH & Co. Logistikzentren KG, Germany – plot of land (Corporate Center/Other segment) |
0 | 5 | 0 | 0 | |
| IntelliAd Media GmbH, Germany – equity interest (PeP segment) | 0 | 3 | 0 | 1 | |
| Güll GmbH, Germany, and Presse-Service Güll GmbH, Switzerland – equity interests (PeP segment) | 3 | 2 | 0 | 0 | |
| nugg.ad GmbH, Germany – equity interest (PeP segment) | 3 | 0 | 2 | 0 | |
| Other | 0 | 0 | 0 | 0 | |
| Assets held for sale and liabilities associated with assets held for sale | 12 | 16 | 2 | 1 |
The company plans to sell properties. The most recent measurement prior to reclassification, which was made in 2015, did not lead to any impairment.
The company plans to sell a plot of land. The most recent measurement prior to reclassification did not indicate any impairment.
The Group plans to sell IntelliAd Media GmbH. The company is a provider of technology for search engine advertising. The most recent measurement prior to reclassification did not indicate any impairment.
| €m | |
|---|---|
| 30 June 2016 | |
| Non-current assets | 0 |
| Current assets | 2 |
| Cash and cash equivalents | 1 |
| ASSETS | 3 |
| Non-current provisions and liabilities | 0 |
| Current provisions and liabilities | 1 |
| EQUITY AND LIABILITIES | 1 |
The sale of IntelliAd Media GmbH was completed in July 2016.
The Group plans to sell Güll GmbH, Germany, and Presse-Service Güll GmbH, Switzerland, which are both accounted for using the equity method. The Group holds 51% of the shares of each of these joint ventures. The most recent measurement prior to reclassification led to an impairment loss of €2 million in financial year 2015. A further impairment loss of €1 million was recognised in financial year 2016. The sale of the Güll companies was completed in July 2016.
The sale of e-commerce company nugg.ad GmbH, Germany, was completed in the first quarter of 2016, Note 2.
The aircraft sales planned by DHL Aviation (Netherlands) B.V., Netherlands, European Air Transport Leipzig GmbH, Germany, and DHL International GmbH, Germany, are reported under Other. As part of early fleet renewal activities, the number of legacy aircraft is to be reduced. Prior to reclassification in financial year 2015, an impairment loss of €12 million was recognised on the aircraft.
KfW Bankengruppe (KfW) held a 21% interest in the share capital of Deutsche Post AG as at 30 June 2016. The remaining 79% of the shares are in free float. KfW holds the shares in trust for the Federal Republic of Germany.
| € | ||
|---|---|---|
| 2015 | 2016 | |
| Issued capital | ||
| Balance at 1 January | 1,211,180,262 | 1,212,753,687 |
| Addition due to capital increase | 1,568,593 | 0 |
| Addition due to contingent capital increase (convertible bond) |
4,832 | 0 |
| Balance at 31 December/30 June | 1,212,753,687 | 1,212,753,687 |
| Treasury shares | ||
| Balance at 1 January | −1,507,473 | −1,568,593 |
| Purchase of treasury shares | −2,628,575 | −8,789,350 |
| Sale of treasury shares | 14,992 | 46,626 |
| Issue of treasury shares | 2,552,463 | 2,829,908 |
| Balance at 31 December/30 June | −1,568,593 | −7,481,409 |
| Total at 31 December/30 June | 1,211,185,094 | 1,205,272,278 |
The issued capital recorded in the commercial register is composed of 1,212,753,687 no-par value registered shares (ordinary shares) with a notional interest in the share capital of €1.00 per share, and is fully paid up.
Deutsche Post AG held 7,481,409 treasury shares as at 30 June 2016.
Deutsche Post AG acquired treasury shares for the total amount of €32 million (average price of €24.62 per share) in order to settle the 2015 tranche of the Share Matching Scheme. The company increased its share capital in 2015 to settle claims to matching shares under the 2011 tranche.
The treasury shares were issued to the executives concerned in April and May 2016.
Under the share buyback programme initiated on 1 April 2016 for a maximum term of one year, 7,481,409 shares were purchased in the period to 30 June 2016 for a total amount of €190 million including transaction costs and at an average price of €25.30 per share. The purchased shares will either be retired, used to service long-term executive remuneration plans or used to meet potential obligations if rights accruing under the 2012/2019 convertible bond are exercised.
In the period to 30 June 2016, an amount of €43 million was added to the capital reserves for share-based payment systems.
| €m | ||
|---|---|---|
| 2015 | 2016 | |
| Capital reserves at 1 January | 2,339 | 2,385 |
| Share Matching Scheme Addition |
47 | 36 |
| Exercise | −48 | −54 |
| Total for Share Matching Scheme | −1 | −18 |
| Performance Share Plan | ||
| Addition | 10 | 7 |
| Total for Performance Share Plan | 10 | 7 |
| Capital increases | 37 | 0 |
| Capital reserves at 31 December/30 June | 2,385 | 2,374 |
In April and May 2016, the rights to matching shares under the 2011 tranche were settled and the rights to incentive and investment shares under the 2015 tranche granted.
Changes in retained earnings are presented in the statement of changes in equity.
| €m | ||
|---|---|---|
| 2015 | 2016 | |
| Retained earnings at 1 January | 6,168 | 7,427 |
| Dividend payment | −1,030 | −1,027 |
| Consolidated net profit for the period | 1,540 | 1,180 |
| Change due to remeasurements of net pension provisions |
773 | −1,441 |
| Transactions with non-controlling interests | −3 | −1 |
| Miscellaneous other changes | −21 | −161 |
| Retained earnings at 31 December/30 June | 7,427 | 5,977 |
| €m | Global Forwarding, | Corporate Center/ | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PeP | Express | Freight | Supply Chain | Other | Consolidation1 | Group | ||||||||
| 1 Jan. to 30 June | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 |
| External revenue | 7,743 | 8,146 | 6,512 | 6,592 | 7,230 | 6,402 | 7,938 | 6,879 | 44 | 43 | 0 | 0 | 29,467 | 28,062 |
| Internal revenue | 70 | 55 | 183 | 182 | 337 | 350 | 49 | 55 | 583 | 572 | −1,222 | −1,214 | 0 | 0 |
| Total revenue | 7,813 | 8,201 | 6,695 | 6,774 | 7,567 | 6,752 | 7,987 | 6,934 | 627 | 615 | −1,222 | −1,214 | 29,467 | 28,062 |
| Profit/loss from operating activities (EBIT) |
474 | 659 | 708 | 777 | 57 | 120 | 172 | 229 | −153 | −159 | −1 | −1 | 1,257 | 1,625 |
| of which net income from investments accounted for using |
||||||||||||||
| the equity method | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | 1 | 1 |
| Segment assets2, 3 | 5,532 | 5,765 | 9,337 | 9,511 | 7,998 | 7,855 | 6,418 | 6,248 | 1,571 | 1,666 | −83 | −91 | 30,773 | 30,954 |
| of which investments accounted for using the equity method |
1 | 20 | 46 | 47 | 25 | 25 | 3 | 3 | 0 | 0 | 1 | 0 | 76 | 95 |
| Segment liabilities2, 3 | 2,697 | 2,694 | 3,508 | 3,105 | 3,141 | 2,856 | 3,372 | 3,042 | 1,496 | 1,469 | −59 | −60 | 14,155 | 13,106 |
| Segment assets/ liabilities, net |
2,835 | 3,071 | 5,829 | 6,406 | 4,857 | 4,999 | 3,046 | 3,206 | 75 | 197 | −24 | −31 | 16,618 | 17,848 |
| Capex | 191 | 187 | 229 | 396 | 74 | 22 | 136 | 184 | 64 | 77 | 1 | 1 | 695 | 867 |
| Depreciation and amortisation |
154 | 156 | 185 | 208 | 44 | 40 | 149 | 144 | 114 | 101 | −1 | 1 | 645 | 650 |
| Impairment losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
| Total depreciation, amortisation and |
||||||||||||||
| impairment losses | 154 | 156 | 185 | 208 | 44 | 40 | 149 | 147 | 114 | 101 | −1 | 1 | 645 | 653 |
| Other non-cash income | ||||||||||||||
| and expenses2 | 90 | 77 | 130 | 148 | 119 | 25 | 187 | 152 | 30 | 22 | 1 | −1 | 557 | 423 |
| Employees4 | 169,430 | 168,558 | 79,318 | 82,728 | 44,588 | 43,010 | 145,827 | 145,650 | 10,747 | 10,839 | 0 | 0 | 449,910 | 450,785 |
| Q 2 | ||||||||||||||
| External revenue | 3,677 | 3,973 | 3,366 | 3,434 | 3,615 | 3,250 | 4,019 | 3,512 | 23 | 21 | 0 | 0 | 14,700 | 14,190 |
| Internal revenue | 35 | 27 | 89 | 89 | 163 | 175 | 26 | 29 | 292 | 288 | −605 | −608 | 0 | 0 |
| Total revenue | 3,712 | 4,000 | 3,455 | 3,523 | 3,778 | 3,425 | 4,045 | 3,541 | 315 | 309 | −605 | −608 | 14,700 | 14,190 |
| Profit/loss from operating activities (EBIT)2 |
75 | 247 | 376 | 420 | 40 | 69 | 119 | 102 | −72 | −87 | −1 | 1 | 537 | 752 |
| of which net income from investments accounted for using the equity method |
0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 1 | 0 |
| Capex | 127 | 113 | 154 | 205 | 34 | 12 | 63 | 84 | 42 | 40 | 1 | 2 | 421 | 456 |
| Depreciation and amortisation |
78 | 79 | 94 | 104 | 21 | 20 | 76 | 72 | 57 | 50 | 0 | 1 | 326 | 326 |
| Impairment losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| Total depreciation, amortisation and |
||||||||||||||
| impairment losses | 78 | 79 | 94 | 104 | 21 | 20 | 76 | 73 | 57 | 50 | 0 | 1 | 326 | 327 |
| Other non-cash income and expenses2 |
62 | 35 | 55 | 100 | 80 | 10 | 96 | 68 | −9 | 7 | 0 | −1 | 284 | 219 |
1 Including rounding.
2 Prior-period amounts adjusted.
3 As at 31 December 2015 and 30 June 2016.
4 Average FTEs; prior-period amount corresponds to that of financial year 2015.
| €m | Europe | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | (excluding Germany) | Americas | Asia Pacific | Other regions | Group | |||||||
| 1 Jan. to 30 June | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 |
| External revenue | 8,498 | 8,787 | 9,609 | 8,473 | 5,134 | 4,916 | 5,026 | 4,770 | 1,200 | 1,116 | 29,467 | 28,062 |
| Non-current assets1 | 5,298 | 5,326 | 7,264 | 6,927 | 3,876 | 4,062 | 3,553 | 3,544 | 390 | 374 | 20,381 | 20,233 |
| Capex | 346 | 360 | 141 | 238 | 109 | 179 | 80 | 77 | 19 | 13 | 695 | 867 |
| Q 2 | ||||||||||||
| External revenue | 4,051 | 4,307 | 4,899 | 4,339 | 2,597 | 2,518 | 2,553 | 2,466 | 600 | 560 | 14,700 | 14,190 |
| Capex | 217 | 196 | 96 | 115 | 48 | 97 | 49 | 41 | 11 | 7 | 421 | 456 |
1 As at 31 December 2015 and 30 June 2016.
Segment reporting has been adapted in line with internal reporting. The prior-period amounts have been adjusted accordingly.
| €m | ||
|---|---|---|
| H1 2015 | H1 2016 | |
| Total income of reportable segments | 1,411 | 1,785 |
| Corporate Center/Other | −153 | −159 |
| Reconciliation to Group/Consolidation | −1 | −1 |
| Profit from operating activities (EBIT) | 1,257 | 1,625 |
| Net finance costs | −165 | −171 |
| Profit before income taxes | 1,092 | 1,454 |
| Income taxes | −180 | −203 |
| Consolidated net profit for the period | 912 | 1,251 |
The following table presents financial instruments recognised at fair value and financial instruments whose fair value is required to be disclosed, both presented by the level in the fair value hierarchy to which they are assigned.
The simplification option under IFRS 7.29a was exercised for cash and cash equivalents, trade receivables, other assets, trade payables and other liabilities with predominantly short maturities. Their carrying amounts as at the reporting date are approximately equivalent to their fair values. Not included are financial investments in equity instruments for which there is no quoted price in an active market and which therefore have to be measured at cost.
| €m | ||||
|---|---|---|---|---|
| Class | Level 11 | Level 22 | Level 33 | Total |
| 30 June 2016 Financial assets |
||||
| Non-current financial assets | 20 | 635 | 0 | 655 |
| Current financial assets | 0 | 458 | 0 | 458 |
| Total | 20 | 1,093 | 0 | 1,113 |
| Financial liabilities Non-current liabilities |
5,505 | 285 | 0 | 5,790 |
| Current liabilities | 764 | 163 | 0 | 927 |
| Total | 6,269 | 448 | 0 | 6,717 |
| 31 December 2015 Financial assets Non-current financial assets |
153 | 866 | 83 | 1,102 |
| Current financial assets | 27 | 42 | 0 | 69 |
| Total | 180 | 908 | 83 | 1,171 |
| Financial liabilities Non-current liabilities |
4,232 | 338 | 0 | 4,570 |
| Current liabilities | 0 | 107 | 0 | 107 |
| Total | 4,232 | 445 | 0 | 4,677 |
1 Quoted prices for identical instruments in active markets. 2 Inputs other than quoted market prices that are directly or indirectly observable for instruments.
3 Inputs not based on observable market data.
Level 1 mainly comprises equity instruments measured at fair value and debt instruments measured at amortised cost.
In addition to financial assets and financial liabilities measured at amortised cost, commodity, interest rate and currency derivatives are reported under Level 2. The fair values of the derivatives are measured on the basis of discounted expected future cash flows, taking into account forward rates for currencies, interest rates and commodities (market approach). For this purpose, price quotations observable on the market (exchange rates, interest rates and commodity prices) are imported from information platforms customary in the market into the treasury management system. The price quotations reflect actual transactions involving similar instruments on an active market. Any currency options used are measured using the Black-Scholes option pricing model. All significant inputs used to measure derivatives are observable on the market.
Level 3 mainly comprises the fair values of equity investments and derivatives associated with M&A transactions. These options are measured using recognised valuation models, taking plausible assumptions into account. The fair values of the derivatives depend largely on financial ratios. Financial ratios strongly influence the fair values of assets and liabilities. Increasing financial ratios lead to higher fair values, while decreasing financial ratios result in lower fair values.
No financial instruments have been transferred between levels in the current financial year.
The table below shows the effect on net gains and losses of the financial instruments categorised within Level 3 as at 30 June 2016:
| €m 2015 |
2016 |
|---|---|
| ------------ | ------ |
Unobservable inputs (Level 3)
| Assets | Liabilities | Assets | Liabilities | |
|---|---|---|---|---|
| Equity instruments | Derivatives, of which equity derivatives |
Equity instruments | Derivatives, of which equity derivatives |
|
| Balance at 1 January | 132 | 1 | 83 | 0 |
| Gains and losses (recognised in profit and loss)1 | 0 | −1 | 0 | 0 |
| 2 Gains and losses (recognised in OCI) |
38 | 0 | 0 | 0 |
| Additions | 0 | 0 | 0 | 0 |
| Disposals | −95 | 0 | −80 | 0 |
| Currency translation effects | 8 | 0 | −3 | 0 |
| Balance at 31 December/30 June | 83 | 0 | 0 | 0 |
1 Fair value losses are recognised in finance costs, fair value gains in financial income.
2 Unrealised gains and losses are recognised in the IAS 39 revaluation reserve.
Available-for-sale financial assets include shares in partnerships and corporations in the amount of €10 million (31 December 2015: €11 million). There is no active market for these instruments. As future cash flows cannot be reliably determined, fair value cannot be determined using valuation techniques. There are no plans to sell or derecognise significant shares of the available-for-sale financial assets reported as at 30 June 2016 in the near future. As in the previous year, no significant shares in partnerships and corporations that are measured at cost have been sold in the current financial year.
The Group's contingent liabilities and other financial obligations have not changed significantly compared with 31 December 2015.
There were no significant changes in related party disclosures as against 31 December 2015.
At his own request, Lawrence Rosen will retire and resign as the member of the Group Board of Management responsible for Finance, Global Business Services, on 30 September 2016. Melanie Kreis has been appointed as his successor; she will retain her responsibility as the Board Member for Human Resources and as Group Labour Director until further notice.
Tim Scharwath was appointed as the new member of the Group Board of Management for Global Forwarding, Freight in May 2016. He will have assumed office by June 2017.
In a judgement dated 14 July 2016, the General Court of the European Union (EGC) set aside the European Commission's state aid decision dated 25 January 2012 in an action brought by the Federal Republic of Germany (the federal government).
In its state aid decision, the European Commission had argued that the financing of civil servant pensions in part constituted unlawful state aid that had to be repaid to the federal government, 2015 Annual Report, Notes 49 and 51. In their actions, Deutsche Post AG and the federal government had asserted that the state aid decision was unlawful. The EGC has now followed this argument in the action brought by the federal government. The action brought by Deutsche Post AG is still pending. There are now no longer any grounds for the obligation to repay the alleged state aid under the state aid decision because of the EGC's judgement. The European Commission has the right to appeal this judgement at the European Court of Justice.
At the end of July 2016, the Group resolved to sell the long-distance bus operation of Deutsche Post Mobility GmbH (in the PeP segment) to FlixMobility GmbH in an asset deal.
There were no other significant events after the reporting date.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group in accordance with German accepted accounting principles, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Bonn, 2 August 2016
Deutsche Post AG The Board of Management
Dr Frank Appel Ken Allen
Jürgen Gerdes John Gilbert
Melanie Kreis Lawrence Rosen
We have reviewed the condensed consolidated interim financial statements – comprising the income statement and statement of comprehensive income, balance sheet, cash flow statement, statement of changes in equity and selected explanatory notes – and the interim group management report of Deutsche Post AG, Bonn, for the period from 1 January to 30 June 2016, which are part of the half-yearly financial report pursuant to section 37w of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the company's Board of Management. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We conducted our review of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW – Institute of Public Auditors in Germany) and additionally observed the International Standard on Review Engagements "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE 2410). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.
Based on our review, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting, as adopted by the EU, nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.
Düsseldorf, 2 August 2016
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft
Gerd Eggemann Verena Heineke Wirtschaftsprüfer Wirtschaftsprüferin
(German public auditor) (German public auditor)
Deutsche Post AG Headquarters Investor Relations 53250 Bonn Germany
Tel.: + 49 (0) 228 182-6 36 36 Fax: + 49 (0) 228 182-6 31 99 E-mail: ir @ dpdhl.com
Tel.: + 49 (0) 228 182-99 44 Fax: + 49 (0) 228 182-98 80 E-mail: pressestelle @ dpdhl.com
E-mail: ir @ dpdhl.com dpdhl.com/en/investors
GeT and DHL Webshop Mat. no. 675-602-407
Published on 3 August 2016.
The English version of the Interim Report as at 30 June 2016 of Deutsche Post DHL Group constitutes a translation of the original German version. Only the German version is legally binding, insofar as this does not conflict with legal provisions in other countries. Deutsche Post Corporate Language Services et al.
8 November 2016 Interim Report as at 30 September 2016
8 March 2017 2016 Annual Report
28 April 2017 2017 Annual General Meeting (Bochum)
2 May 2017 Dividend payment
11 May 2017 Interim Report as at 31 March 2017
8 August 2017 Interim Report as at 30 June 2017
8 November 2017 Interim Report as at 30 September 2017
Further dates, updates as well as information on live webcasts: dpdhl.com/en/investors
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