Deutsche Post AG

Earnings Release • Nov 5, 2009

News Details

Corporate | 5 November 2009 07:00

Deutsche Post DHL raises full-year outlook to at least 1.35 billion euros – successfully manages impact of economic crisis in third quarter

Deutsche Post AG / Quarter Results

05.11.2009

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Deutsche Post DHL raises full-year outlook to at least 1.35 billion euros -
successfully manages impact of economic crisis in third quarter

• Q3 underlying EBIT excluding Arcandor insolvency up 25 percent

• Transport volumes show slight improvement in the third quarter

• Consolidated revenue drops by 18.6 percent to 11.2 billion euros

• CEO Frank Appel: 'Cost management bearing fruit'

Bonn, Nov. 5, 2009: Deutsche Post DHL, the world's leading mail and
logistics provider, saw its third-quarter revenue fall 18.6 percent to 11.2
billion euros in the wake of the continuing global economic crisis. Thanks
to strict cost management, however, the Group was able to significantly
cushion the crisis' impact on profitability. As a result, underlying EBIT
was 10 percent below the previous year's level, finishing the quarter at
378 million euros. Excluding the negative effect on earnings of 146 million
euros related to the insolvency of Arcandor AG - not reported as a
non-recurring item - the underlying EBIT increased by approximately 25
percent in the third quarter year on year.

'With our cost management bearing fruit we are able to mostly offset the
negative effects of the crisis', said Frank Appel, Chief Executive Officer
Deutsche Post DHL. 'Although we see initial positive signals with the
stabilization of transport volumes, there's still no indication of a
full-scale economic recovery. Therefore we can't ease up; we must
accelerate our efforts.'

Roadmap to Value

In November 2007, Deutsche Post DHL announced its capital market program,
Roadmap to Value, which focuses on value creation. The program's goals of
achieving significant improvements in efficiency, net working capital, cash
generation and transparency within two years have been reached. The Group's
progress in successfully implementing efficiency programs are clearly
reflected in the accelerated implementation of the IndEx program. This
initiative was introduced at the end of last year to counter the impact of
the economic downturn. The Group is now confident that it will reach the
goal of reducing indirect costs by 1 billion euros by the end of 2009, one
year earlier than originally planned. In the first nine months of 2009
alone, 720 million euros were saved. Total savings since November 2008
amount to 859 million euros.

Third quarter

Reported Group EBIT totaled 231 million euros in the third quarter,
compared with 953 million euros in the same period of the previous year.
The primary causes of this steep decrease were EU state aid repayments to
the Group included in last year's figures, charges related to the Arcandor
insolvency and the restructuring expenses related to the Express business
in the U.S. Furthermore, the lower valuation of the put options on shares
of Deutsche Postbank AG had a negative impact on the consolidated net
profit after minorities. In the third quarter, this figure was minus 83
million euros compared with 879 million euros in the prior year. As a
result, earnings per share dropped from 73 cents in the previous year to
minus 7 cents. In contrast, underlying operating cash flow increased from
753 million euros to 807 million euros.

Nine months

Revenue in the first nine months of 2009 declined 16.4 percent to 33.8
billion euros. While the reported EBIT fell 80.2 percent to 367 million
euros, the underlying EBIT dropped 31 percent to 947 million euros. Both
operational figures include negative effects from the Arcandor insolvency
in an amount of 186 million euros. The Group's net profit after minorities
reached 927 million euros after 1.5 billion euros in the prior year. The
improved net financial income as a result of the valuation of the Postbank
put option was offset by restructuring expenses for the U.S. Express
business and the EU state aid repayment in last year's figures. Therefore,
at 77 cents earnings per share were below last year's level of 1.24 euros.
The underlying operating cash flow showed a slight improvement to 1.39
billion euros in the first nine months from 1.38 billion euros in 2008.

MAIL Division

Revenue in the MAIL Division fell further during the third quarter. At 3.3
billion euros, it was 3.9 percent lower than in the same period last year.
This development reflects both the global economic crisis and the
increasing substitution of letters with electronic media. Despite higher
wages and losses on receivables related to the Arcandor insolvency,
effective cost-cutting measures were able to limit the underlying EBIT
decline. Underlying EBIT totaled 323 million euros in the third quarter
2009, a drop of 6.1 percent versus the prior year.

EXPRESS Division

The strict cost management was particularly successful in the EXPRESS
Division. Although continuing steep drops in volume and the withdrawal from
the domestic US express business caused third-quarter revenue to fall by
nearly 1 billion euros to 2.5 billion euros, extensive cost-cutting
measures completely offset this significant decline. As a result,
profitability actually increased. At 131 million euros, underlying EBIT was
well above the previous year's level of 24 million euros. Including
non-recurring restructuring charges related to the U.S. express business,
the result was still positive.

GLOBAL FORWARDING, FREIGHT Division

Transport volumes in air and sea freight have improved sequentially in each
quarter this year. In particular, marketing and sales initiatives in the
areas of life science and consumer goods have had a positive effect,
resulting in an expanded market position. Due to reduced fuel surcharges
and generally lower freight rates, revenue in the GLOBAL FORWARDING,
FREIGHT Division fell more steeply than it did in the first six months of
the year, dropping 30.4 percent to 2.6 billion euros. At the same time,
purchase prices for transport services climbed steeply, driven by severely
reduced transport capacities. The impact on underlying EBIT, which fell to
76 million euros, was limited by successful cost management and further
boosts in productivity.

SUPPLY CHAIN Division

Contract logistics at Deutsche Post DHL also further extended its market
position in the third quarter after concluding new contracts worth about
300 million euros. Nonetheless, revenue fell 11.6 percent to 3.1 billion
euros. This decrease was caused not only by challenging economic
conditions, but also by the insolvency of Arcandor, which led to charges of
141 million euros in the third quarter. As a result, underlying EBIT fell
from 51 million euros in the third quarter 2008 to minus 81 million euros
in 2009. This result overshadows the strong increase in operational
efficiency year on year. Excluding the Arcandor effect, third-quarter
operating earnings would have risen despite the decrease in revenue.

Outlook

As a result of the progress Deutsche Post DHL has made in its cost
management and the first signs of market recovery, the Group has raised its
previous target of 1.2 billion euros for underlying EBIT for the fiscal
year 2009 to at least 1.35 billion euros in spite of the still challenging
business climate. In addition, Deutsche Post DHL continues to expect a
positive net profit for the full year. 'Our third-quarter results and the
new forecast are positive indications that we are on the right track,' said
Deutsche Post DHL Chief Financial Officer Larry Rosen. 'But we still have a
long way to go to unlock our full potential.'

• Ends -

Deutsche Post DHL
Corporate Communications - External Communications
Silje Skogstad
Sebastian Steffen
Tel.: +49 (0)228 182-9944
E-mail: pressestelle@deutschepost.de

05.11.2009 Financial News transmitted by DGAP

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Language: English
Company: 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.dp-dhl.de
ISIN: DE0005552004
WKN: 555200
Indices: DAX
Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard),
Düsseldorf, Hannover, München, Hamburg, Stuttgart;
Terminbörse EUREX

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