Deutsche Post AG

Earnings Release • Mar 6, 2008

News Details

Corporate | 6 March 2008 07:30

Deutsche Post World Net 2007 Underlying EBIT at 3.8 billion euros

Deutsche Post AG / Final Results

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Deutsche Post World Net 2007 Underlying EBIT at 3.8 billion euros

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

Bonn, March 6, 2008: Deutsche Post World Net, the world’s leading provider
of logistics services, today reported earnings before interest and tax
(EBIT) of 3.8 billion euros before non-recurring effects for the 2007
business year, an increase of 8 percent compared with the year-earlier
level. Underlying EBIT was in line with the Group’s business expectations
and guidance. Reported EBIT was 17 percent lower at 3.2 billion euros
following a non-cash asset writedown in the EXPRESS Americas division.
Revenue increased 4.9 percent to 63.5 billion euros in 2007.

'The 2007 results again demonstrate the strength of the Group’s platform.
We want to continue to build on this basis by enforcing an even stronger
customer focus as well as a closer collaboration among our individual
businesses and employees on all levels,' said Chairman and Chief Executive
Officer Frank Appel at a press conference in Bonn. Appel reiterated the
Group’s financial target for 2008 of around 4.2 billion euros in underlying
EBIT and confirmed the Board of Management will propose to raise the 2007
dividend by 20 percent to 90 euro cents. 'Our focus remains on organic
growth and improving cash generation and cash payout to shareholders,'
Appel said.

Net income and cash flow

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

'Roadmap to Value'

Deutsche Post World Net is making good progress on its 'Roadmap to Value'
capital markets program, which was introduced in November 2007. 'The
program is already delivering tangible results and we remain heavily
focused on its execution,' said Chief Financial Officer John Allan.

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

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

MAIL division

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

Following the full liberalization of the German mail market on Jan. 1,
2008, the MAIL division was able to maintain its position with major key
account clients. With its high quality standards, the division was able to
win back more than 30 large customers in the month of December 2007 alone.

EXPRESS division

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

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

LOGISTICS division

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

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

As announced on March 4, the corporate division LOGISTICS will be separated
into two operating divisions with immediate effect: One division comprises
the business units Supply Chain and Corporate Information Solutions and
will be headed by Bruce Edwards. The other division, to be headed by
Hermann Ude, will consist of the Freight and Global Forwarding business
units. These changes in the organizational structure at this point in time
won’t have an impact on the financial reporting.

FINANCIAL SERVICES division

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

Deutsche Postbank reported earnings separately on February 15.

SERVICES division

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

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

Outlook

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

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

The company also reiterated its EBIT guidance for 2009.

Please note:
The complete annual report is available at
http://investors.dpwn.de/de/index.htm.
The press conference will be broadcast at 10 a.m. at www.dpwn.de/presse.

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

All information is provided without guarantee and subject to change without
prior notice. This document contains forward-looking statements that relate
to the business, financial performance and results of operations of
Deutsche Post AG. Forward-looking statements are not historical facts, and
may be identified by words such as 'believes', 'expects', 'predicts',
'intends', 'projects', 'plans', 'estimates', 'aims', 'foresees',
'anticipates', 'targets', and similar expressions. As these statements are
based 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 of the date of this presentation. Deutsche Post AG does not
intend or assume any obligation to update these forward-looking statements
to reflect events or circumstances after the date of this document.

Contact for media queries:
Deutsche Post World Net
Corporate Communications
Martin Dopychai
Silje Skogstad
Nicole Mommsen
Tel.: 0228/182 99 44
E-mail: pressestelle@deutschepost.de
06.03.2008 Financial News transmitted by DGAP

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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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