Quarterly Report • May 12, 2011
Quarterly Report
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| Q 1 2010 | Q 1 2011 | + / – % | ||
|---|---|---|---|---|
| Revenue | € m | 12,016 | 12,842 | 6.9 |
| Profi t from operating activities (ebit) | € m | 5121) | 629 | 22.9 |
| Return on sales 2) | % | 4.3 | 4.9 | – |
| Consolidated net profi t 3) | € m | 1,747 | 325 | – 81.4 |
| Operating cash fl ow | € m | – 95 | –34 | – 64.2 |
| Net liquidity (–) / net debt (+) 4) | € m | –1,382 | –1,084 | –21.6 |
| Earnings per share | € | 1.44 | 0.27 | – 81.3 |
| Number of employees 5) | 421,274 | 419,431 | – 0.4 | |
1) In the previous year ebit before non-recurring items was € 566 million. 2) ebit / revenue. 3) Excluding non-controlling interests. 4) Prior-year amount as at 31 December, page 12 of the Interim Report by the Board of Management for calculation. 5) Average ftes, prior-year amount corresponds to that of fi nancial year 2010.
1) In the previous year ebit before non-recurring items was € 566 million.
MAIL EXPRESS GLOBAL FORWARDING, FREIGHT SUPPLY CHAIN
WWW.DP-DHL.COM/EN/INVESTORS.HTML
What we achieved in the first quarter
We succeeded in significantly increasing our revenue and earnings compared with the first quarter of 2010, consistently utilising our strengths as the market leader in the German mail business and in nearly all of our logistics activities. The encouraging growth seen in the German parcel business and the fast-growing Asian region substantiate this. Our profitability improved further, resulting in return on sales rising clearly. We increased our investments as planned. Our financial position remains strong and stable.
2011 What we intend to achieve by the end of the year
In light of our good performance over the fi rst three months, we are confi rming our forecast of consolidated ebit for full-year 2011 to reach between € 2.2 billion and € 2.4 billion. The mail division is expected to contribute € 1.0 billion to € 1.1 billion to this figure, whilst the dhl divisions should deliver € 1.6 billion to € 1.7 billion. Consolidated net profit before effects from the measurement of the Postbank instruments is expected to continue to improve in 2011 in line with our operating business.
| Key Figures | I |
|---|---|
| Review and Preview | 1 |
| Letter to our Shareholders | 3 |
| Business and Environment | 4 |
|---|---|
| Organisation | 4 |
| Economic parameters | 4 |
| Deutsche Post Shares | 5 |
| Economic Position | 6 |
| Overall assessment by the Board of Management | 6 |
| Signifi cant events | 6 |
| Earnings | 6 |
| Financial position | 8 |
| Assets and liabilities | 11 |
| Divisions | 13 |
| Overview | 13 |
| mail division | 14 |
| express division | 16 |
| global forwarding, freight division | 18 |
| supply chain division | 20 |
| Non-Financial Performance Indicators | 21 |
| Employees | 21 |
| Research and development | 21 |
| Further Developments | 21 |
| Outlook | 22 |
| Report on expected developments | 22 |
| Opportunities and risks | 22 |
| Future economic parameters | 23 |
| Revenue and earnings forecast | 24 |
| Projected fi nancial position | 25 |
| Income Statement | 26 |
|---|---|
| Statement of Comprehensive Income | 27 |
| Balance Sheet | 28 |
| Cash Flow Statement | 29 |
| Statement of Changes in Equity | 30 |
| Selected Explanatory Notes | 31 |
| Basis of preparation | 31 |
| Income statement disclosures | 32 |
| Balance sheet disclosures | 34 |
| Segment reporting | 37 |
| Other disclosures | 38 |
| Responsibility Statement | 39 |
| Review Report | 39 |
| Graphs and Tables | 40 |
| Contacts | 40 |
Events II
Deutsche Post AG
9 May 2011
First quarter of 2011
Your company has started the year 2011 just as successfully as it ended the past fi nancial year. Consolidated revenue rose by 6.9 % to € 12.8 billion and EBIT was up by an impressive 22.9 % to € 629 million compared with the same period last year. Th is demonstrates that our favourable international position allows us to benefi t overproportionally from the sustained economic recovery.
Our mail business performed solidly, despite the fact that we have been required to apply value added tax to revenues generated with business customers since mid-2010. What is more, we are reaping the rewards of the boom in e-commerce with strong revenue growth in our parcel business. We saw substantial growth in our DHL divisions, especially in the key growth markets of Asia.
Th e challenges we faced in the past are now behind us. We have completed the majority of our restructuring initiatives, we have developed innovative products such as E-Postbrief and we have streamlined and optimised our processes. Now we are focusing all eff orts on profi table growth. Asia remains the key for our express and logistics business.
We have just the right man for this job. Roger Crook, our new Board member for GLOBAL FORWARDING, FREIGHT, is well acquainted with the region. He not only headed up our express business there in his previous position, he now works out of both Bonn and Singapore and is therefore closer to our customers and markets.
As a logistics company, we have to stay fl exible in order to respond quickly to events such as the devastating earthquake in Japan or the recent political unrest in various regions. Finding new ways to off er customers rapid solutions without risking the safety of our employees or the goods we transport is the ultimate art of logistics – and we have mastered this art.
Th at is why I am convinced that we will successfully continue on our growth course. We confi rm our expectation that consolidated EBIT will reach between € 2.2 billion and € 2.4 billion in fi nancial year 2011.
Yours faithfully,
Deutsche Post DHL The Mail & Logistics Group PO box address Deutsche Post AG Headquarters 53250 Bonn GERMANY
Delivery address Deutsche Post AG Headquarters Charles-de-Gaulle-Str. 20 53113 Bonn GERMANY
Visitor's address Deutsche Post AG Headquarters Platz der Deutschen Post Bonn
Phone +49 228 182-0 Fax +49 228 182-7099
www.dp-dhl.com
4
Hermann Ude, previous Board of Management member responsible for GLOBAL FORWARDING, FREIGHT, left the company on 31 March 2011. Roger Crook has been appointed as the new Board member responsible for this department.
Currently, no material changes to the Group's organisational structure are planned for the year 2011.
Th e global economy remained on its upwards path at the beginning of 2011, with emerging economies seeing the strongest growth. Th e recovery also continued in most industrial nations, although it is likely that unusually high growth rate disparities remained.
Growth in Asian countries lost some momentum but remained comparatively very high on a global scale. In China, GDP in the fi rst quarter was up by 9.7 % year on year and therefore comparably dynamic to the previous quarters. Th e devastating earthquake that struck Japan on 11 March 2011 has had signifi cant implications for the country, where economic output is likely to have fallen noticeably.
Th e US economy held to a growth course. Investments in machinery and equipment are expected to have again been the primary drivers. Furthermore, private consumption grew, bolstered by rising employment. Nevertheless, the unemployment rate remained very high. Amidst these economic conditions, the US Federal Reserve retained its key interest rate at 0 % to 0.25 %.
In the euro zone, economic growth regained speed aft er seeing only a moderate pace of late. Th e industrial sector in particular showed a strong upwards trend. Furthermore, the construction industry is beginning to come out of the slump caused by the harsh winter, which is causing gross fi xed capital formation to rise. However, private consumption has again probably only seen a moderate rise on account of considerably higher prices. Based on a higher risk of infl ation, the European Central Bank raised its key interest rate at the beginning of April from 1.0 % to 1.25 %.
Th e German economy began 2011 in very good form, seeing a strong infl ux of new orders, substantially higher industrial production and even exceptionally solid construction spending. GDP is expected to have climbed signifi cantly in the reporting period, although private consumption has remained moderate. Adjusted for seasonal factors, the unemployment fi gure fell by 129,000 as at 31 March 2011. Th e strong upturn was also refl ected in the ifo Business Climate Index, which reached a new record high in February before dipping slightly again in March.
1) Rebased on the closing price of Deutsche Post shares on 30 December 2010.
Th e positive economic trend gave stock markets around the world a further boost as 2011 got underway. Although the national budget situation in several European countries remained tense, the EURO STOXX 50 climbed 4.2 % to 2,910 points in the fi rst quarter. Th e DAX got off to a good start to the year only to lose considerable ground due to the political unrest in North Africa, the rise in oil prices and the events triggered by the earthquake in Japan. Th e index was only up by 1.8 % overall but still managed to close the quarter at 7,041 points. Our shares also started off well, topping out at € 13.83. Th e market disruptions that arose in mid-February, however, put strong pressure on the price, which fell to € 12.10. Our shares recovered along with the indexes at the end of March, closing the quarter with a slight plus of 0.2 % to € 12.72. Average trading volumes fell 9.5 % below the prior year to 4.8 million.
| millions | 1.209.0 | 1.209.01 |
|---|---|---|
| 12.70 | 12.72 | |
| €m | 15,354 | 15,378 |
| € | 14.46 | 13.83 |
| 11.18 | 12.10 | |
| shares | 5,298,800 | 4,793,596 |
1) Including treasury shares, Note 13.
2) In 2010 and in the fi rst three months of 2011.
3) In the fi rst quarter.
| 30 Dec. 2010 31 March 2011 | $+/-$ % 31 March 2010 31 March 2011 | $+/-$ % | |||||
|---|---|---|---|---|---|---|---|
| Deutsche Post DHL | 12.70 | 12.72 | 0.2 | 12.85 | 12.72 | $-1.0$ | |
| TNT | 19.21 | 18.10 | $-5.8$ | 21.23 | 18.10 | $-14.7$ | |
| FedEx | USS | 92.96 | 93.55 | 0.6 | 93.40 | 93.55 | 0.2 |
| UPS | US\$ | 72.68 | 74.32 | 2.3 | 64.41 | 74.32 | 15.4 |
| Kuehne + Nagel | CHF | 130.00 | 128.50 | $-1.2$ | 106.70 | 128.50 | 20.4 |
Th e global economy continued to recover in the fi rst quarter of 2011, despite the repercussions of the devastating earthquake in Japan and the political unrest in North Africa and the Middle East. Against this backdrop, we succeeded in signifi cantly increasing our revenue and earnings compared with the fi rst quarter of 2010. Our profi tability improved further, resulting in return on sales rising clearly. Th e Group's fi nancial position remains stable and we continue to enjoy a good liquidity position, so we did not make use of the syndicated credit facility. We increased our investments as planned, particularly in the maintenance and expansion of our infrastructure.
In accordance with the contractual arrangements governing the planned sale of Postbank to Deutsche Bank, we reclassifi ed our remaining 39.5 % shareholding in Postbank as held for sale at the end of February 2011. Th e carrying amount of the investment as at the reclassifi cation date was € 1,801 million.
| Q 1 2010 | Q 1 2011 | ||
|---|---|---|---|
| Revenue | € m | 12,016 | 12,842 |
| Profi t from operating activities (ebit) | € m | 5121) | 629 |
| Return on sales 2) | % | 4.3 | 4.9 |
| Consolidated net profi t for the period 3) | € m | 1,747 | 325 |
| Earnings per share | € | 1.44 | 0.27 |
1) In the previous year ebit before non-recurring items was € 566 million.
2) ebit / revenue.
3) After deduction of non-controlling interests.
In order to strengthen the focus on our core business in the United States, we sold Exel Transportation Services, a provider of freight brokerage and intermodal services in the USA and Canada, on 1 April 2011, prior to which all of the assets and liabilities of the companies concerned were therefore reclassifi ed as held for sale as at 31 March 2011.
During the reporting period, consolidated revenue increased by € 826 million, or 6.9 %, to € 12,842 million (previous year: € 12,016 million). Currency eff ects of € 146 million contributed to this increase. Th e share of consolidated revenue generated abroad rose from 65.9 % in the fi rst quarter of 2010 to 67.0 %.
At € 389 million, other operating income was € 46 million lower than in the prioryear period (€ 435 million). Th e higher fi gure last year was largely attributable to the reversal of provisions recognised for restructuring.
Materials expense rose by € 712 million to € 7,298 million in the reporting period due, amongst other things, to the higher oil price. We are able to pass on this eff ect to our customers in most cases.
Staff costs fell slightly, from € 4,174 million to € 4,128 million, primarily due to the sale in 2010 of the day-defi nite domestic express businesses in the United Kingdom and France.
Depreciation, amortisation and impairment losses also fell slightly, decreasing by € 10 million to € 308 million.
Other operating expenses remained practically unchanged at € 868 million ( previous year: € 861 million).
Profi t from operating activities (EBIT) rose by € 117 million or 22.9 % during the reporting period to reach € 629 million.
However, net fi nancial income dropped from € 1,328 million to €–161 million ( reported as net fi nance costs). In particular, the previous year's fi gure had been lift ed by € 1,453 million by the initial measurement of the fair market value of a forward related to the second tranche of the Postbank sale.
Profi t before income taxes declined by € 1,372 million to € 468 million (previous year: € 1,840 million). Income taxes increased by € 47 million to € 117 million. Th e measurement of the derivatives from the planned Postbank sale had no eff ect on tax. Th e tax rate increased to the current fi gure of 25 % due to the higher income generated abroad.
Consolidated net profi t decreased from € 1,770 million in the fi rst quarter of 2010 to € 351 million in the reporting period. Of this amount, € 325 million is attributable to shareholders of Deutsche Post AG and € 26 million to non-controlling interest holders. Both basic and diluted earnings per share fell from € 1.44 to € 0.27.
| 10 Consolidated ebit | |||||
|---|---|---|---|---|---|
| €m | |||||
| Q 1 2011 | |||||
| 629 | |||||
| Q 1 2010 | |||||
| 512 1) |
1) In the previous year ebit before non-recurring items was € 566 million.
| 11 Selected cash fl ow indicators | |||
|---|---|---|---|
| Q 1 2010 | Q 1 2011 |
|---|---|
| 2,696 | 2,943 |
| – 407 | – 424 |
| – 95 | –34 |
| –195 | –237 |
| –117 | –153 |
Good liquidity position
Th e principles and aims of our fi nancial management presented in the 2010 Annual Report remain valid and are being pursued unchanged as is our fi nance strategy.
"FFO to debt", our dynamic performance metric, is calculated on a rolling 12-month basis. Th e defi nition of this metric and the methodology used to calculate its individual components correspond to those used by the rating agency Standard & Poor's.
In the fi rst quarter of 2011, "FFO to debt" declined slightly as anticipated due to the prepayment made to the Bundes-Pensions-Service für Post und Telekommunikation, although funds from operations (FFO) increased. At 34.9 %, this performance metric is, however, well within our expectations.
Our liquidity position remains good. In the reporting period, we therefore did not utilise the fi ve-year syndicated credit facility agreed upon in December 2010, which has a total volume of € 2 billion. As at 31 March 2011, the Group had cash and cash equivalents of € 2.9 billion. Th ere are also investment funds callable at sight of approximately € 400 million that are reported as current fi nancial assets in the balance sheet.
| 12 ffo to debt | |||
|---|---|---|---|
| ---------------- | -- | -- | -- |
| € m | 1 April 2010 to | |
|---|---|---|
| 1 Jan. to | 31 March | |
| 31 Dec. 2010 | 2011 | |
| Operating cash fl ow before changes in working capital | 2,109 | 2,296 |
| Interest and dividends received | 59 | 56 |
| Interest paid | 183 | 178 |
| Adjustment for operating leases | 1,055 | 1,055 |
| Adjustment for pensions | 198 | 198 |
| Non-recurring income / expenses | 531 | 387 |
| Funds from operations (ffo) | 3,769 | 3,814 |
| Reported fi nancial liabilities 1) | 7,022 | 6,885 |
| Financial liabilities related to the sale of Deutsche Postbank ag 1) | 4,164 | 4,207 |
| Financial liabilities at fair value through profi t or loss 1) | 115 | 122 |
| Adjustment for operating leases 2) | 5,527 | 5,527 |
| Adjustment for pensions 2) | 5,323 | 5,323 |
| Surplus cash and near-cash investments 1), 3) | 2,893 | 2,463 |
| Debt | 10,700 | 10,942 |
| ffo to debt (%) | 35.2 | 34.9 |
1) As at 31 December 2010 and 31 March 2011, respectively. 2) As at 31 December 2010. 3) Surplus cash and near-cash investments are defi ned as cash and cash equivalents and investment funds callable at sight, less cash needed for operations.
standardandpoors.com
dp-dhl.com/en/investors.html
Page 11
8
9
Th e Group's capital expenditure (capex) totalled € 252 million in the fi rst quarter of 2011, which refl ects a signifi cant year-on-year increase of 29.2 % (previous year: € 195 million). Funds were used mainly to replace and expand assets as follows: € 222 million was invested in property, plant and equipment and € 30 million in intangible assets excluding goodwill. Investments in property, plant and equipment related mainly to advance payments and assets under development (€ 103 million), transport equipment (€ 41 million), technical equipment and machinery (€ 28 million), IT equipment (€ 16 million) and aircraft (€ 16 million).
Our regional investments focused mainly on Europe and the Americas. In Europe, investments were centred on Germany and the UK.
| mail express |
global forwarding, freight |
supply chain | Corporate Center / Other |
Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q 1 2010 adjusted |
Q 1 2011 | Q 1 2010 | Q 1 2011 | Q 1 2010 | Q 1 2011 | Q 1 2010 adjusted |
Q 1 2011 | Q 1 2010 | Q 1 2011 | Q 1 2010 | Q 1 2011 | |
| Capex (€m) | 84 | 48 | 41 | 82 | 18 | 21 | 35 | 60 | 17 | 41 | 195 | 252 |
| Depreciation, amortisation and impairment losses (€ m) |
72 | 76 | 89 | 82 | 24 | 25 | 71 | 76 | 62 | 49 | 318 | 308 |
| Ratio of capex to depreciation, amortisation and impairment losses |
1.17 | 0.63 | 0.46 | 1.00 | 0.75 | 0.84 | 0.49 | 0.79 | 0.27 | 0.84 | 0.61 | 0.82 |
Capital expenditure in the MAIL division in the reporting period fell from € 84 million (adjusted) to € 48 million, primarily because some investments were deferred to later in the year and because some investments were made in new sorting systems in the prior-year period. We invested mainly in technical equipment and machinery, internally generated soft ware and in other operating and offi ce equipment.
In the EXPRESS division, a total of € 82 million was invested in the fi rst quarter of 2011 (previous year: € 41 million). We have made advance payments in the amount of € 50 million to, amongst other things, renew parts of our aircraft fl eet. In addition, € 16 million was spent for aircraft maintenance and € 7 million for technical equipment and machinery. By region, we invested mainly in Europe and Asia, with the focus there on India and China.
In the GLOBAL FORWARDING, FREIGHT division, € 21 million was invested in the fi rst quarter (previous year: € 18 million). € 15 million of this fi gure was attributable to the Global Forwarding business unit, where we fi tted out and modernised our warehouses. In the Freight business unit, we invested € 6 million, most of which was in property, plant and equipment and intangible assets.
In the SUPPLY CHAIN division, capex amounted to € 60 million in the reporting period, which was € 25 million more than the adjusted prior-year fi gure. € 47 million of our investments was dedicated to property, plant and equipment. Compared with the prior year, we invested more in all regions; € 50 million was attributable to the Supply Chain business unit and € 10 million to Williams Lea.
Cross-divisional capital expenditure rose from € 17 million in the fi rst quarter of 2010 to the current fi gure of € 41 million. Th e purchase of vehicles accounted for the highest share of expenditure. In the fi rst quarter of 2010, capital expenditure in this area was considerably reduced when vehicle operating life was extended and new vehicle orders suspended.
15 Operating cash fl ow by division, q 1 2011
Net cash used in operating activities amounted to € 34 million in the fi rst quarter of 2011, € 61 million lower than in the same period last year. Th e improved EBIT and reduced utilisation of provisions led to a higher cash infl ow before adjustments for changes in working capital. However, the changes in working capital gave rise to a cash outfl ow of € 662 million. Operating cash fl ow is regularly impacted in the fi rst quarter of the fi nancial year by the prepaid annual contribution to the Bundes-Pensions-Service für Post und Telekommunikation; the 2011 payment was € 542 million.
Net cash used in investing activities increased by € 42 million to € 237 million, primarily because we accelerated our investments in property, plant and equipment and intangible assets. Our intention to increase organic growth is also refl ected in the cash outfl ows for subsidiaries and other business units: no payments were made or received regarding this item in the reporting period as opposed to the prior-year period.
In the past, free cash fl ow was characterised by substantial changes in fi nancial assets. In order to improve the informative value of free cash fl ow from an operating perspective, we have changed the way we report this indicator:
| € m | ||
|---|---|---|
| Q 1 2010 | Q 1 2011 | |
| Net cash used in operating activities | – 95 | –34 |
| Sale of property, plant and equipment and intangible assets | 54 | 52 |
| Purchase of property, plant and equipment and intangible assets | –203 | –305 |
| Net cash used for changes in property, plant and equipment and intangible assets | –149 | –253 |
| Disposal of subsidiaries and other business units | –24 | 0 |
| Acquisition of subsidiaries and other business units | – 47 | 0 |
| Net cash used for acquisitions/divestments | –71 | 0 |
| Interest received | 11 | 12 |
| Interest paid | –72 | – 67 |
| Net interest payments | – 61 | – 55 |
| Free cash fl ow | –376 | –342 |
Free cash fl ow changed from €–376 million in the fi rst quarter of 2010 to €–342 million in the fi rst quarter of 2011.
Net cash used in fi nancing activities was € 36 million higher year on year, at € 153 million, with interest payments of € 67 million representing the largest item. Th e change in current fi nancial liabilities also led to a cash outfl ow of € 22 million, compared with a cash infl ow of € 27 million in the fi rst quarter of 2010.
Compared with 31 December 2010, cash and cash equivalents fell from € 3,415 million to € 2,943 million due to the changes in the cash fl ows from the individual activities.
| 31 Dec. 2010 31 March 2011 | |||
|---|---|---|---|
| Equity ratio | % | 28.3 | 28.8 |
| Net liquidity (–) / net debt (+) | € m | –1,382 | –1,084 |
| Net interest cover 1) | 8.4 | 11.4 | |
| ffo to debt 2) | % | 35.2 | 34.9 |
| 1) In the fi rst quarter. |
2) For calculation page 8.
Th e Group's total assets amounted to € 37,434 million as at 31 March 2011, € 329 million lower than at 31 December 2010.
Since the planned sale of Postbank is now expected to take place within the next 12 months, it was necessary to reclassify all of the associated non-current assets and liabilities to the relevant current balance sheet items. In addition, the carrying amount of the investment in Postbank was reclassifi ed as held for sale.
At € 19,671 million, non-current assets were € 4,822 million lower than the prioryear fi gure. Intangible assets fell by € 323 million or 2.7 % to € 11,525 million, largely due to a decline in goodwill resulting from currency translation diff erences. Th e decline of € 132 million in property, plant and equipment to € 5,998 million was also largely attributable to currency translation diff erences. In addition, deferred tax assets decreased by € 29 million to € 944 million. In particular, the above-mentioned reclassifi cations in connection with the sale of Postbank reduced investments in associates by € 1,797 million and non-current fi nancial assets by € 2,509 million.
Current assets rose from € 13,270 million to € 17,763 million, largely as a result of the reclassifi cations mentioned. Receivables and other current assets increased by € 545 million to € 9,186 million, with the accrual of the prepaid annual contribution to Bundes-Pensions-Service accounting for € 407 million of this increase. Cash and cash equivalents declined from € 3,415 million to € 2,943 million. Assets held for sale increased from € 113 million to € 2,068 million, mainly because we reclassifi ed our remaining equity interest in Postbank and on 1 April 2011 sold the US subsidiary Exel Transportation Services.
At € 10,586 million, equity attributable to Deutsche Post shareholders is slightly higher than at 31 December 2010 (€ 10,511 million). Th is fi gure was aff ected positively by consolidated net profi t for the period but reduced by negative currency translation diff erences.
Current and non-current liabilities decreased from € 17,640 million to € 17,439 million, primarily because trade payables fell by € 500 million to € 5,207 million. Th is refl ects a seasonal eff ect: business is usually stronger towards the end of a fi nancial year than at the beginning. However, other current liabilities increased from € 4,047 million to € 4,441 million because tax liabilities, deferred income as well as liabilities from wages, salaries and severance payments have increased. Financial liabilities decreased by € 137 million, from € 7,022 million to € 6,885 million, accompanied by a fundamental change in the maturity structure: the liabilities relating to the planned Postbank sale were reclassifi ed from non-current fi nancial liabilities to current fi nancial liabilities, in line with the methodology applied to the related assets. Current and non-current provisions were also reduced, from € 9,427 million to € 9,214 million. Other non-current provisions decreased largely as a result of currency translation factors.
Our net liquidity declined from € 1,382 million as at 31 December 2010 to € 1,084 million as at 31 March 2011, since our operating, investing and fi nancing activities in the fi rst quarter all resulted in cash outfl ows. However, the equity ratio improved further by 0.5 percentage points to 28.8 %. Net interest cover, which shows the extent to which net interest obligations are covered by EBIT, rose from 8.4 to 11.4. As we have net liquidity, the informative value of net gearing is limited. We therefore do not present or comment on it here.
| 31 Dec. 2010 31 March 2011 | ||
|---|---|---|
| Non-current fi nancial liabilities | 6,275 | 2,054 |
| Current fi nancial liabilities | 747 | 4,831 |
| Financial liabilities | 7,022 | 6,885 |
| Cash and cash equivalents | 3,415 | 2,943 |
| Current fi nancial assets | 655 | 3,115 |
| Long-term deposits 1) | 120 | 0 |
| Positive fair value of non-current fi nancial derivatives 1) | 2,531 | 125 |
| Financial assets | 6,721 | 6,183 |
| Financial liabilities to Williams Lea minority shareholders | 28 | 28 |
| Mandatory exchangeable bond 2) | 2,796 | 2,827 |
| Collateral for the put option 2) | 1,248 | 1,260 |
| Net effect from measurement of Postbank derivatives 3) | 2,389 | 2,329 |
| Non-cash adjustments | 1,683 | –1,786 |
| Net liquidity (–) / net debt (+) | −1,382 | −1,084 |
1) Reported in non-current fi nancial assets in the balance sheet. 2) Reported in non-current or current fi nancial liabilities in the balance sheet. 3) Reported in non-current or current fi nancial assets and liabilities in the balance sheet.
Interim Report by the Board of Management Divisions Overview
| € m | Q 1 2010 adjusted |
Q 1 2011 | + / – % |
|---|---|---|---|
| Revenue | 3,506 | 3,514 | 0.2 |
| of which Mail Communication | 1,469 | 1,386 | – 5.7 |
| Dialogue Marketing | 667 | 679 | 1.8 |
| Press Services | 205 | 202 | –1.5 |
| Value-Added Services | 86 | 89 | 3.5 |
| Parcel Germany | 650 | 706 | 8.6 |
| Retail Outlets | 196 | 198 | 1.0 |
| Global Mail | 423 | 426 | 0.7 |
| Pension Service | 20 | 23 | 15.0 |
| Consolidation / Other | –210 | –195 | 7.1 |
| Profi t from operating activities (ebit) | 3892) | 373 | – 4.1 |
| Return on sales (%)1) | 11.1 | 10.6 | – |
| Operating cash fl ow | – 8 | –145 | <−100 |
| express | |||
| Revenue | 2,620 | 2,765 | 5.5 |
| of which Europe | 1,277 | 1,212 | – 5.1 |
| Americas | 409 | 453 | 10.8 |
| Asia Pacifi c | 730 | 841 | 15.2 |
| eemea (Eastern Europe, the Middle East and Africa) | 279 | 301 | 7.9 |
| Consolidation / Other | –75 | – 42 | 44.0 |
| Profi t from operating activities (ebit) | 1103) | 216 | 96.4 |
| Return on sales (%)1) | 4.2 | 7.8 | – |
| Operating cash fl ow | 81 | 138 | 70.4 |
| global forwarding, freight | |||
| Revenue | 3,117 | 3,581 | 14.9 |
| of which Global Forwarding | 2,276 | 2,632 | 15.6 |
| Freight | 867 | 981 | 13.1 |
| Consolidation / Other | –26 | –32 | −23.1 |
| Profi t from operating activities (ebit) | 534) | 69 | 30.2 |
| Return on sales (%)1) | 1.7 | 1.9 | – |
| Operating cash fl ow | –10 | 116 | >100 |
| supply chain | |||
| Revenue | 3,044 | 3,273 | 7.5 |
| of which Supply Chain | 2,820 | 3,015 | 6.9 |
| Williams Lea | 223 | 259 | 16.1 |
| Consolidation / Other | 1 | −1 | − |
| Profi t from operating activities (ebit) | 565) | 78 | 39.3 |
| Return on sales (%)1) | 1.8 | 2.4 | – |
| Operating cash fl ow | 45 | 53 | 17.8 |
1) ebit / revenue. 2) In the previous year ebit before non-recurring items was € 391 million. 3) In the previous year ebit before non-recurring items was € 154 million.
4) In the previous year ebit before non-recurring items was € 54 million. 5) In the previous year ebit before non-recurring items was € 63 million.
As at 1 July 2010, we transferred signifi cant parts of Williams Lea Germany from the SUPPLY CHAIN division to the MAIL division. Th ese parts are reported on in the Value-Added Services business unit. Th e previous year's segment reporting fi gures were adjusted accordingly.
Revenue in the fi rst quarter of 2011, which had one additional working day compared with 2010, amounted to € 3,514 million and was therefore at the prior-year level (€ 3,506 million). Since 1 July 2010, we have been required to apply value added tax (VAT) to revenues generated from business customers. In order to retain this key customer group, we increased our graduated discount scale, which lowered our revenue. No currency eff ects were applicable in the reporting period.
In the Mail Communication business unit, we made more deliveries to business customers for the second quarter in a row. However, since we increased the discount applicable to these deliveries, our revenue declined from € 1,469 million to € 1,386 million. Even though we retained and won back quality-conscious customers, some of our more price-sensitive customers turned to competitors.
Th e market is shrinking steadily owing to the increasing use of electronic means of communications. Information on market volumes is collected each year; for the latest fi gures, please see page 51 of the 2010 Annual Report.
| Total | 2,037 | 2,047 | 0.5 |
|---|---|---|---|
| Private customer letters | 311 | 297 | – 4.5 |
| Business customer letters | 1,726 | 1,750 | 1.4 |
| Q 1 2010 | Q 1 2011 | + / – % | |
| mail items (millions) |
We saw a revenue and volume increase for addressed advertising mail and our Ein kaufaktuell product in the reporting period. Customers are again increasing their advertising budgets. Revenue increased by 1.8 % to € 679 million (previous year: € 667 million).
| mail items (millions) | |||
|---|---|---|---|
| Q 1 2010 | Q 1 2011 | + / – % | |
| Addressed advertising mail | 1,520 | 1,567 | 3.1 |
| Unaddressed advertising mail | 1,117 | 1,069 | – 4.3 |
| Total | 2,637 | 2,636 | 0.0 |
Revenue in the Press Services business unit totalled € 202 million in the reporting period, 1.5 % below the prior-year fi gure of € 205 million. Th e German press services market, the volume of which we have described in detail on page 52 of the 2010 Annual Report, continues to decline. Newspaper and magazine circulation is declining, although item weights remain stable.
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Revenue in the Value-Added Services business unit reached € 89 million, exceeding the previous year's fi gure of € 86 million by 3.5 %. Growth in our document management and mailroom services was the main reason for the increase.
Revenue in the Parcel Germany business unit reached € 706 million in the reporting period, improving on the previous year's high fi gure of € 650 million by 8.6 %. Th is strong growth was similar to that achieved in the previous quarter. Mail-order business is generally returning to growth alongside the expanding e-commerce business, a trend that was refl ected in our higher business customer volumes.
| Total | 189 | 206 | 9.0 |
|---|---|---|---|
| Private customer parcels | 28 | 27 | −3.6 |
| Business customer parcels 1) | 161 | 179 | 11.2 |
| Q 1 2010 | Q 1 2011 | + / – % | |
| mail items (millions) |
1) Including intragroup sales.
Revenue generated by our approximately 20,000 retail outlets and sales points amounted to € 198 million in the reporting period and was thus at the previous year's level (€ 196 million).
Revenue in the Global Mail business unit totalled € 426 million in the reporting period, an increase of 0.7 % on the prior-year fi gure of € 423 million. We are registering encouraging revenue gains in both our international mail business and the traditional import and export business. Volumes declined year on year due to our having relinquished the bulk mail business in the Netherlands.
| mail items (millions) | |||
|---|---|---|---|
| Q 1 2010 | Q 1 2011 | + / – % | |
| Global Mail | 1,577 | 1,089 | –30.9 |
With EBIT of € 373 million, we were slightly below the prior-year level of € 389 million in the MAIL division. Due to higher revenues in the parcel business, and strict cost management, we were able to compensate for most of the losses incurred from the above-mentioned discounts in the mail business. Return on sales was 10.6 %.
Operating cash fl ow amounted to €–145 million (previous year: €–8 million). Th is fi gure is impacted in the fi rst quarter of each year by the annual payments to the Bundes-Pensions-Service für Post und Telekommunikation. Th is is refl ected especially in the high cash outfl ow in working capital.
Revenue generated in the EXPRESS division increased by 5.5 % in the fi rst quarter of 2011 to € 2,765 million (previous year: € 2,620 million) despite the fact that the fi gure for the fi rst quarter of the previous year still included revenue of € 125 million from our day-defi nite domestic businesses in the UK and France, which have meanwhile been sold. Revenue was positively aff ected by currency gains of € 36 million. Without these gains, the revenue rise would have amounted to 4.2 %. Th is growth is primarily attributable to the rise in daily shipment volumes of 7.8 % in the TDI product line and 10.0 % in the TDD product line. We also generated higher revenues from fuel surcharges levied to cover our increased fuel costs. In the TDI product line, weight per shipment exceeded the prior-year fi gure by 6.6 %, additional evidence that our international business is continuing on a strong growth path. In the DDD product line, revenues and volumes decreased signifi cantly, above all due to the sale of the day-defi nite domestic businesses in the UK and France.
| € m per day | Q 1 2010 adjusted |
Q 1 2011 | + / – % |
|---|---|---|---|
| Time Defi nite International (tdi) | 26.3 | 28.5 | 8.4 |
| Time Defi nite Domestic (tdd) | 4.9 | 5.2 | 6.1 |
| Day Defi nite Domestic (ddd) | 5.9 | 3.9 | –33.9 |
| thousand of items per day | Q 1 2010 adjusted |
Q 1 2011 | + / – % |
|---|---|---|---|
| Time Defi nite International (tdi) | 475 | 512 | 7.8 |
| Time Defi nite Domestic (tdd) | 628 | 691 | 10.0 |
| Day Defi nite Domestic (ddd) | 657 | 425 | –35.3 |
Revenue in our Europe region declined by 5.1 % on the prior year to € 1,212 million in the reporting period (previous year: € 1,277 million). Th e main reason for the decrease was the sale of our day-defi nite domestic businesses in the UK and France. Revenue in this region was positively impacted by currency gains of € 14 million, which resulted predominantly from our business operations in Switzerland, the UK and Scandinavia. Without these currency gains, revenue would have dropped by 6.2 %. In the highly competitive European express market, we increased our daily shipment volumes by an encouraging 7.1 % in the TDI product line.
In the Americas region, revenue grew by 10.8 % in the reporting period to € 453 million (previous year: € 409 million). Daily shipment volumes in the TDI product line rose by 5.0 % overall, with the increase in the United States amounting to even 8.0 %.
Compared with revenue, however, volumes rose only moderately due to eff ects of the product mix: instead of documents, customers are now sending more express parcels.
Th e Asia Pacifi c region continues to drive growth in the express business. Revenue increased sharply on the prior year with a rise of 15.2 % to € 841 million in the fi rst quarter of 2011 (previous year: € 730 million). Revenue was positively aff ected by currency gains of € 25 million. Without these gains, the revenue growth would have amounted to 11.8 %. Particularly in the TDI product line, shipment volumes saw a clear 9.7 % rise, thus reaching a higher level than prior to the crisis of 2009. Th e devastating earthquake in Japan had no signifi cant eff ect on our business; we were able to maintain our services. For more information, please refer to the Risk Report.
Revenue in the EEMEA region (Eastern Europe, the Middle East and Africa) increased by 7.9 % to € 301 million in the fi rst quarter of the reporting year (previous year: € 279 million). Revenue was negatively impacted by currency eff ects of € 5 million. Adjusted for these currency eff ects, the revenue rise amounted to 9.7 %. In all product lines, daily shipment volumes increased versus the prior year.
Due to signifi cant revenue and volume growth as well as strict cost management, EBIT rose substantially versus the previous year, increasing from € 110 million to € 216 million.
Return on sales increased to 7.8 % in the fi rst quarter of 2011 (previous year: 4.2 %).
Operating cash fl ow rose from € 81 million in the fi rst quarter of the previous year to € 138 million. Although higher shipment volumes and revenues led to a slight increase in working capital, lower cash payments for restructuring and the substantial EBIT improve ment more than compensated for the associated cash outfl ow.
Page 22
In the GLOBAL FORWARDING, FREIGHT division we improved revenue by 14.9 % to € 3,581 million in the fi rst quarter of 2011 (previous year: € 3,117 million). Revenue was positively aff ected by currency gains of € 66 million. Without these gains, the increase would have amounted to 12.8 %. Overall, in the fi rst quarter we got off to a good start to the new fi nancial year with a particularly strong March.
In the Global Forwarding business unit, we increased revenue from € 2,276 million to € 2,632 million, a rise of 15.6 % year on year. Th e increase amounted to 13.8 % aft er adjustment for currency gains of € 41 million. Fuel prices, which were already high, rose further during the reporting period. We were nonetheless able to improve gross profi t by 14.4 % from € 499 million to € 571 million.
In our air and ocean freight businesses, transport volumes and revenues performed increasingly well as the fi rst quarter of 2011 progressed. Although fuel prices rose markedly, freight rates declined, as in the previous quarter, particularly rates for ocean freight, allowing us to slightly increase our operating margins.
Air freight volumes rose by 4.8 % year on year and revenue improved by 15.1 %. We were able to benefi t from improved purchasing conditions given that capacity shortages are now less prominent in the air freight market, resulting in gross profi t growing by 16.1 %.
Th e rise in ocean freight volumes amounted to 1.7 % due to the fact that warehouse stocks were already replenished to a large extent in the fi rst quarter of the previous year. Revenue increased by 24.8 %. Freight rates dropped on individual trade lanes. Gross profi t increased by 21.0 %.
Aft er the devastating earthquake in Japan, some airports and seaports were temporarily closed. For more information, please refer to the Risk Report.
We were able to achieve slight growth in our industrial project business, as can be seen by the fact that gross profi t continued to improve slightly compared with the previous year. Th e industrial project business is referred to as a part of Other in the table below.
| € m | |||
|---|---|---|---|
| Q 1 2010 | Q 1 2011 | + / – % | |
| Air freight | 1,169 | 1,345 | 15.1 |
| Ocean freight | 703 | 877 | 24.8 |
| Other | 404 | 410 | 1.5 |
| Total | 2,276 | 2,632 | 15.6 |
Page 22
| thousands | Q 1 2010 adjusted1) |
Q 1 2011 | + / – % | |
|---|---|---|---|---|
| Air freight | tonnes | 1,037 | 1,087 | 4.8 |
| of which exports | tonnes | 581 | 596 | 2.6 |
| Ocean freight | teu s2) | 637 | 648 | 1.7 |
1) At the beginning of 2011 we adapted our systems for recording transport volumes, which also resulted in a slight retroactive adjustment. 2) Twenty-foot equivalent units.
In the Freight business unit, revenue rose by 13.1 % to € 981 million in the reporting period (previous year: € 867 million), mainly due to increases in business in Germany, Sweden and Eastern Europe. Th is fi gure contains currency gains of € 25 million. Gross profi t increased by 4.2 % to € 249 million (previous year: € 239 million).
Due to our positive margin development, divisional EBIT improved by 30.2 %, rising from € 53 million to € 69 million. Th e prior-year fi gure contained restructuring costs of € 1 million. Return on sales amounted to 1.9 % (previous year: 1.7 %).
Although volumes continued to rise, net working capital improved in the reporting period compared with the previous quarter, due to an increase in liabilities. Operating cash fl ow thus improved signifi cantly by € 126 million to € 116 million (previous year: €–10 million).
| Total revenue: € 3,273 million | ||||
|---|---|---|---|---|
| 2 % Energy | ||||
| 7 % Supply Chain Others | ||||
| 7 % Automotive | ||||
| 8 % Williams Lea | ||||
| 12 % Technology | ||||
| 17 % Life Sciences & Healthcare |
||||
| 20 % Consumer | ||||
| 27 % Retail | ||||
On 1 July 2010, we transferred signifi cant parts of Williams Lea Germany from the SUPPLY CHAIN division to the MAIL division. Th e previous year's segment reporting fi gures were adjusted accordingly.
Th e SUPPLY CHAIN division generated revenue of € 3,273 million in the fi rst quarter of 2011, an increase of 7.5 % (previous year: € 3,044 million). Revenue was positively aff ected by exchange rate gains of € 47 million. Without these gains, the increase would have amounted to 6.0 %. We experienced strong development, in the Retail and Life Sciences & Healthcare sectors in particular.
Revenue in the Supply Chain business unit was € 3,015 million, an increase of 6.9 % (previous year: € 2,820 million). Th e Americas region benefi tted in particular from growth in the Consumer, Retail and Life Sciences & Healthcare sectors as well as in transport activity. Th e Asia Pacifi c region had the highest level of revenue growth with additional new and existing business, especially in China, Australia, India and Th ailand. In Japan, the volumes of some of our customers fell following the earthquake on 11 March 2011, as described in the Risk Report. In Europe, we also saw an increase in revenue, driven primarily by new business and continued growth in the Life Sciences & Healthcare sector in the UK. Th e sale of the temperature-controlled logistics business in Austria in April 2010 had an opposite eff ect on revenue.
Williams Lea revenue increased by 16.1 % in the fi rst quarter of 2011 to € 259 million (previous year: € 223 million). Th e Americas marketing solutions business and new business gained in the European banking sector accounted for much of this growth.
Th e Supply Chain business unit concluded additional contracts worth € 320 million in annualised revenue with both new and existing customers in the fi rst quarter of 2011, a 33 % rise over the previous year. Th e biggest increase was in the UK Retail sector. We monitor the performance of all major contracts on a regular basis. For new contracts, both revenue and profi tability exceeded expectations by around 7 % for the most recent 12 months. Overall, new contract profi t margins have improved signifi cantly year on year. Th e annualised contract renewal rate remained at the 2010 level.
Th e Williams Lea Americas region won a sizeable print management contract with an international direct marketing company.
Th e division reported EBIT of € 78 million for the fi rst quarter of 2011, an increase of 39.3 % (previous year: € 56 million). Th e prior-year fi gure included restructuring costs of € 7 million. Return on sales improved from 1.8 % to 2.4 %, which was largely a result of the increase in business activity and the incremental benefi ts of our restructuring initiatives.
Operating cash fl ow improved from € 45 million to € 53 million. A higher cash fl ow before adjustments for changes in working capital was partly off set by increased working capital.
Th e average number of employees (full-time equivalents) decreased to 419,431 in the fi rst three months of 2011, a slight seasonal decline of 0.4 % compared with the previous year's average.
Our current planning calls for maintaining the total number of employees at the current level in fi nancial year 2011.
As a service provider, Deutsche Post DHL does not undertake any research and development activities in the narrower sense and thus does not report signifi cant expenses in this area.
At the beginning of May 2011, DHL Express Canada announced the sale of its domestic express business in Canada to the transport company TransForce, with the two companies entering into a 10-year strategic alliance. DHL Express Canada continues to provide international express services.
At the end of March 2011, we entered into an agreement to acquire a 100 % interest in Eurodifarm srl., Lodi, Italy. Th e agreement is subject to conditions precedent which had not yet been fulfi lled at the balance sheet date. Eurodifarm is the market leader in the controlled-temperature distribution of pharmaceutical and diagnostic products in Italy.
On 1 April 2011, we acquired all shares of Adcloud GmbH, Cologne, Gemany. Th is company is a specialised provider of internet advertising space marketing and placement services.
We originally assumed that the world economy would grow by 3 % to 4 % and that world trade would exceed this growth by a factor of 1.5 to 2. We continue to expect those growth forecasts to materialise. In light of our good performance over the fi rst three months, we are confi rming our forecast of consolidated EBIT for full-year 2011 to reach between € 2.2 billion and € 2.4 billion. Th e MAIL division is expected to contribute € 1.0 billion to € 1.1 billion to this fi gure, whilst the DHL divisions should deliver € 1.6 billion to € 1.7 billion. At around €–0.4 billion, the Corporate Center / Other result should be on a par with the previous year. Consolidated net profi t before eff ects from the measurement of the Postbank instruments is expected to continue to improve in 2011 in line with our operating business.
We identify, assess and report opportunities and risks to management at an early stage as part of a Group-wide process led by Corporate Controlling. Th is allows key information about future events and developments to fl ow systematically into the company's control processes. In this way, the opportunity and risk controlling process facilitates sustainable management of our company. We describe our opportunity and risk management process and the signifi cant risks aff ecting our earnings, fi nancial position, as well as assets and liabilities in the 2010 Annual Report beginning on page 88.
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We describe the Group's unchanged economic opportunities in the 2010 Annual Report starting on page 90.
We have been working closely with Japanese authorities since the devastating earthquake struck the country on 11 March. Our goal is to maintain our service whilst taking all safety precautions. Cargo fl ights were resumed very rapidly. Collection and delivery services are in operation; however, we are experiencing some delays. A few of our buildings were damaged, which has partially aff ected service. We suspended services in some parts of the north-east, which are either diffi cult or impossible to reach. Th e port of Sendai, which is particularly relevant to our operations, was also aff ected. Th e harbours in Tokyo and Yokohama temporarily refused to accept bookings, which caused some shipments to reach their destinations late. Th e Group's management is in close contact with the local management team in order to be able to respond quickly to any potential changes in the situation there in an eff ort to protect our staff and in the interest of our customers. Th e fi nancial implications for our Group depend greatly on how the Japanese economy develops and what impact this has on the global economy and shipping volumes.
22
In the fi rst quarter of 2011, no further signifi cant risks or changes arose beyond those presented in the 2010 Annual Report and in this report. No risks are currently identifi able that, individually or collectively, cast doubt upon the Group's ability to continue as a going concern.
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Th e International Monetary Fund (IMF) is predicting an increase of 4.4 % in global economic output for full-year 2011 and 7.4 % growth for global trade. Commodity prices, which are already higher, may carry economic risks, especially for emerging markets.
Th e Japanese economy will presumably continue to suff er greatly in the second quarter from the aft ermath of the earthquake. In the second half of the year, public expenditure for clean-up and rebuilding may spur an economic turnaround. However, the overall impact remains diffi cult to predict. Consequently, growth forecasts vary considerably (IMF: 1.4 %, Postbank Research: –0.5 %).
In China, the government and the central bank continue to work to keep the economy from overheating. Th e economy is therefore expected to grow somewhat more slowly (IMF: 9.6 %).
In the United States, the upturn is rather broad based as business investment, private consumption and exports are all trending upwards. Rising employment is creating favourable conditions for the economy to gain momentum and GDP to grow at a solid pace (IMF: 2.8 %, Postbank Research: 3.3 %).
Th e economy in the euro zone is expected to continue on its recovery path, driven by business investment and exports. By contrast, private consumption is likely to only expand marginally as a result of rising infl ation and high unemployment. A moderate increase in total GDP is forecast (ECB: 1.7 %, Postbank Research: 2.0 %).
Th e German economy in 2011 is expected to see a remarkably broad-based upturn. A sharp rise in exports and investments in machinery and equipment is anticipated. Construction spending is also expected to make a positive contribution to growth. Further more, private consumption will probably see a boost from the strong rise in employment. GDP growth should again be markedly higher in Germany than in the rest of the euro zone (IMF: 2.5 %, Postbank Research: 2.8 %).
We believe that the global economy will continue recovering in 2011 even though some economic risk does exist. We originally budgeted for growth of 3 % to 4 % and assumed that the international trading volumes relevant for our business would exceed this growth by a factor of 1.5 to 2. We continue to expect our revenue to increase more or less in line with our forecast medium-term growth rates of 7 % to 9 %, especially in the DHL divisions, with the increase pertaining to each of the three divisions.
In light of our good performance over the past three months, we are confi rming our forecast of consolidated EBIT for full-year 2011 to reach between € 2.2 billion and € 2.4 billion. Th e MAIL division is expected to contribute between € 1.0 billion and € 1.1 billion to this fi gure. Compared with the previous year, we expect an additional improvement in overall earnings to between € 1.6 billion and € 1.7 billion in the DHL divisions. Th is corresponds to an increase of 10 % to 17 % on the prior-year fi gure. At around €–0.4 billion, the Corporate Center / Other result should be on a par with the previous year.
We are maintaining our fi nance policy in 2011 and plan to increase capital expenditures to no more than € 1.6 billion aft er having increased it to just under € 1.3 billion in 2010. Following our corporate strategy, we are focusing on organic growth. We anticipate only a few small acquisitions in 2011, as in the previous year. In 2011, cash fl ow will be impacted by the restructuring measures resolved in 2009 to a much lesser extent than in previous years.
Provided that the global economy continues to recover, the positive trend in our earnings that we are anticipating for 2011 is likely to continue into 2012. Th e cost reduction measures and growth programmes initiated in the MAIL division are expected to stabilise EBIT even if traditional physical letter volumes continue to lose out to electronic means of communication. We expect EBIT to improve in the DHL divisions at an annual average of 13 % to 15 % until 2015 as trading volumes continue to recover.
Th e mark-to-market measurement of certain fi nancial instruments required under IFRS s in connection with the Postbank transaction will be reviewed at the end of each quarter until early 2012, and adjusted if necessary, based on the change in the Postbank share price. Any adjustments made will not impact liquidity and will be reported under net fi nance costs/net fi nancial income. To a large extent, this impact will be negated by off setting changes in the fair value of the remaining shareholding in Postbank. Consolidated net profi t before eff ects from the measurement of the Postbank instruments is expected to continue to improve in 2011 in line with our operating business.
Based on the projected earnings trend for 2011 and the planned increase in capital expenditure, we expect the "FFO to debt" performance metric to remain at approximately the prior-year level. We do not anticipate signifi cant changes to our credit ratings.
Due to our favourable liquidity position, we continue to have no plans for any major funding initiatives at present. Since we pass on most of the commodity price risk to our customers, we do not expect the latest increase in the price of crude oil to signifi cantly impact our earnings.
As described in the 2010 Annual Report, we intend to step up capital expenditure in 2011 in all of the divisions. Th e majority of the increase will be focused on property, plant and equipment as well as transport equipment.
This interim report contains forward-looking statements that relate to the business, fi nancial performance and results of operations of Deutsche Post ag. Forward-looking statements are not historical facts and may be identifi ed by words such as "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets" and similar expressions. As these statements are based on 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 forwardlooking statements to refl ect 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.
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1 January to 31 March
€ m
| 2010 | 2011 | |
|---|---|---|
| Revenue | 12,016 | 12,842 |
| Other operating income | 435 | 389 |
| Total operating income | 12,451 | 13,231 |
| Materials expense | – 6,586 | –7,298 |
| Staff costs | – 4,174 | – 4,128 |
| Depreciation, amortisation and impairment losses | –318 | –308 |
| Other operating expenses | – 861 | – 868 |
| Total operating expenses | –11,939 | –12,602 |
| Profi t from operating activities (ebit) | 512 | 629 |
| Net income from associates | 34 | 58 |
| Other fi nancial income | 1,550 | 79 |
| Other fi nance costs | –250 | –296 |
| Foreign currency result | – 6 | –2 |
| Net other fi nancial income / net other fi nance costs | 1,294 | –219 |
| Net fi nancial income / net fi nance costs | 1,328 | –161 |
| Profi t before income taxes | 1,840 | 468 |
| Income taxes | –70 | –117 |
| Consolidated net profi t for the period | 1,770 | 351 |
| attributable to Deutsche Post ag shareholders | 1,747 | 325 |
| attributable to non-controlling interests | 23 | 26 |
| Basic earnings per share (€) | 1.44 | 0.27 |
| Diluted earnings per share (€) | 1.44 | 0.27 |
1 January to 31 March
| € m | ||
|---|---|---|
| 2010 | 2011 | |
| Consolidated net profi t for the period | 1,770 | 351 |
| Currency translation reserve | ||
| Changes from unrealised gains and losses | 261 | –281 |
| Changes from realised gains and losses | 11 | 0 |
| Other changes in retained earnings | ||
| Changes from unrealised gains and losses | 0 | 0 |
| Changes from realised gains and losses | 0 | 0 |
| Hedging reserve in accordance with ias 39 | ||
| Changes from unrealised gains and losses | –17 | 25 |
| Changes from realised gains and losses | 18 | 1 |
| Revaluation reserve in accordance with ias 39 | ||
| Changes from unrealised gains and losses | 7 | – 6 |
| Changes from realised gains and losses | – 5 | 0 |
| Revaluation reserve in accordance with ifrs 3 | ||
| Changes from unrealised gains and losses | 0 | 0 |
| Changes from realised gains and losses | 0 | 0 |
| Income taxes relating to components of other comprehensive income | 3 | – 8 |
| Share of other comprehensive income of associates (after tax) | 34 | 10 |
| Other comprehensive income (after tax) | 312 | –259 |
| Total comprehensive income | 2,082 | 92 |
| attributable to Deutsche Post ag shareholders | 2,047 | 77 |
| attributable to non-controlling interests | 35 | 15 |
28
| 31 Dec. 2010 31 March 2011 assets Intangible assets 11,848 11,525 Property, plant and equipment 6,130 5,998 Investment property 37 37 Investments in associates 1,847 51 Non-current fi nancial assets 3,193 646 Other non-current assets 465 470 Deferred tax assets 973 944 Non-current assets 24,493 19,671 Inventories 223 233 Income tax assets 223 218 Receivables and other current assets 8,641 9,186 Current fi nancial assets 655 3,115 Cash and cash equivalents 3,415 2,943 Assets held for sale 113 2,068 Current assets 13,270 17,763 Total assets 37,763 37,434 equity and liabilities Issued capital 1,209 1,207 Other reserves 1,535 1,306 Retained earnings 7,767 8,073 Equity attributable to Deutsche Post ag shareholders 10,511 10,586 Non-controlling interests 185 195 Equity 10,696 10,781 Provisions for pensions and similar obligations 4,513 4,502 Deferred tax liabilities 215 202 Other non-current provisions 2,440 2,329 Non-current provisions 7,168 7,033 Non-current fi nancial liabilities 6,275 2,054 Other non-current liabilities 401 363 Non-current liabilities 6,676 2,417 Non-current provisions and liabilities 13,844 9,450 Current provisions 2,259 2,181 Current fi nancial liabilities 747 4,831 Trade payables 5,707 5,207 Income tax liabilities 463 481 Other current liabilities 4,047 4,441 Liabilities associated with assets held for sale 0 62 Current liabilities 10,964 15,022 Current provisions and liabilities 13,223 17,203 Total equity and liabilities 37,763 37,434 |
€ m | |
|---|---|---|
€ m
| 2010 | 2011 | |
|---|---|---|
| Consolidated net profi t for the period attributable to Deutsche Post ag shareholders 1) | 1,747 | 325 |
| Consolidated net profi t for the period attributable to non-controlling interests | 23 | 26 |
| Income taxes | 70 | 117 |
| Net other fi nancial income / net other fi nance costs | –1,294 | 219 |
| Net income from associates | –34 | – 58 |
| Profi t from operating activities (ebit) | 512 | 629 |
| Depreciation, amortisation and impairment losses | 318 | 308 |
| Net loss / income from disposal of non-current assets | 2 | –10 |
| Non-cash income and expense | 70 | 10 |
| Change in provisions | –358 | –198 |
| Change in other non-current assets and liabilities | –28 | –25 |
| Income taxes paid | –75 | – 86 |
| Net cash from operating activities before changes in working capital | 441 | 628 |
| Changes in working capital | ||
| Inventories | 4 | –15 |
| Receivables and other current assets | –782 | – 838 |
| Liabilities and other items | 242 | 191 |
| Net cash used in operating activities | – 95 | –34 |
| Subsidiaries and other business units | –24 | 0 |
| Property, plant and equipment and intangible assets | 54 | 52 |
| Other non-current fi nancial assets | 14 | 8 |
| Proceeds from disposal of non-current assets | 44 | 60 |
| Subsidiaries and other business units | – 47 | 0 |
| Property, plant and equipment and intangible assets | –203 | –305 |
| Other non-current fi nancial assets | –10 | – 9 |
| Cash paid to acquire non-current assets | –260 | –314 |
| Interest received | 11 | 12 |
| Dividend received | 4 | 0 |
| Current fi nancial assets | 6 | 5 |
| Net cash used in investing activities | –195 | –237 |
| Proceeds from issuance of non-current fi nancial liabilities | 8 | 7 |
| Repayments of non-current fi nancial liabilities | –29 | –31 |
| Change in current fi nancial liabilities | 27 | –22 |
| Other fi nancing activities | –34 | –14 |
| Proceeds from transactions with non-controlling interests | 0 | 0 |
| Cash paid for transactions with non-controlling interests | 0 | 0 |
| Dividend paid to Deutsche Post ag shareholders | 0 | 0 |
| Dividend paid to non-controlling interest holders | –7 | – 5 |
| Purchase of treasury shares | –10 | –21 |
| Interest paid | –72 | – 67 |
| Net cash used in fi nancing activities | –117 | –153 |
| Net change in cash and cash equivalents | – 407 | – 424 |
| Effect of changes in exchange rates on cash and cash equivalents | 39 | – 42 |
| Changes in cash and cash equivalents associated with assets held for sale | 0 | – 6 |
| Changes in cash and cash equivalents due to changes in consolidated group | 0 | 0 |
| Cash and cash equivalents at beginning of reporting period | 3,064 | 3,415 |
| Cash and cash equivalents at end of reporting period | 2,696 | 2,943 |
1) The profi t before income taxes item on the basis of which cash fl ows are calculated has been changed to consolidated net profi t for the period attributable to Deutsche Post ag shareholders to increase transparency. The presentation of the prior-year fi gures has been adjusted. This change does not affect the calculation.
| € m | Other reserves | Equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Capital | ifrs 3 revaluation |
Currency translation |
Retained | attributable to Deutsche Post ag |
Non controlling |
||||
| Issued capital | reserves ias 39 reserves | reserve | reserve | earnings | shareholders | interests | Total equity | ||
| Balance at 1 January 2010 | 1,209 | 2,147 | –70 | 7 | –1,215 | 6,098 | 8,176 | 97 | 8,273 |
| Capital transactions with owner | |||||||||
| Dividend | 0 | 0 | 0 | 0 | 0 | 0 | 0 | –7 | –7 |
| Transactions with non-controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Changes in non-controlling interests | |||||||||
| due to changes in consolidated group | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Purchase of treasury shares | –1 | 0 | 0 | 0 | 0 | – 9 | –10 | 0 | –10 |
| Share Matching Scheme (issuance) | 0 | 6 | 0 | 0 | 0 | 0 | 6 | 0 | 6 |
| Share Matching Scheme (exercise) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| – 4 | –7 | –11 | |||||||
| Total comprehensive income | |||||||||
| Consolidated net profi t for the period | 0 | 0 | 0 | 0 | 0 | 1,747 | 1,747 | 23 | 1,770 |
| Currency translation differences | 0 | 0 | 0 | 0 | 264 | 0 | 264 | 12 | 276 |
| Other changes | 0 | 0 | 36 | 0 | 0 | 0 | 36 | 0 | 36 |
| 2,047 | 35 | 2,082 | |||||||
| Balance at 31 March 2010 | 1,208 | 2,153 | –34 | 7 | – 951 | 7,836 | 10,219 | 125 | 10,344 |
| Balance at 1 January 2011 | 1,209 | 2,158 | 53 | 6 | – 682 | 7,767 | 10,511 | 185 | 10,696 |
| Capital transactions with owner | |||||||||
| Dividend | 0 | 0 | 0 | 0 | 0 | 0 | 0 | – 5 | – 5 |
| Transactions with non-controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Changes in non-controlling interests | |||||||||
| due to changes in consolidated group | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Purchase of treasury shares | –2 | 0 | 0 | 0 | 0 | –19 | –21 | 0 | –21 |
| Share Matching Scheme (issuance) | 0 | 19 | 0 | 0 | 0 | 0 | 19 | 0 | 19 |
| Share Matching Scheme (exercise) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| –2 | – 5 | –7 | |||||||
| Total comprehensive income | |||||||||
| Consolidated net profi t for the period | 0 | 0 | 0 | 0 | 0 | 325 | 325 | 26 | 351 |
| Currency translation differences | 0 | 0 | 0 | 0 | –273 | 0 | –273 | –11 | –284 |
| Other changes | 0 | 0 | 25 | 0 | 0 | 0 | 25 | 0 | 25 |
| 77 | 15 | 92 | |||||||
| Balance at 31 March 2011 | 1,207 | 2,177 | 78 | 6 | – 955 | 8,073 | 10,586 | 195 | 10,781 |
Deutsche Post AG is a listed corporation domiciled in Bonn, Germany.
Th e accompanying condensed consolidated interim fi nancial statements have been reviewed.
Th e accompanying condensed consolidated interim fi nancial statements as at 31 March 2011 were prepared in accordance with the International Financial Reporting Standards (IFRSs) and related interpretations issued by the International Accounting Standards Board (IASB) for interim fi nancial reporting, as adopted by the European Union. Th ese interim fi nancial statements thus include all information and disclosures required by IFRSs to be presented in condensed interim fi nancial statements.
Preparation of the condensed consolidated interim fi nancial statements for interim fi nancial reporting in accordance with IAS 34 requires the Board of Management to exercise judgement and make estimates and assumptions that aff ect the application of accounting policies in the Group and the presentation of assets, liabilities, income and expenses. Actual amounts may diff er from these estimates. Th e results obtained thus far in fi nancial year 2011 are not necessarily an indication of how business will develop in the future.
Th e accounting policies applied to the condensed consolidated interim fi nancial statements are generally based on the same accounting policies used in the consolidated fi nancial statements for fi nancial year 2010. For further information on the accounting policies applied, please refer to the consolidated fi nancial statements for the year ended 31 December 2010, on which these interim fi nancial statements are based.
Th e income tax expense for the reporting period was deferred on the basis of the tax rate expected to apply to the full fi nancial year.
Departures from the accounting policies applied in fi nancial year 2010 consist of the new or amended international accounting pronouncements under IFRSs required to be applied since fi nancial year 2011.
Th e amendments have no material eff ects on the consolidated fi nancial statements. Detailed explanations can be found in the 2010 Annual Report, Note 4 "New developments in international accounting under the IFRSs".
In addition to Deutsche Post AG as the Group parent, the consolidated group generally includes all German and foreign entities in which Deutsche Post AG directly or indirectly holds a majority of voting rights, or whose activities it is otherwise able to control.
| 31 Dec. 2010 31 March 2011 | ||
|---|---|---|
| Number of fully consolidated companies (subsidiaries) |
||
| German | 80 | 80 |
| Foreign | 747 | 742 |
| Number of proportionately consolidated joint ventures |
||
| German | 1 | 1 |
| Foreign | 16 | 16 |
| Number of equity-accounted companies (associates) |
||
| German | 28 | 28 |
| Foreign | 31 | 31 |
As in the prior-year period, there were no acquisitions in the fi rst quarter of 2011.
In the prior-year period, € 47 million was expended for subsidiaries already acquired in previous years. Th e purchase prices of the acquired companies were paid in cash.
On 1 April 2011, Deutsche Post DHL acquired all shares of Adcloud GmbH, Cologne, Germany. Th is company is a specialised provider of internet advertising space marketing and placement services. Th e purchase price is a fi xed price of € 11 million. Th e company's net assets are less than € 1 million. Final purchase price allocation will be disclosed in a subsequent fi nancial report because not all the necessary information is available as yet. Added to the fi xed price, there is a revenue and earnings-related variable purchase price for fi nancial years 2011 to 2013. It has been classifi ed as contingent consideration in accordance with IFRS 3 and will increase goodwill during fi nal purchase price allocation accordingly. On this basis, provisional purchase price allocation excluding contingent considerations resulted in goodwill of €11 million. Inclusion of the company as at 1 January 2011 would not have materially aff ected consolidated revenue and EBIT.
At the end of March 2011, Deutsche Post DHL entered into an agreement to acquire a 100 % interest in Eurodifarm srl., Lodi, Italy. Th e agreement is subject to conditions precedent which had not yet been fulfi lled at the time the present consolidated fi nancial statements were prepared. Eurodifarm is the market leader in the controlled-temperature distribution of pharmaceutical and diagnostic products in Italy.
Th ere were no disposal and deconsolidation eff ects of companies or business operations in the period up to 31 March 2011.
In the prior-year period, DHL Express (UK) Ltd. sold its daydefi nite domestic business. Th e loss of € 51 million was reported in other operating expenses. In the course of the transaction, pro rata expenses of € 12 million were transferred from the currency translation reserve to profi t or loss. An additional loss of € 2 million was realised in the second quarter of 2010, resulting in a total deconsolidation loss of € 53 million.
| € m | |
|---|---|
| 1 January to March 31, 2010 | dhl Express uk |
| Assets held for sale 1) | 54 |
| Liabilities associated with assets held for sale 1) | –39 |
| Net assets | 15 |
| Total consideration received | –24 |
| Deconsolidation gain (+) /loss (–) | – 51 |
1) Figures before deconsolidation.
At the end of February 2011, Deutsche Post AG's 39.5 % interest in Deutsche Postbank AG was reclassifi ed as held for sale; Note 12.
| € m | ||
|---|---|---|
| Q 1 2010 | Q 1 2011 | |
| Rental and lease income | 42 | 43 |
| Insurance income | 38 | 42 |
| Income from currency translation differences | 38 | 38 |
| Income from fees and reimbursements | 30 | 36 |
| Income from the reversal of provisions | 128 | 32 |
| Income from prior-period billings | 16 | 23 |
| Gains on disposal of non-current assets | 19 | 16 |
| Reversals of impairment losses on receivables and other assets |
11 | 15 |
| Income from the remeasurement of liabilities | 7 | 13 |
| Income from work performed and capitalised | 14 | 11 |
| Recoveries on receivables previously written off | 3 | 11 |
| Income from the derecognition of liabilities | 8 | 10 |
| Commission income | 4 | 9 |
| Income from loss compensation | 6 | 5 |
| Income from derivatives | 3 | 0 |
| Subsidies | 1 | 1 |
| Miscellaneous | 67 | 84 |
| Total | 435 | 389 |
Miscellaneous other operating income includes a large number of smaller individual items.
| € m | ||
|---|---|---|
| Q 1 2010 | Q 1 2011 | |
| Travel and training costs | 66 | 77 |
| Other business taxes | 91 | 72 |
| Cost of purchased cleaning, transport and security | ||
| services | 69 | 71 |
| Warranty expenses, refunds and compensation | ||
| payments | 66 | 63 |
| Expenses for advertising and public relations | 66 | 63 |
| Telecommunication costs | 54 | 59 |
| Insurance costs | 25 | 47 |
| Offi ce supplies | 41 | 43 |
| Consulting costs (including tax advice) | 35 | 42 |
| Write-downs of current assets | 40 | 41 |
| Expenses from currency translation differences | 38 | 39 |
| Entertainment and corporate hospitality expenses | 24 | 30 |
| Prior-period other operating expenses | 7 | 22 |
| Voluntary social benefi ts | 36 | 21 |
| Services provided by the Federal Posts and | ||
| Telecommunications Agency | 19 | 19 |
| Contributions and fees | 14 | 19 |
| Legal costs | 31 | 17 |
| Commissions paid | 14 | 14 |
| Donations | 12 | 14 |
| Losses on disposal of assets | 75 | 9 |
| Monetary transaction costs | 7 | 7 |
| Audit costs | 7 | 6 |
| Expenses from derivatives | 13 | 4 |
| Additions to provisions | 2 | 1 |
| Miscellaneous | 9 | 68 |
| Total | 861 | 868 |
Th e losses on disposal of assets in the prior year largely related to the deconsolidation loss on the sale of the business in the United Kingdom; Note 2.
Miscellaneous other operating expenses include a large number of smaller individual items.
Depreciation, amortisation and impairment losses declined by € 10 million year on year, from € 318 million to € 308 million. Th is item includes impairment losses of € 5 million (previous year: € 14 million), which are attributable to the segments as follows:
| € m | ||
|---|---|---|
| Q 1 2010 | Q 1 2011 | |
| express | ||
| Property, plant and equipment | 1 | 0 |
| supply chain | ||
| Property, plant and equipment | 0 | 5 |
| Corporate Center / Other | ||
| Property, plant and equipment | 13 | 0 |
| Impairment losses | 14 | 5 |
Th e impairment losses relate to land and buildings. In the previous year, € 13 million of the impairment losses was attributable to properties reclassifi ed as held for sale.
Investments in companies on which a signifi cant infl uence can be exercised and which are accounted for using the equity method contributed € 58 million (previous year: € 34 million) to net fi nancial income / net fi nance costs; this is attributable to Deutsche Postbank AG, as in the previous year.
Th e net other fi nance costs of € 219 million (previous year: net other fi nancial income of € 1,294 million) are mainly aff ected by the planned sale of Postbank. Th ey also include impairment losses resulting from the measurement of the Deutsche Postbank shares before and aft er they were reclassifi ed as held for sale in accordance with IFRS 5; Note 12.
| € m | ||
|---|---|---|
| Q 1 2010 | Q 1 2011 | |
| Interest expense on exchangeable bond | –30 | –31 |
| Interest expense on cash collateral | –11 | –12 |
| Net gain / loss on recognition and subsequent measurement of the forward |
1,453 | – 42 |
| Net gain / loss on measurements of the option (tranche iii) |
2 | –19 |
| Impairment loss (–) on measurement of shares before reclassifi cation under ifrs 5 |
0 | – 63 |
| Impairment loss (–) / reversal of impairment loss (+) | ||
| on shares under ifrs 5 | 0 | 53 |
| 1,414 | –114 |
Basic earnings per share in the period under review were € 0.27.
| Basic earnings per share | € | 1.44 | 0.27 |
|---|---|---|---|
| Weighted average number of shares outstanding |
shares 1,208,759,276 1,208,465,874 | ||
| Consolidated net profi t for the period attributable to Deutsche Post ag shareholders |
€ m | 1,747 | 325 |
| Q 1 2010 | Q 1 2011 |
Diluted earnings per share in the period under review were € 0.27. Executives were entitled to 4,470,605 rights to shares as at the reporting date.
| Weighted average number of shares outstanding |
shares 1,208,759,276 1,208,465,874 | ||
|---|---|---|---|
| Potentially dilutive shares Weighted average number of shares |
shares | 982,0071) | 1,434,295 |
| for diluted earnings | shares 1,209,741,2831) 1,209,900,169 | ||
| Diluted earnings per share | € | 1.44 | 0.27 |
1) Adjusted prior-year amount. The adjustment did not affect diluted earnings.
Investments in intangible assets and property, plant and equipment in the period up to 31 March 2011 amounted to € 252 million (previous year: € 195 million), of which € 30 million was attributable to intangible assets (previous year: € 30 million). Investments in property, plant and equipment are shown in the following table:
| € m | ||
|---|---|---|
| 31 March 2010 31 March 2011 | ||
| Property, plant and equipment | ||
| Land and buildings (incl. leasehold improvements) | 7 | 7 |
| Technical equipment and machinery | 47 | 28 |
| Transport equipment | 12 | 41 |
| Aircraft | 11 | 16 |
| it equipment | 15 | 16 |
| Other operating and offi ce equipment | 10 | 11 |
| Advance payments and assets under development | 63 | 103 |
| 165 | 222 |
Of the advance payments, € 35 million relates to the renewal of the aircraft fl eet.
Goodwill changed as follows in the reporting period:
| € m | ||
|---|---|---|
| 2010 | 2011 | |
| Cost | ||
| Balance at 1 January | 11,291 | 11,759 |
| Additions to consolidated group | 20 | 0 |
| Additions | 4 | 0 |
| Disposals | –11 | –29 |
| Currency translation differences | 455 | –259 |
| Balance at 31 December / 31 March | 11,759 | 11,471 |
| Impairment losses | ||
| Balance at 1 January | 1,048 | 1,093 |
| Disposals | 0 | – 6 |
| Currency translation differences | 45 | –21 |
| Balance at 31 December / 31 March | 1,093 | 1,066 |
| Carrying amount at 31 December / 31 March | 10,666 | 10,405 |
Th e net disposals of € 23 million relate to the goodwill of Exel Transportation Services Inc., USA, which was reclassifi ed as held for sale in accordance with IFRS 5.
Th e decline in investments in associates is due solely to the reclassifi cation of the carrying amount of the investment in Deutsche Postbank AG amounting to € 1,801 million as held for sale; Note 12.
| € m | ||
|---|---|---|
| 2010 | 2011 | |
| Balance at 1 January | 1,772 | 1,847 |
| Changes in Group's share of equity | ||
| Changes recognised in profi t or loss | 56 | 58 |
| Profi t distributions | – 4 | 0 |
| Changes recognised in other comprehensive income | 93 | 10 |
| Impairment losses | – 69 | – 63 |
| Elimination of intercompany profi ts and losses | –1 | 0 |
| Reclassifi ed to current assets | 0 | –1,801 |
| Carrying amount at 31 December / 31 March | 1,847 | 51 |
| € m | Assets | Liabilities | |||
|---|---|---|---|---|---|
| 31 Dec. 2010 31 March 2011 | 31 Dec. 2010 31 March 2011 | ||||
| Investment in Deutsche Postbank ag | 0 | 1,854 | 0 | 0 | |
| Exel Transportation Services Inc., usa | 0 | 113 | 0 | 62 | |
| Deutsche Post ag – real estate | 71 | 70 | 0 | 0 | |
| Deutsche Post Immobilienentwicklung Grundstücksgesellschaft mbH & Co. Logistikzentren KG, | |||||
| Germany – real estate | 25 | 15 | 0 | 0 | |
| us Express Aviation, usa – aircraft | 12 | 10 | 0 | 0 | |
| Miscellaneous | 5 | 6 | 0 | 0 | |
| Assets held for sale and liabilities associated with assets held for sale | 113 | 2,068 | 0 | 62 |
As part of the planned sale of Deutsche Postbank shares and in accordance with the contractual arrangements, the shares of Deutsche Postbank AG held by Deutsche Post AG amounting to a 39.5 % interest (86,417,432 shares) were reclassifi ed as held for sale. Th e shares were reclassifi ed at the end of February 2011.
As at 31 December 2010, the carrying amount of the investment in Deutsche Postbank AG was written down by € 52 million due to the lower share price (as at 31 December 2010: € 20.80 per share). Th e most recent measurement of the carrying amount of the investment prior to its reclassifi cation resulted in an impairment loss of € 63 million, which was recognised in net other fi nance costs.
Following its reclassifi cation, the investment in Deutsche Postbank is now accounted for in accordance with IFRS 5. Th e fair value of the investment was € 1,854 million as at 31 March 2011. Deutsche Postbank's share price was € 21.45 as at 31 March 2011. Th is resulted in a € 53 million reversal of the impairment loss, which is presented in net other fi nance costs.
Th e following table shows the income and expenses attributable to Deutsche Postbank AG and recognised in other comprehensive income.
| € m | Equity attributable to Deutsche Post ag |
Non controlling |
|
|---|---|---|---|
| shareholders | interests | Total equity | |
| 2011 | |||
| ias 39 revaluation reserve | 70 | 0 | 70 |
| Currency translation reserve | – 44 | 0 | – 44 |
| 26 | 0 | 26 | |
Aft er the reporting date, Deutsche Post DHL completed the sale of the freight forwarding company Exel Transportation Services Inc., USA, which is reported under the SUPPLY CHAIN division, including Exel Trucking Inc., USA, and Exel Transportation Services Inc. ( Canadian Branch), Canada. Th e buyer is the Hub Group, USA. As at 31 March 2011, the assets and liabilities were presented as held for sale in accordance with IFRS 5.
| € m | |
|---|---|
| 31 March 2011 | |
| assets | |
| Intangible assets | 23 |
| Property, plant and equipment | 7 |
| Non-current fi nancial assets | 1 |
| Receivables and other current assets | 76 |
| Cash and cash equivalents | 6 |
| Total assets | 113 |
| equity and liabilities | |
| Non-current provisions | 4 |
| Current provisions | 1 |
| Current liabilities | 57 |
| Total equity and liabilities | 62 |
Income and expenses recognised in other comprehensive income are shown in the following table:
| € m | Equity attributable to Deutsche Post ag shareholders |
Non controlling interests |
Total equity |
|---|---|---|---|
| 2011 | |||
| Currency translation reserve | 24 | 0 | 24 |
Deutsche Post Immobilienentwicklung Grundstücksgesellschaft , Germany, plans to sell four properties. Th ese properties were therefore reclassifi ed in the previous year from property, plant and equipment to assets held for sale. Th e most recent appraisal prior to reclassifi cation resulted in an impairment loss of € 13 million.
Surplus aircraft capacity that was no longer required following the restructuring of US Express Aviation was classifi ed in accordance with IFRS 5 in the previous year.
| Balance at 31 December/31 March | 1,209,015,874 | 1,207,365,874 |
|---|---|---|
| Treasury shares issued | 769,794 | 0 |
| Treasury shares acquired | –769,794 | –1,650,000 |
| Balance at 1 January | 1,209,015,874 | 1,209,015,874 |
| 2010 | 2011 | |
| € |
In the fi rst quarter of 2011, Deutsche Post AG acquired 1.65 million shares at a total price of € 21 million, including transaction costs, to settle entitlements due under the 2010 tranche of the bonus programme for executives (Share Matching Scheme). Consequently, issued capital was reduced by the notional value of the shares purchased. Th e average purchase price per share was € 12.783.
Th e notional value of the treasury shares is deducted from issued capital and the diff erence between the notional value and the reported value of the treasury shares is deducted from retained earnings.
Issued capital will increase again when the shares are issued to executives in April 2011. Changes in treasury shares are presented in the statement of changes in equity.
Changes in retained earnings are presented in the statement of changes in equity.
| € m | ||
|---|---|---|
| 2010 | 2011 | |
| Balance at 1 January | 6,098 | 7,767 |
| Dividend payment | –725 | 0 |
| Consolidated net profi t for the period attributable | ||
| to Deutsche Post ag shareholders | 2,541 | 325 |
| Transactions with non-controlling interests | –147 | 0 |
| Change due to Share Matching Scheme | –1 | –19 |
| Miscellaneous other changes | 1 | 0 |
| Balance at 31 December / 31 March | 7,767 | 8,073 |
Th e purchase of treasury shares to settle the 2010 tranche of the Share Matching Scheme reduced retained earnings by € 19 million.
Th e company plans to distribute a dividend of € 786 million for fi nancial year 2010. A dividend of € 725 million was distributed in 2010 for fi nancial year 2009.
| € m | global | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| express | forwarding, freight |
supply chain | Corporate Center / | Other | Consolidation | Group | ||||||||
| 1 January to 31 March | 20101) | 2011 | 2010 | 2011 | 2010 | 2011 | 20101) | 2011 | 20101) | 2011 | 20101) | 2011 | 2010 | 2011 |
| External revenue | 3,475 | 3,481 | 2,543 | 2,673 | 2,969 | 3,430 | 3,012 | 3,244 | 17 | 14 | 0 | 0 | 12,016 | 12,842 |
| Internal revenue | 31 | 33 | 77 | 92 | 148 | 151 | 32 | 29 | 311 | 309 | – 599 | – 614 | 0 | 0 |
| Total revenue | 3,506 | 3,514 | 2,620 | 2,765 | 3,117 | 3,581 | 3,044 | 3,273 | 328 | 323 | – 599 | – 614 | 12,016 | 12,842 |
| Profi t/loss from operating activities (ebit) | 389 | 373 | 110 | 216 | 53 | 69 | 56 | 78 | – 96 | –107 | 0 | 0 | 512 | 629 |
| Net income from associates | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 34 | 58 | 0 | 0 | 34 | 58 |
| Segment assets 2) | 4,029 | 4,522 | 8,323 | 8,316 | 7,727 | 7,612 | 6,030 | 5,807 | 1,167 | 3,064 | –246 | –251 | 27,030 | 29,070 |
| Investments in associates 2) | 8 | 8 | 28 | 28 | 15 | 15 | 0 | 0 | 1,796 | 0 | 0 | 0 | 1,847 | 51 |
| Segment liabilities 2), 3) | 2,795 | 2,858 | 2,525 | 2,463 | 2,777 | 2,875 | 2,942 | 2,747 | 818 | 800 | –187 | –171 | 11,670 | 11,572 |
| Capex | 84 | 48 | 41 | 82 | 18 | 21 | 35 | 60 | 17 | 41 | 0 | 0 | 195 | 252 |
| Depreciation and amortisation | 72 | 76 | 88 | 82 | 24 | 25 | 71 | 71 | 49 | 49 | 0 | 0 | 304 | 303 |
| Impairment losses | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 5 | 13 | 0 | 0 | 0 | 14 | 5 |
| Total depreciation, amortisation | ||||||||||||||
| and impairment losses | 72 | 76 | 89 | 82 | 24 | 25 | 71 | 76 | 62 | 49 | 0 | 0 | 318 | 308 |
| Other non-cash expenses | 53 | 49 | 132 | 44 | 15 | 19 | 28 | 24 | 8 | 23 | 0 | 0 | 236 | 159 |
| Employees 4) | 146,365 143,980 | 88,384 | 87,379 | 41,729 | 42,347 131,032 132,159 | 13,764 | 13,566 | 0 | 0 421,274 419,431 |
| € m | Europe (excluding | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Germany | Germany) | Americas | Asia Pacific | Other regions | Group | |||||||
| 1 January to 31 March | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 |
| External revenue | 4,092 | 4,237 | 3,999 | 4,222 | 1,935 | 2,146 | 1,546 | 1,736 | 444 | 501 | 12,016 | 12,842 |
| Non-current assets2) | 4,085 | 4,048 | 7,198 | 7,124 | 3,261 | 3,109 | 3,231 | 3,055 | 329 | 313 | 18,104 | 17,649 |
| Capex | 107 | 130 | 49 | 56 | 21 | 39 | 13 | 17 | 5 | 10 | 195 | 252 |
1) Prior-year amounts adjusted. 2) As at 31 December 2010 and 31 March 2011. 3) Including non-interest-bearing provisions. 4) Average ftes.
Deutsche Post DHL reports four operating segments; these are managed independently by the responsible segment management bodies in line with the products and services off ered and the brands, distribution channels and customer profi les involved. Components of the entity are defi ned as a segment on the basis of the existence of segment managers with bottom-line responsibility who report directly to Deutsche Post DHL's top management.
Th e Consolidation column and the Corporate Center / Other collective segment are reported separately. Th e collective segment comprises the activities of Global Business Services (GBS), the Corporate Center and other areas. Th e activities concerned are composed of non-operating activities and other business activities. Th e profi t / loss generated by GBS is allocated to the operating segments, whilst its assets and liabilities remain with GBS (asymmetrical allocation).
Th e main geographical areas in which the Group is active are Germany, Europe, the Americas, Asia Pacifi c and Other regions. External revenue, non-current assets and capex are disclosed for these regions.
Revenue, assets and capex are allocated to the individual regions on the basis of the domicile of the reporting entity. Noncurrent assets primarily comprise intangible assets, property, plant and equipment, and other non-current assets.
Th e allocation of assets to segment assets and of liabilities to segment liabilities between the MAIL division and Corporate Center / Other was modifi ed for reasons of transparency. Th e prioryear fi gures were adjusted accordingly.
Additionally, goodwill of €–114 million arising from a previous intragroup transaction was reclassifi ed from Corporate Center / Other to Consolidation. Th e adjustment did not aff ect the amounts presented for the operating segments. Th e prior-year amounts were adjusted accordingly.
In the previous year, the management structure of Williams Lea Germany changed as at 1 July 2010. Th e reason for this was the many strategic and operational links between the MAIL division and Williams Lea Germany. Signifi cant parts of Williams Lea Germany were therefore reclassifi ed from the SUPPLY CHAIN division to MAIL. Th e prior-year amounts were adjusted accordingly.
| € m | ||
|---|---|---|
| Q 1 2010 | Q 1 2011 | |
| Total income of reportable segments | 608 | 736 |
| Corporate Center / Other | – 96 | –107 |
| Reconciliation to Group / Consolidation | 0 | 0 |
| Profi t from operating activities (ebit) | 512 | 629 |
| Net fi nancial income / net fi nance costs | 1,328 | –161 |
| Profi t before income taxes | 1,840 | 468 |
| Income taxes | –70 | –117 |
| Consolidated net profi t for the period | 1,770 | 351 |
A new system to grant variable remuneration components to certain Group executives was implemented in fi nancial year 2009.
| 2009 tranche |
2010 tranche |
2011 tranche |
||
|---|---|---|---|---|
| Grant date | 1 Nov. 2009 1 Jan. 2010 1 Jan. 2011 | |||
| Term | months | 53 | 63 | 63 |
| Expires | March 2014 March 2015 March 2016 | |||
| Share price at grant date | € | 11.48 | 13.98 | 12.90 |
An amount of € 19 million (31 December 2010: € 20 million) was transferred to the capital reserves for the 2009, 2010 and 2011 tranches of the Share Matching Scheme.
Exercise of the rights to shares of the 2009 tranche in April 2010 reduced the capital reserves by € 9 million due to the corresponding issuance of treasury shares to the executives.
| € m | ||
|---|---|---|
| 2010 | 2011 | |
| Balance at 1 January | 2,147 | 2,158 |
| Addition | ||
| Issue of share rights under the 2009 Share Matching | ||
| Scheme | 6 | 1 |
| Issue of share rights under the 2010 Share Matching | ||
| Scheme | 14 | 16 |
| Issue of share rights under the 2011 Share Matching | ||
| Scheme | 0 | 2 |
| Exercise of share rights under the 2009 Share Matching | ||
| Scheme | – 9 | 0 |
| Balance at 31 December / 31 March | 2,158 | 2,177 |
Th e SAR provisions for the other share-based payment systems for executives amounted to € 45 million as at 31 March 2011 (31 December 2010: € 37 million).
Th ere have been no material changes in related party disclosures as against 31 December 2010; 2010 Annual Report, Note 55.
Th e Group's contingent liabilities and other obligations have not changed signifi cantly compared with 31 December 2010; 2010 Annual Report, Notes 51 and 52.
At the beginning of May 2011, DHL Express Canada announced the sale of its domestic express business in Canada to the transport company TransForce, with the two companies entering into a 10 -year strategic alliance. Th e domestic express business is planned to be handled via TransForce's subsidiary Loomis Express. DHL Express Canada continues to provide international express services. Deconsolidation is planned for the second quarter of 2011.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim fi nancial reporting, the interim consolidated fi nancial statements give a true and fair view of the assets, liabilities, fi nancial position and profi t or loss of the Group, 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 fi nancial year.
Bonn, 9 May 2011
Deutsche Post AG Th e Board of Management
Dr Frank Appel
Ken Allen Roger Crook
Bruce A. Edwards Jürgen Gerdes
Lawrence Rosen Walter Scheurle
We have reviewed the condensed consolidated interim fi nancial statements – comprising the income statement and statement of comprehensive income, balance sheet, cash fl ow 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 31 March 2011, which are part of the quarterly fi nancial report pursuant to section 37 x (3) of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act). Th e preparation of the condensed consolidated interim fi nancial statements in accordance with the IFRSs applicable to interim fi nancial 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 manage ment reports is the responsibility of the company's Board of Management. Our responsibility is to issue a review report on the condensed consolidated interim fi nancial statements and on the interim group management report based on our review.
We conducted our review of the condensed consolidated interim fi nancial statements and the interim group management report in accordance with German generally accepted standards for the review of fi nancial statements promulgated by the Institut der Wirtschaft sprüfer (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). Th ose 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 fi nancial statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim fi nancial 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 fi nancial statement audit. Since, in accordance with our engagement, we have not performed a fi nancial 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 fi nancial statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to in terim fi nancial 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, 9 May 2011
PricewaterhouseCoopers Aktiengesellschaft Wirtschaft sprüfungsgesellschaft
Gerd Eggemann Dietmar Prümm Wirtschaft sprüfer Wirtschaft sprüfer (German Public Auditor) (German Public Auditor)
| 01 Selected key fi gures | I |
|---|---|
| 02 Consolidated revenue | I |
| 03 Revenue by region | I |
| 04 Consolidated ebit | I |
| 35 Events | II |
| 05 Share price performance | 5 |
|---|---|
| 06 Deutsche Post shares | 5 |
| 07 Peer group comparison: closing prices | 5 |
| 08 Selected indicators for results of operations | 6 | ||
|---|---|---|---|
| 09 Consolidated revenue | 7 |
|---|---|
| 10 Consolidated ebit | 7 |
| 11 Selected cash fl ow indicators | 8 |
| 12 ffo to debt | 8 |
| 13 Capex and depreciation, amortisation and impairment losses |
9 |
| 14 Capex by region | 9 |
| 15 Operating cash fl ow by division, q 1 2011 | 10 |
| 16 Calculation of free cash fl ow | 10 |
| 17 Selected indicators for net assets | 11 |
| 18 Net liquidity (–) / net debt (+) | 12 |
| Divisions | |
| 19 Key fi gures by operating division | 13 |
| 20 Mail Communication: volumes | 14 |
21 Dialogue Marketing: volumes 14
| 22 Parcel Germany: volumes | 15 |
|---|---|
| 23 Mail International: volumes | 15 |
| 24 express: revenue by product | 16 |
| 25 express: volumes by product | 16 |
| 26 Global Forwarding: revenue | 18 |
| 27 Global Forwarding: volumes | 19 |
| 28 supply chain: revenue by region, q 1 2011 | 20 |
| 29 supply chain: revenue by sector, q 1 2011 | 20 |
| 30 Income Statement | 26 |
|---|---|
| 31 Statement of Comprehensive Income | 27 |
| 32 Balance Sheet | 28 |
| 33 Cash Flow Statement | 29 |
| 34 Statement of Changes in Equity | 30 |
| Contacts | Ordering a copy of the Interim Report | |
|---|---|---|
| Investor Relations | External | |
| Tel.: + 49 (0) 228 182-6 36 36 Fax: + 49 (0) 228 182-6 31 99 e-mail: ir @ deutschepost.de |
e-mail: ir @ deutschepost.de Online: dp-dhl.com/en/investors.html |
|
| Press offi ce | Internal | |
| Tel.: + 49 (0) 228 182-99 44 Fax: + 49 (0) 228 182-98 80 e-mail: pressestelle @deutschepost.de |
GeT and dhl Webshop Mat. no. 675-601-532 |
|
| Publication | English translation | |
| Published on 10 May 2011. | Deutsche Post Corporate Language Services et al. | |
| The English version of the Interim Report on the first quarter of 2011 of Deutsche Post DHL |
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constitutes a translation of the original German version.
with legal provisions in other countries.
Only the German version is legally binding, insofar as this does not conflict
Financial calendar 1) 2011 Annual General Meeting (Frankfurt am Main) Dividend payment Interim Report on the fi rst half of 2011 Interim Report on the fi rst nine months of 2011 25 MAY 2011 26 MAY 2011 02 AUGUST 2011 09 NOVEMBER 2011 2011 Annual Report Interim Report on the fi rst quarter of 2012 2012 Annual General Meeting (Frankfurt am Main) Dividend payment 13 MARCH 2012 08 MAY 2012 09 MAY 2012 10 MAY 2012 Interim Report on the fi rst half of 2012 Interim Report on the fi rst nine months of 2012
02 AUGUST 2012 08
NOVEMBER 2012
| 18 May 2011 | Cheuvreux Pan-Europe London Forum (London) |
|---|---|
| 19 – 20 May 2011 | Deutsche Bank German & Austrian Corporate Conference (Frankfurt am Main) |
| 14 – 16 June 2011 | Deutsche Bank Global Industrials Conference (Chicago) |
| 20 – 21 June 2011 | Goldman Sachs Business Services Conference (London) |
| 12 – 13 September 2011 | ubs Transport Conference (London) |
| 14 – 15 September 2011 | ubs Best of Germany Conference (New York) |
| 20 – 21 September 2011 | Sanford C. Bernstein's Strategic Decisions Conference (London) |
| 29 September 2011 | UniCredit German Investment Conference (Munich) |
1) Further dates, updates as well as information on live webcasts dp-dhl.com/en/investors.html.
Deutsche Post ag Headquarters Investor Relations 53250 Bonn Germany www.dp-dhl.com
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