Deutsche Post AG

Earnings Release • Jul 31, 2008

News Details

Corporate | 31 July 2008 07:00

Deutsche Post World Net reports double-digit growth in first half

Deutsche Post AG / Quarter Results/Quarter Results

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Deutsche Post World Net reports double-digit growth in first half

• Underlying EBIT rises 12 percent, with 19 percent growth in second
quarter; reported EBIT down 11 percent
• Organic revenue up 8 percent; Reported revenue gains 3.4 percent, held
back by negative currency effects
• Both Logistics divisions showing strong worldwide performance in new
contracts and renewals
• 2008 guidance of around 4.1 billion euros in underlying EBIT reiterated

Bonn, July 31, 2008: Deutsche Post World Net reported double-digit growth
in its underlying EBIT for the first half, despite challenging economic
conditions. Underlying EBIT, or earnings before interest and taxes
excluding non-recurring effects, gained 12 percent to 1.9 billion euros.
Reported EBIT declined by 11 percent to 1.5 billion euros due to one-time
charges at the Group’s FINANCIAL SERVICES division and costs to restructure
its DHL U.S. Express business. Revenue gained 3.4 percent, with growth
being held back by negative currency effects. Excluding those effects,
revenue grew 7.8 percent.

'Our healthy operating performance in the first half demonstrates that a
well-balanced portfolio like ours and a global presence can show more
resilience to an unfavorable economic environment,' said Chief Executive
Officer Frank Appel at Deutsche Post World Net’s half-year earnings press
conference in Bonn. 'We’re particularly happy about the robust performance
in the MAIL business given we’re now seven months into full market
liberalization in Germany, and the growing stream of significant new
business wins in our logistics divisions.' The Group reiterated its
full-year guidance of around 4.1 billion euros in underlying EBIT, assuming
that the economic environment won’t worsen significantly.

Net income and Cash Flow

Net income after minorities fell 16 percent to 661 million euros in the
first half, mainly due to 317 million euros in writedowns at Postbank tied
to the turbulences in the financial markets. Earnings per share fell to 55
cents from 65 cents a year ago. Operating cash flow (Postbank at Equity)
fell to 623 million euros from 789 million euros due to lower earnings and
higher consumption of provisions.

Roadmap to Value

Deutsche Post World Net made good progress in its Roadmap to Value capital
markets program in the first half of the year. The initiatives to improve
operating profit are on track with 140 million euros in savings reached in
the first half. A reduction in working capital of 125 million euros and
capital expenditure on the level of the previous year also mark good
progress, with spending on acquisitions remaining at a minimal level. The
Group also stands by its commitment of increasing payouts to shareholders
and expects to raise its dividend broadly in line with underlying earnings
in coming years. That corresponds to an annual increase of around 10
percent on average.

To increase transparency, the Group is now for the first time reporting
along its new management structure with the Corporate Divisions
FORWARDING/FREIGHT and SUPPLY CHAIN/CORPORATE INFORMATION SOLUTIONS (CIS)
and has provided restated figures for the previous year. In regard to its
focus on organic growth, Deutsche Post World Net made further progress as
well. In the second quarter alone, DHL’s organic growth rate in
fast-growing regions was almost twice as high as worldwide.

Second Quarter Development

Underlying EBIT gained 19 percent to 862 million euros in the second
quarter, with all divisions meeting or exceeding their previous year’s
levels. Reported EBIT fell 4.4 percent to 672 million euros, burdened by 47
million euros in costs to restructure DHL Express U.S. as well as 143
million euros in writedowns at Deutsche Postbank. Second-quarter net income
after minorities declined to 254 million euros from 285 million euros, with
earnings per share standing at 21 cents compared with 24 cents.

MAIL Corporate Division

Deutsche Post has been able to maintain its strong position following the
full opening of the German letter mail market on Jan. 1, 2008 with the
impact of a worsening economic environment remaining limited. Total volumes
in its Mail Communications unit increased by 3.2 percent in the second
quarter, with the number of customer contact points being raised further.

Revenue in the MAIL division rose 1.6 percent to 3.4 billion euros in the
quarter. EBIT gained 1.9 percent to 321 million euros. EBIT remained stable
in spite of the new market environment and higher costs.

EXPRESS Corporate Division

In the EXPRESS division the leading position in most markets outside the
U.S. was maintained, helped by strong growth in its cross-border Day
Definite and Domestic businesses. The division also benefited from its
strong presence in fast-growing regions such as Asia/Pacific and Eastern
Europe/Middle East/Africa (EEMEA). Accordingly, Asia/Pacific recorded
organic revenue growth – excluding currency effects and other non-operative
items – of 13 percent. In the EEMEA region, organic revenue rose 26
percent, helped by higher fuel surcharges and strong performance of almost
all products. In the Express Americas division, organic revenue increased
4.2 percent, due to increased demand for Day Definite products in Latin
America, Canada and the Carribean.

Measures to restructure the Group’s DHL Express U.S. business are on track,
despite deteriorating market conditions and the weakening economic
environment in the U.S. Deutsche Post World Net in May presented a plan to
restructure DHL Express U.S. to cut losses by 1 billion dollars in 2011. By
that time, the Group expects the contribution to the global network to
exceed the losses incurred by the business. Negotiations about a planned
air lift agreement with United Parcel Service (UPS) are making progress.

Overall organic revenue at the EXPRESS division gained 8.4 percent. On a
reported level, revenue increased 2.7 percent to 3.5 billion euros.
Underlying EBIT rose 20 percent to 78 million euros. Reported EBIT dropped
52 percent, due to the one-time costs related to the restructuring of U.S.
Express.

FORWARDING/FREIGHT Corporate Division

Following the split of the former LOGISTICS Corporate Division in March,
the Group reports its first-half earnings for the first time according to
the new structure.

The new FORWARDING/FREIGHT division was able to raise revenue and improve
profitability in the second quarter, despite negative currency effects due
to the strength of the Euro. The division benefited from flexible products
and services as well as its low asset base, which allowed it to respond
swiftly to increasing demand for a shift of transportation modes to ocean
freight from air. Growth in both air and ocean freight outpaced the market
with 5 percent and 10 percent, respectively.

Revenue at the division grew 11 percent to 3.5 billion euros in the second
quarter, with organic revenue gaining 17 percent. Reported EBIT rose even
faster at 36 percent to 109 million euros in the reporting period. The
improvement in profitability was reached by efficiency measures as well as
lower overhead expenses.

SUPPLY CHAIN/CIS Corporate Division

The SUPPLY CHAIN/CORPORATE INFORMATION SOLUTIONS division was able to make
further progress in the second quarter, again against the backdrop of
adverse currency effects. Supply Chain showed strong progress in new
contract wins with gains of 550 million euros in the first half. New Supply
Chain contracts were awarded from all across the globe supporting
industries ranging from oil sands in Saskatchewan, Canada, to garment
production in Italy and leisure operations in China. In the second quarter
alone, Supply Chain generated new business of around 300 million euros in
annualized revenue. The contract renewal rate was 90 percent. CORPORATE
INFORMATION SOLUTIONS also showed good organic revenue growth despite
challenges in the financial services industry.

In total, revenue at the division grew 4.4 percent in the second quarter,
excluding negative currency effects and other inorganic items. Reported
revenue fell by 4.4 percent to 3.4 billion euros. Reported EBIT dropped
slightly to 126 million euros from 127 million euros.

FINANCIAL SERVICES Corporate Division

The FINANCIAL SERVICES division, which consists largely of Postbank,
boosted its quarterly revenue by 15.2 percent to 3 billion euros. EBIT
before non-recurring items rose by 20 percent to 328 million euros.
Reported EBIT dropped by 26 percent to 185 million euros amid charges tied
to the turbulences in the financial markets. Postbank reported its
quarterly results separately on July 30.

Outlook

Assuming no significant worsening of the global economy, Deutsche Post
World Net reiterated its full-year guidance of around 4.1 billion euros in
underlying EBIT, around 3.1 billion euros in underlying pretax profit and
around 1.65 euros in underlying earnings per share. The outlook for 2009
was also confirmed.

The MAIL division maintained its underlying EBIT guidance of around 1.95
billion euros, even after splitting off Corporate Information Solutions,
marking a minor upward revision. FORWARDING/FREIGHT and SUPPLY CHAIN/CIS
expect around 500 million euros in underlying EBIT each, slightly lower
than the previous around 1.05 billion euros for the former LOGISTICS
division. For Corporate Center/Other a loss of around 500 million euros is
forecast compared with the earlier forecast of around 550 million euros.
The guidance for EXPRESS and FINANCIAL SERVICES remains unchanged at around
400 million euros and around 1.2 billion euros, respectively.

Notes:
The complete quarterly report is available at
http://investors.dpwn.de/de/index.htm .
An interview with CFO John Allan is available at www.dpwn.de.

Contact for media queries:
Deutsche Post World Net
External Communications
Silje Skogstad
Nicole Mommsen
Tel.: 0228/182 99 44
E-mail: pressestelle@deutschepost.de

31.07.2008 Financial News transmitted by DGAP

Language: English
Issuer: Deutsche Post AG
Charles-de-Gaulle-Straße 20
53113 Bonn
Deutschland
Phone: +49 (0)228 182 - 63 100
Fax: +49 (0)228 182 - 63 199
E-mail: ir@deutschepost.de
Internet: www.dpwn.de
ISIN: DE0005552004
WKN: 555200
Indices: DAX
Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard),
Hannover, Düsseldorf, Hamburg, München, Stuttgart;
Terminbörse EUREX

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