Earnings Release • Jul 23, 2009
Earnings Release
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Corporate | 23 July 2009 07:30
Deutsche Post DHL earnings stabilize in second quarter – cost cuts cushion impact of economic crisis
Deutsche Post AG / Quarter Results
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Deutsche Post DHL earnings stabilize in second quarter - cost cuts cushion
impact of economic crisis
Bonn, July 23, 2009: Deutsche Post DHL, the world's leading logistics
provider, succeeded in cushioning the effects of the global economic crisis
through its comprehensive cost-cutting program and stabilized earnings in
the second quarter. Before non-recurring effects, all corporate divisions
were profitable in the second quarter with DHL and Deutsche Post
contributing nearly equal amounts to operating earnings. The Group reported
underlying EBIT, or earnings before interest and taxes excluding
non-recurring effects, of 257 million euros in the second quarter of 2009,
helped by cost-reduction efforts which showed positive effects mainly in
the EXPRESS Corporate Division. Compared with last year, earnings fell 37.8
percent as a result of the global economic crisis. Revenue decreased by
17.7 percent to 11.1 billion euros in the second quarter. Reported EBIT on
the Group level also decreased from 366 million euros in the previous year
to 109 million euros. The Group has based its planning for 2009 on a
scenario that does not foresee a significant improvement in global trade in
the coming months. Taking that into account, Deutsche Post DHL expects
underlying EBIT to reach 1.2 billion euros for the full year 2009.
'Our first-half figures prove that our vigorous cost-cutting efforts are
having a tangible impact throughout the Group and we cannot let up now,'
said Frank Appel, Chief Executive Officer of Deutsche Post DHL, at the
Group's half-year press conference in Bonn. 'We're successfully navigating
through the crisis. What's crucial is that we have not only taken
short-term steps but are also sustainably strengthening both pillars of the
Group - mail and logistics - as part of our Strategy 2015. This is all the
more important as we still don't have a clear view of the further economic
development. Though economic conditions haven't worsened - with new
business bustling and our strong market position in Asia - we are not yet
seeing any substantial improvement.'
Overall, the savings generated in the first half of the year by the
cost-cutting program IndEx totaled an annualized 413 million euros. Since
the start of the program, total annualized savings have amounted to 552
million euros. As a result, the Group is confident that it will reach its
goal of saving 1 billion euros in indirect costs already in the second
quarter of 2010. The Group's original goal was by the end of 2010.
Net income and cash flow in the second quarter
Net income after minorities dropped to 66 million euros in the second
quarter from 231 million euros in the year-earlier period. Earnings per
share declined to 6 cents from 19 cents. Earnings were negatively affected
by the decline in business as well as a lower follow-up valuation of the
put options on Deutsche Postbank AG shares. Free cash flow increased to 839
million euros from 285 million euros. The reasons were lower investments, a
reduction in working capital and the sale of Deutsche Bank AG shares.
First-half results
Revenue in the first half of the year declined 15.3 percent to 22.58
billion euros. Reported EBIT declined 85 percent to 136 million euros,
while underlying EBIT dropped 40.2 percent to 569 million euros. Net income
after minorities amounted to 1.01 billion euros in the first half after 614
million euros a year earlier due to a higher valuation of Postbank put
options in the first three months of the year. Earnings per share rose from
51 cents to 84 cents.
MAIL Corporate Division
The MAIL Corporate Division saw a further deterioration of results in the
second quarter. Revenue declined 6.7 percent to 3.21 billion euros.
Underlying EBIT fell 38 percent to 171 million euros because of
significantly higher wages and 15 million euros in bad debt following the
insolvency of department store and mail-order company Arcandor.
As part of its Strategy 2015, the MAIL Corporate Division has introduced a
comprehensive program to make the business fit for the future. The program
aims at reducing costs in a sustainable way and broadening the services
portfolio to include products such as the 'Letter on the Internet', which
meet customers' needs in the future. In the first half alone, the MAIL
division reduced costs by 180 million euros, with the total EBIT effect
expected to amount to around 300 million euros this year.
EXPRESS Corporate Division
The EXPRESS Corporate Division was able to reduce costs faster than
planned, with the result that lower volumes were largely offset. With 65
million euros, underlying EBIT in the second quarter almost matched the
level of the previous year, when underlying EBIT amounted to 66 million
euros. Revenue at the division declined 28.6 percent to 2.51 billion euros.
In terms of cost cutting, further progress was made mainly in the United
States. Here, the Group is confident that despite the economic crisis, it
will be able to reduce losses on an annual basis to below $400 million in
the fourth quarter of 2009.
GLOBAL FORWARDING, FREIGHT Corporate Division
The GLOBAL FORWARDING, FREIGHT Corporate Division was able to benefit from
the economic crisis and win significant new business, particularly in the
life science, fashion, industrial project business, high tech and
automotive sectors.
Still, an overall declining demand, particularly in the technology and
engineering sectors, as well as lower freight rates and fuel surcharges
prompted a decline in earnings and revenue in the second quarter.
Underlying EBIT amounted to 79 million euros compared with 103 million
euros a year earlier. Revenue fell 27 percent to 2.57 billion euros.
SUPPLY CHAIN Corporate Division
In contract logistics, Deutsche Post DHL continued to add contracts with a
total volume of around 250 million euros in the second quarter, despite the
weak business climate. The contract renewal rate remained around 90
percent. The bankruptcy filing of the department-store and mail-order group
Arcandor had a negative impact during the second quarter. As a result,
assets were reduced by 13 million euros. In addition, the Arcandor
insolvency led to bad debt losses of 12 million euros.
In the second quarter, underlying EBIT in the SUPPLY CHAIN Corporate
Division amounted to 16 million euros compared with 64 million euros in the
previous year as a result of the unexpected impact of the Arcandor
insolvency. Revenue fell by 8.8 percent to 3.06 billion euros.
Outlook
Business development in the second quarter confirms our view, expressed
after the first quarter, that in percentage terms volume declines may have
seen the bottom. Still, the Group doesn't expect a substantial recovery in
world trade in coming months. This scenario includes continued risks to
individual customers and industries, be it insolvencies or extended factory
closures. In all our divisions cost-cutting initiatives are being executed,
which are by now successfully taking hold. Taking these factors into
account, Deutsche Post DHL expects to reach full-year underlying Group EBIT
of 1.2 billion euros. The positive effects resulting from the Postbank
transaction should lead to a return to a positive net income, a significant
improvement compared with 2008.
Deutsche Post DHL
Corporate Communications
Christof Ehrhart
Silje Skogstad
Tel.: 0228/182 99 44
E-mail: [email protected]
23.07.2009 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: [email protected]
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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