Quarterly Report • May 16, 2019
Quarterly Report
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| Q 1 2018 | Q 1 2019 | + / – % | ||
|---|---|---|---|---|
| Revenue | € m | 14,749 | 15,353 | 4.1 |
| Profi t from operating activities (EBIT) | € m | 905 | 1,159 | 28.1 |
| Return on sales 1 | % | 6.1 | 7.5 | – |
| EBIT after asset charge (EAC) | € m | 313 | 521 | 66.5 |
| Consolidated net profi t for the period 2 | € m | 600 | 746 | 24.3 |
| Free cash fl ow | € m | – 679 | –256 | 62.3 |
| Net debt 3 | € m | 12,303 | 12,510 | 1.7 |
| Earnings per share 4 | € | 0.49 | 0.60 | 22.4 |
| Number of employees 5 | 547,459 | 540,245 | –1.3 |
1 EBIT / revenue.
4 Basic earnings per share.
5 Headcount at the end of the fi rst quarter, including trainees; priorperiod amount as at 31 December.
On 1 January 2019, Ken Allen assumed responsibility for the newly created eCommerce Solutions division. John Pearson has led the Express division since 1 January 2019.
Tobias Meyer has been head of the Post & Parcel Germany division, previously headed in a dual role by CEO Frank Appel, since 1 April 2019.
As a service provider, the Group does not engage in research and development activities in the narrower sense and therefore has no signifi cant expenses to report in this connection.
The global economy continued to trend downwards at the beginning of 2019. Certain industrial nations were particularly impacted.
The emerging economies in Asia recorded a slight loss of momentum at a high level. In China, the economy remained largely stable and economic output in Japan again showed only a minimal increase.
The upturn in the United States continued, albeit at a slower pace. Gross fi xed capital formation increased and private growth continued to be fuelled primarily by consumer spending. The US Federal Reserve retained its key interest rate at 2.25 % to 2.50 %.
Economic growth in the eurozone was again subdued. Private consumption continued to rise, although no signifi cant momentum developed. Capital expenditure continued to grow at a somewhat slower rate. No notable momentum came from foreign trade. The European Central Bank kept its key interest rate at 0.00 % and announced its intention to maintain that level throughout 2019.
The German economy barely rose above stagnation at the start of 2019. Manufacturing activity declined further, due above all to uncertainties surrounding foreign trade. Although exports were up slightly, foreign trade had a negative impact on the economy. At the same time, gross fi xed capital formation increased whilst consumer spending grew only moderately. The weak state of the economy was refl ected in business sentiment: the ifo German Business Climate index dropped to its lowest level in three years in February, although it subsequently recovered slightly.
In February, we completed the sale of our Supply Chain business in China, Hong Kong and Macao in return for a net payment of €653 million.
| Q 1 2018 | Q 1 2019 | + / – % | ||
|---|---|---|---|---|
| Revenue | € m | 14,749 | 15,353 | 4.1 |
| Profi t from operating activities |
||||
| (EBIT) | € m | 905 | 1,159 | 28.1 |
| Return on sales 1 | % | 6.1 | 7.5 | – |
| EBIT after asset charge (EAC) |
€ m | 313 | 521 | 66.5 |
| Consolidated net profi t for the period 2 |
€ m | 600 | 746 | 24.3 |
| Earnings per share 3 | € | 0.49 | 0.60 | 22.4 |
1 EBIT / revenue.
2 After deduction of noncontrolling interests.
3 Basic earnings per share.
Beyond the sale of the Supply Chain business in China, our portfolio did not change in the period under review.
In the first quarter of 2019, consolidated revenue rose by €604 million to €15,353 million, for reasons including an increase of €211 million due to positive currency eff ects. The proportion of revenue generated abroad increased from 68.1 % to 69.1 %.
Above all, income from the sale of the Supply Chain business in China drove up other operating income considerably, from €406 million to €930 million.
15,353
| Q 1 2018 | Change |
|---|---|
| 14,749 | + 4.1 % |
In addition to currency effects, transport costs increased materials expense by €313 million to €7,814 million. At €5,430 million, staff costs were up €466 million over the previous year's figure, due primarily to an increased headcount over the quarter and the collective wage increase in Germany.Depreciation, amortisation and impairmentlosses also greatly exceeded the previous year's level (€769 million) to reach €883 million, due in part to investments, which markedly increased leased property, plant and equipment. Other operating expenses totalled €1,086 million, down slightly from the previous year (€1,094 million). In the reporting period, this item included restructuring expenses in the Supply Chain and eCommerce Solutions divisions, whilst in the previous year there was a negative effect from customer contracts.
In the first quarter of 2019, consolidated EBIT was €1,159 million, 28.1 % over the previous year's level (€905 million). Net finance costs grew from €135 million to €164 million, due, amongst other things, to the interest expense on lease liabilities. Profit before income taxes rose by €225 million to €995 million. Income taxes grew by €80 million to €219 million due to, amongst otherthings, a higher tax rate note 1.
| Q 1 2018 Change |
|---|
At €776 million, consolidated net profit in the reporting period exceeded the prior-year level (€631 million). Of this amount, €746 million was attributable to Deutsche Post AG shareholders and €30 million to non-controlling interest shareholders. Basic earnings per share were up significantly from €0.49 to €0.60 and diluted earnings per share from €0.48 to €0.60.
| € m | + / – % | ||
|---|---|---|---|
| Revenue | 15,353 | 4.1 • Currency effects increase figure by €211 million | |
| Other operating income | 930 | >100 • Includes income from the sale of the Supply Chain business in China | |
| Materials expense | 7,814 | 4.2 • Currency effects increase figure by €158 million • Higher transport costs |
|
| Staff costs | 5,430 | 9.4 • Rise in headcount • Currency effects increase figure by €68 million • The prior-year figure included a positive one-time effect of €108 million from the revaluation of pension obligations • Collective wage increase in Germany as at 1 October 2018 |
|
| Depreciation, amortisation and impairment losses |
883 | 14.8 • Investment-related increase in leased property, plant and equipment | |
| Other operating expenses | 1,086 | – 0.7 • Prior-year figure included a negative effect of €49 million from customer contracts • Include restructuring expenses in the Supply Chain and eCommerce Solutions divisions in the reporting period |
EAC jumped in the first quarter of 2019, from €313 million to €521 million. The imputed asset charge increased over the prior-year quarter, in particular due to investments in property, plant and equipment in the Express division.
| € m | |||
|---|---|---|---|
| Q 1 2018 | Q 1 2019 | + / – % | |
| EBIT | 905 | 1,159 | 28.1 |
| Asset charge | – 592 | – 638 | –7.8 |
| EAC | 313 | 521 | 66.5 |
| € m | ||
|---|---|---|
| Q 1 2018 | Q 1 2019 | |
| Cash and cash equivalents as at 31 March | 2,403 | 2,961 |
| Change in cash and cash equivalents | –704 | –130 |
| Net cash from operating activities | 368 | 252 |
| Net cash used in / from investing activities | – 535 | 90 |
| Net cash used in financing activities | – 537 | – 472 |
The principles and aims of our financial management as presented in the 2018 Annual Report beginning on page 43 remain valid and continue to be pursued as part of our finance strategy.
The FFO to debt performance metric decreased in the first quarter of 2019 compared with 31 December 2018 due to the increase in debt and the decrease of funds from operations. Reported financial liabilities increased, mainly as a result of new borrowing. An increase in pension obligations was responsible for the increase in the adjustment for pensions, despite higher plan assets. Surplus cash and near-cash investments declined, primarily due to the negative free cash flow recognised in the first quarter. This line item contains the net proceeds of €653 million from the sale of the Supply Chain business in China and the annual pension prepayment to Bundesanstalt für Post und Telekommunikation. The annual amountfor 2019 is €443 million.
| 1 April | |
|---|---|
| 1 Jan. to | 2018 to |
| 31 Dec. | 31 March |
| 2018 | 2019 |
| 6,079 | 6,027 |
| 52 | 56 |
| 526 | 540 |
| 309 | 282 |
| 5,914 | 5,825 |
| 16,462 | 16,631 |
| 38 | 24 |
| 4,110 | 4,633 |
| 2,683 | 2,441 |
| 17,851 | 18,799 |
| 33.1 | 31.0 |
1 As at 31 December 2018 and 31 March 2019, respectively.
2 Reported cash and cash equivalents and investment funds callable at sight,
less cash needed for operations.
Our credit quality as rated by Fitch Ratings and Moody's Investors Service has not changed from the ratings described and projected in the 2018 Annual Report on page 45. In view of our solid liquidity, the five-year syndicated credit facility with a total volume of €2 billion was not drawn upon during the reporting period. On 31 March 2019, the Group had cash and cash equivalents of €3.0 billion.
Investments in property, plant and equipment and intangible assets acquired (not including goodwill) amounted to €448 million in the first quarter of 2019 (previous year: €327 million). Please referto notes 10 and 15 to the consolidated financial statements for a breakdown of capex into asset classes and regions.
In the Post & Parcel Germany division, the largest capex portion was attributable to the expansion of our network in Germany.
Investments in the Express division related to buildings and technical equipment, for example at our Cologne, Stavanger and Leipzig locations. Continuous maintenance and renewal of our aircraft fleet represented an additional focus of investment spending.
| Post & Parcel Germany adjusted 1 |
Express | Global Forwarding, Freight |
Supply Chain | eCommerce Solutions adjusted 1 |
Corporate Functions adjusted 1 |
Consolidation 1, 2 | Group | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | |
| Capex (€ m) relating to assets acquired |
86 | 85 | 80 | 121 | 20 | 26 | 70 | 75 | 30 | 39 | 39 | 102 | 2 | 0 | 327 | 448 |
| Capex (€ m) relating to leased assets |
1 | 26 | 120 | 219 | 37 | 35 | 113 | 151 | 26 | 18 | 171 | 130 | 1 | 1 | 469 | 580 |
| Total (€ m) | 87 | 111 | 200 | 340 | 57 | 61 | 183 | 226 | 56 | 57 | 210 | 232 | 3 | 1 | 796 | 1,028 |
| Depreciation, amortisation and impairment losses (€ m) |
70 | 74 | 267 | 313 | 56 | 63 | 192 | 217 | 35 | 54 | 150 | 161 | –1 | 1 | 769 | 883 |
| Ratio of total capex to depreciation, amortisation and impairment |
||||||||||||||||
| losses | 1.24 | 1.50 | 0.75 | 1.09 | 1.02 | 0.97 | 0.95 | 1.04 | 1.60 | 1.06 | 1.40 | 1.44 | – | – | 1.04 | 1.16 |
1 Adjusted prior-year figures, note 15.
2 Including rounding.
In the Global Forwarding, Freight division, we invested in warehouses, office buildings and IT.
In theSupplyChain division,themajority offundswere used to support new business, mostly in the EMEA and Americas regions.
In the eCommerce Solutions division, most of the investments were attributable to a new terminal in the Netherlands and investments in India.
At Corporate Functions, investments were made in the IT infrastructure, the renewal and expansion of the vehicle fleet and the production of our StreetScooter electric vehicles.
Net cash from operating activities decreased by €116 million compared with the prior-year period, to €252 million in the first quarter of 2019. Starting with EBIT, which at €1,159 million was well over the previous year's figure of €905 million, all noncash income and expense items were adjusted. The payments resulting from the sale of the Supply Chain business in China are shown in net cash from / used in investing activities. The cash outflow from changes in working capital grew from €953 million to €1,017 million, due primarily to an increase in receivables and other current assets.
Investing activities generated a cash inflow of €90 million in contrast to a cash outflow of €535 million in the prior-year period. This was due mainly to the net proceeds from the sale of the Supply Chain business in China amounting to €653 million. The cash outflow to acquire property, plant and equipment and intangible assets was €77 million higherthan in the previous year, at €634 million.
| € m | ||
|---|---|---|
| Q 1 2018 | Q 1 2019 | |
| Net cash from operating activities | 368 | 252 |
| Sale of property, plant and equipment and intangible assets |
22 | 48 |
| Acquisition of property, plant and equipment and intangible assets |
– 557 | – 634 |
| Cash outflow from change in property, plant and equipment and intangible assets |
– 535 | – 586 |
| Disposals of subsidiaries and other business units |
0 | 657 |
| Disposals of investments accounted for using the equity method and other investments |
0 | 0 |
| Acquisition of subsidiaries and other business units |
–2 | 0 |
| Acquisition of investments accounted for using the equity method and other investments |
–17 | – 9 |
| Cash outflow / inflow from acquisitions / divestitures |
–19 | 648 |
| Proceeds from lease receivables | 0 | 7 |
| Repayment of lease liabilities | –398 | – 472 |
| Interest on lease liabilities | – 89 | –101 |
| Cash outflow from leases | – 487 | – 566 |
| Interest received | 12 | 16 |
| Interest paid | –18 | –20 |
| Net interest paid | – 6 | – 4 |
| Free cash flow | – 679 | –256 |
Free cash flow improved markedly from €–679 million to €–256 million, chiefly because of disposals of subsidiaries and other business units producing a cash inflow of €657 million.
At €472 million, net cash used in financing activities was €65 million lower than in the previous year (€537 million). In the previous year, factors included the acquisition of treasury shares in the amount of €46 million.
Cash and cash equivalents fell from €3,017 million as at 31 December 2018 to €2,961 million.
| 31 Dec. 2018 |
31 March 2019 |
||
|---|---|---|---|
| Equity ratio | % | 27.5 | 28.2 |
| Net debt | € m | 12,303 | 12,510 |
| Net interest cover 1 | 9.5 | 11.0 | |
| Net gearing | % | 47.0 | 46.4 |
1 In the first quarter.
The Group's total assets amounted to €51,238 million as at 31 March 2019, €768 million higher than at 31 December 2018 (€50,470 million).
Intangible assets increased by €143 million to €11,993 million, primarily as a result of exchange rate effects. Additions to property, plant and equipment and positive currency effects exceeded depreciation and disposals, increasing them from €19,202 million to €19,298 million. In contrast, other non-current assets dropped by €118 million to €235 million on account of actuarial losses that reduced pension assets. Trade receivables rose from €8,247 million to €8,593 million.Other current assets were up €618 million to €2,987 million. This figure includes the deferred expense of €311 million at the reporting date that was recognised for the prepaid annual contribution to civil servant pensions to Bundesanstalt für Post und Telekommunikation (BAnst PT). Assets held for sale were down €403 million to €23 million after the sale of the Supply Chain business in China. The €56 million decrease in cash and cash equivalents to €2,961 million is described in the section entitled Financial position, page 5 f.
On the equity and liabilities side of the balance sheet, equity attributable to Deutsche Post AG shareholders stood at €14,124 million, above the level as at 31 December 2018 (€13,590 million): consolidated net profit for the period and currency effects increased this figure, whilst actuarial losses from pension obligations decreased it. Non-current financial liabilities rose by €148 million to €14,017 million, mainly because we took out a loan for €150 million. Trade payables decreased from €7,422 million to €6,634 million on the balance sheet date.Other current liabilities increased by €560 million to €4,992 million, due primarily to an increase in liabilities to employees, such as holiday entitlements. We no longer hold any liabilities associated with assets held for sale after the disposal of the Supply Chain business in China.
Our net debt rose from €12,303 million as at 31 December 2018 to €12,510 million as at 31 March 2019, mainly on account of the increase in financial liabilities. At 28.2 %,the equity ratio exceeded the figure as at 31 December 2018 (27.5 %). Net interest cover indicates the extent to which net interest obligations are covered by EBIT. This figure increased from 9.5 to 11.0. Net gearing was 46.4 % as at 31 March 2019.
| € m | ||
|---|---|---|
| 31 Dec. | 31 March | |
| 2018 | 2019 | |
| Non-current financial liabilities | 13,838 | 13,989 |
| Current financial liabilities | 2,425 | 2,440 |
| Financial liabilities 1 | 16,263 | 16,429 |
| Cash and cash equivalents | 3,017 | 2,961 |
| Current financial assets | 943 | 958 |
| Financial assets | 3,960 | 3,919 |
| Net debt | 12,303 | 12,510 |
1 Less operating financial liabilities.
| € m | |||
|---|---|---|---|
| Q 1 2018 | |||
| adjusted 1 | Q 1 2019 | + / – % | |
| Revenue | 3,807 | 3,834 | 0.7 |
| of which Post | 2,527 | 2,436 | –3.6 |
| Parcel | 1,320 | 1,445 | 9.5 |
| Other / Consolidation | – 40 | – 47 | –17.5 |
| Profit from operating activities | |||
| (EBIT) | 405 | 227 | – 44.0 |
| Return on sales (%) 2 | 10.6 | 5.9 | – |
| Operating cash flow | – 84 | –149 | –77.4 |
1 Adjusted prior-year figures, note 15.
2 EBIT / revenue.
In the first quarter of 2019, revenue in the newly structured division was €3,834 million, which is equivalent to an increase of 0.7 % above the adjusted prior-year figure of €3,807 million, boosted by growth in the Parcel business unit.
In the Post business unit, revenue was €2,436 million in the first quarter of 2019 and thus 3.6 % below the prior-year level of €2,527 million. Volumes declined by 2.8 %.
As expected,revenue andvolumes intheMailCommunication business remained in decline on the whole, due mainly to electronic substitution. Revenue and volumes were also down in the Dialogue Marketing business due to the changed market situation. The measures we have taken to increase sales to e-commerce businesses were not able to fully compensate for the declines. Revenue from the cross-border mail business decreased due to low-weight goods items now being sent in small packages. The general trend towards sending goods items as letters persisted.
Revenue in our Parcel business unit was €1,445 million in the reporting period, an increase of 9.5 % on the prior-year figure of €1,320 million. Volumes rose by 7.7 % to 377 million parcels. The volume increase was fuelled by sustained growth in e-commerce. Revenue increased even more than volumes owing to significant price increases.
| € m | |||
|---|---|---|---|
| Q 1 2018 | |||
| adjusted 1 | Q 1 2019 | + / – % | |
| Post | 2,527 | 2,436 | –3.6 |
| of which Mail Communication | 1,666 | 1,594 | – 4.3 |
| Dialogue Marketing | 554 | 545 | –1.6 |
| Other / Consolidation | |||
| Post | 307 | 297 | –3.3 |
| Parcel | 1,320 | 1,445 | 9.5 |
1 Adjusted prior-year figures, note 15.
| Mail items (millions) | |||
|---|---|---|---|
| Q 1 2018 | |||
| adjusted 1 | Q 1 2019 | + / – % | |
| Post | 4,623 | 4,493 | –2.8 |
| of which Mail Communication | 2,045 | 1,997 | –2.3 |
| Dialogue Marketing | 2,162 | 2,080 | –3.8 |
| Parcel | 350 | 377 | 7.7 |
1 Adjusted prior-year figures, note 15.
EBIT in the division was down 44.0 % to €227 million in the first quarter of 2019 (previous year: €405 million). The decrease was due mainly to higher costs for material and labour, whilst the decision to raise postage prices will nottake effect until 1 July 2019. Personnel expenses increased, due partly to non-recurring income of €108 million from the remeasurement of pension obligations contained in the prior-year figure. Collective wage increases also contributed to the rise in personnel expenses. Return on sales fell to 5.9 % (previous year: 10.6 %). Operating cash flow was €65 million below the 2018 level, mainly as a result of the decline in EBIT.
| € m | |||
|---|---|---|---|
| Q 1 2018 | Q 1 2019 | + / – % | |
| Revenue | 3,772 | 3,971 | 5.3 |
| of which Europe | 1,746 | 1,809 | 3.6 |
| Americas | 748 | 818 | 9.4 |
| Asia Pacific | 1,322 | 1,380 | 4.4 |
| MEA (Middle East and Africa) |
275 | 294 | 6.9 |
| Consolidation / Other | –319 | –330 | –3.4 |
| Profit from operating activities (EBIT) |
461 | 453 | –1.7 |
| Return on sales (%) 1 | 12.2 | 11.4 | – |
| Operating cash flow | 621 | 657 | 5.8 |
1 EBIT / revenue.
Revenue in the division increased by 5.3 % to €3,971 million in the first quarter of 2019 (previous year: €3,772 million). This figure includes foreign currency gains of €79 million; excluding these gains, the revenue increase was 3.2 %. The revenue figure also reflects the fact that fuel surcharges were higher in all regions compared with the previous year. Excluding currency effects and the higher fuel surcharges, revenue was up by 2.3 %.
In the Time Definite International (TDI) product line, revenues per day increased by 3.5 % and per-day shipment volumes by 5.0 % in the reporting period.
In the Time Definite Domestic (TDD) product line, revenues per day were up by 4.7 % in the first quarter of 2019 and per-day shipment volumes by 4.8 %.
| Q 1 2018 | Q 1 2019 | + / – % | |
|---|---|---|---|
| Time Definite International (TDI) | 46.1 | 47.7 | 3.5 |
| Time Definite Domestic (TDD) | 4.3 | 4.5 | 4.7 |
1 To improve comparability, product revenues were translated at uniform exchange rates. These revenues are also the basis for the weighted calculation of working days.
| Thousands of items per day | |||
|---|---|---|---|
| Q 1 2018 | Q 1 2019 | + / – % | |
| Time Definite International (TDI) | 904 | 949 | 5.0 |
| Time Definite Domestic (TDD) | 478 | 501 | 4.8 |
Revenue in the Europe region increased by 3.6 % to €1,809 million in the reporting period (previous year: €1,746 million). This included negative currency effects of €10 million,relating mainly to Turkey. Excluding these effects, revenue growth was 4.2 %. In the TDI productline,revenues per day increased by 5.0 %. Per-day shipment volumes improved by 7.7 %.
In the Americas region, revenue increased by 9.4 % to €818 million in the first quarter of 2019 (previous year: €748 million). The figure forthe reporting period included positive currency effects of €35 million, which related mainly to the United States. Excluding these effects,revenue in the region rose by 4.7 %. Per-day TDI shipments were at the prior-year level with a rise of just 0.1 %. Revenues per day increased by 1.6 %.
In theAsiaPacific region,revenue increased by4.4 % to€1,380 million in the first quarter(previous year: €1,322 million). This figure included positive currency effects of €40 million, most of which related to Hong Kong and Japan. Excluding these currency gains, revenue rose by a relatively weak 1.4 % in the reporting period. In the TDI product line, revenues per day rose by 2.5 % and per-day volumes by 2.0 %.
Revenue in the MEA (Middle East and Africa) region improved by 6.9 % to €294 million in the reporting period (previous year: €275 million). This included positive currency effects of €12 million, most of which related to theUnited Arab Emirates and Saudi
Arabia. Excluding these effects, revenue growth was 2.5 %. TDI revenues per day were up by 6.4 %, with per-day volumes up by a strong 16.6 %.
As expected, division EBIT fell slightly by 1.7 % to €453 million in the first quarter of 2019 (previous year: €461 million). The decline was caused by foreign currency losses, mix effects anticipated from portfolio streamlining and weak growth in shipments atthe start of the year. The return on sales was 11.4 % (previous year: 12.2 %). Operating cash flow rose to €657 million in the reporting period (previous year: €621 million).
| € m | |||
|---|---|---|---|
| Q 1 2018 | Q 1 2019 | + / – % | |
| Revenue | 3,591 | 3,762 | 4.8 |
| of which Global Forwarding | 2,534 | 2,638 | 4.1 |
| Freight | 1,092 | 1,157 | 6.0 |
| Consolidation / Other | –35 | –33 | 5.7 |
| Profit from operating activities | |||
| (EBIT) | 70 | 100 | 42.9 |
| Return on sales (%) 1 | 1.9 | 2.7 | – |
| Operating cash flow | –30 | 52 | >100 |
1 EBIT / revenue.
Division revenue increased by 4.8 % to €3,762 million in the first quarter of 2019 (previous year: €3,591 million). Excluding positive currency effects of €31 million,revenue was up by 3.9 % yearon-year. In the Global Forwarding business unit, revenue in the reporting period increased by 4.1 % to €2,638 million (previous year: €2,534 million). Adjusted for positive currency effects of €41 million, the increase was 2.5 %. The business unit increased gross profit from €582 million in the prior year to €604 million, also partly attributable to positive currency effects.
We reported a decline in air freight volume of 3.9 % in the first quarter of 2019, due mainly to the current decline in market volumes on key trade lanes. Airfreightrevenues rose by 3.4 % in the reporting period as a result of higher freight rates. Gross profit also improved, with an increase of 4.2 %.
Ocean freight volumes fell 1.8 % below the previous year's level in the first quarter. Ocean freight revenues rose by 6.4 %, whilst gross profit declined by 1.3 %.
Our industrial project business (reported in the following table as part of Other) improved compared with the prior year. The share of revenue related to industrial project business and reported under Other increased from 29.9 % in the prior year to 33.9 %. Gross profit for industrial projects improved by 36.3 %.
| Total | 2,534 | 2,638 | 4.1 |
|---|---|---|---|
| Other | 538 | 549 | 2.0 |
| Ocean freight | 834 | 887 | 6.4 |
| Air freight | 1,162 | 1,202 | 3.4 |
| Q 1 2018 | Q 1 2019 | + / – % | |
| € m |
Thousands
| Q 1 2018 | Q 1 2019 | + / – % | ||
|---|---|---|---|---|
| Air freight | tonnes | 923 | 887 | –3.9 |
| of which exports | tonnes | 517 | 495 | – 4.3 |
| Ocean freight | TEU 1 | 766 | 752 | –1.8 |
1 Twenty-foot equivalent units.
In the Freight business unit, revenue rose by 6.0 % to €1,157 million in the first quarter of 2019 (previous year: €1,092 million) despite negative currency effects of €10 million. The 10.3 % volume growthwas driven mainly by e-commerce-based business in Sweden and less-than-truckload business in Germany. The business unit's gross profit rose by 5.5 % to €288 million (previous year: €273 million).
Division EBIT increased significantly in the first quarter of 2019, rising from €70 million to €100 million. The increase was due mainly to improved gross profit margins in air freight and cost measures. Return on sales rose to 2.7 % (previous year: 1.9 %). Operating cash flow amounted to €52 million (previous year: €–30 million).
| € m | |||
|---|---|---|---|
| Q 1 2018 | Q 1 2019 | + / – % | |
| Revenue | 3,124 | 3,267 | 4.6 |
| of which EMEA (Europe, Middle East and Africa) |
1,686 | 1,689 | 0.2 |
| Americas | 947 | 1,063 | 12.2 |
| Asia Pacific | 505 | 521 | 3.2 |
| Consolidation / Other | –14 | – 6 | 57.1 |
| Profit from operating activities (EBIT) |
55 | 486 | >100 |
| Return on sales (%) 1 | 1.8 | 14.9 | – |
| Operating cash flow | 2 | – 90 | <–100 |
1 EBIT / revenue.
Revenue in the division increased by 4.6 % to €3,267 million in the first quarter of 2019 (previous year: €3,124 million). The increase was driven by dynamic business performance across nearly all regions as well as currency gains of €80 million. However, the sale of our Supply Chain business in China partially negated these positive effects.
In the EMEA region, the main volume increases were seen in the Retail and Engineering & Manufacturing sectors. The Americas and Asia Pacific regions registered growth in nearly all sectors.
| Supply Chain: revenue by sector and region, Q 1 2019 | ||
|---|---|---|
| of which Retail | 28 % |
|---|---|
| Consumer | 23 % |
| Auto-mobility | 16 % |
| Technology | 13 % |
| Life Sciences & Healthcare | 10 % |
| Engineering & Manufacturing | 6 % |
| Others | 4 % |
| of which Europe / Middle East / Africa / Consolidation | 51 % |
| Americas | 33 % |
| Asia Pacific | 16 % |
In the first quarter of 2019, the division concluded additional contracts worth around €180 million in annualised revenue with both new and existing customers. The Retail, Life Sciences & Healthcare and Auto-mobility (formerly Automotive) sectors accounted for the majority of the new business. The annualised contract renewal rate remained at a consistently high level.
EBIT in the division was €486 million in the first quarter of 2019 (previous year: €55 million). It was influenced positively by the sale of the Chinese business. The increase in EBIT was offset partially by expenses for strategic cost-reduction measures amounting to €58 million, most of which involved restructuring in Europe. The first quarter of the prior year had been impacted negatively by one-off effects of €50 million for customer contracts. Excluding the above effects, EBIT was up 12.4 % in the reporting period. The return on sales was 14.9 % (previous year: 1.8 %). Operating cash flow declined considerably, decreasing from €2 million to €–90 million.
| € m | |||
|---|---|---|---|
| Q 1 2018 | Q 1 2019 | + / – % | |
| Revenue | 917 | 999 | 8.9 |
| of which Americas | 251 | 283 | 12.7 |
| Europe | 534 | 579 | 8.4 |
| Asia | 134 | 139 | 3.7 |
| Other / Consolidation | –2 | –2 | 0.0 |
| Loss from operating activities | |||
| (EBIT) | –14 | –28 | –100.0 |
| Return on sales (%) 1 | –1.5 | –2.8 | – |
| Operating cash flow | 30 | 21 | –30.0 |
1 EBIT / revenue.
We have combined the Parcel Europe and DHL eCommerce business units, which were previously part of the Post - eCommerce - Parcel division, into a newly created division known as eCommerce Solutions. The new division will enable us to leverage growth opportunities in international e-commerce even more effectively than in the past. We are developing suitable solutions along our customers' value chains and further expanding our local activities. E-commerce willremain the world's fastest-growing sector. In particular,the omnichannel, direct-to-consumer and B2B e-commerce models are increasingly gaining importance given the additional development opportunities they offer.
Revenue in the eCommerce Solutions division rose 8.9 % in the first quarter of 2019 to €999 million (previous year: €917 million). All regions contributed to the increase.
Revenue in the Americas region rose by 12.7 % to €283 million (previous year: €251 million).
In the Europe region, revenue grew by 8.4 % to €579 million (previous year: €534 million).
In the Asia region,revenue exceeded the prior-year figure by 3.7 % to reach €139 million.
Excluding foreign currency gains of €23 million, the total year-on-year revenue increase came to 6.4 %.
EBIT in the division decreased to €–28 million in the first quarter of 2019 (previous year: €–14 million), primarily due to restructuring expenses in a net amount of €23 million. The expenses were incurred for portfolio optimisation, overhead reductions and loss allowances. The return on sales therefore fell to –2.8 % (previous year: –1.5 %). At €21 million, operating cash flow was below the 2018 level, mainly as a result of lower net working capital liabilities.
The economic outlook for full-year 2019 as reported in the 2018 Annual Report beginning on page 63 continued to deteriorate in the first quarter. The International Monetary Fund (IMF) now expects growth of just 3.3 % in global economic output. The forecastfor growth in globaltrade volumes was lowered to 3.4 %, even though the IMF does not expect a recession but rather a slight increase in growth in the second half ofthe year.However,the outlook for the global economy is still at risk of deterioration due to Brexit, trade tensions and potential turmoil on the financial markets.
In China, gross domestic product(GDP)is likely to grow more slowly than in the previous year (IMF: 6.3 %). Growth in Japan is expected to be moderate, coming in at approximately the prior-year level (IMF: 1.0 %; IHS: 0.6 %).
In the United States, the economic upturn is expected to remain intact, althoughGDP growth is likely to be noticeablyweaker than in the previous year (IMF: 2.3 %; OECD: 2.6 %).
The upward momentum seen in the eurozone is expected to slow significantly, with GDP registering only moderate growth (IMF: 1.3 %; ECB: 1.1 %).
Early indicators suggest that the phase of economic weakness will persist for some time in Germany. Not only is momentum therefore expected to decline compared with the prior year but GDP growth is also forecast to be weak in absolute terms (IMF: 0.8 %; Sachverständigenrat: 0.8 %).
We are reconfirming the earnings forecast for full-year 2019 as described on page 64 f of the 2018 Annual Report.
We are reconfirming the expected financial position for full-year 2019 as described in the 2018 Annual Report on page 65.
We are reconfirming the projected full-year 2019 figures for the EAC and free cash flow management indicators as described on page 65 of the 2018 Annual Report.
The Group's overall opportunity and risk situation did not change significantly during the first quarter of 2019 as compared with the situation described in the 2018 Annual Report beginning on page 66. No new risks have been identified that could have a potentially critical impact on the Group's results. Based upon the Group's early warning system and in the estimation of its Board of Management, there were no identifiable risks for the Group in the currentforecast period which, individually or collectively, cast doubt upon theGroup's ability to continue as a going concern. Nor are any such risks apparent in the foreseeable future.
Any internet sites referred to in the Interim Group Management Report do not form part of the report.
€ m
| 2018 | 2019 | |
|---|---|---|
| Revenue | 14,749 | 15,353 |
| Other operating income 1 | 406 | 930 |
| Changes in inventories and work performed and capitalised 1 | 77 | 90 |
| Materials expense | –7,501 | –7,814 |
| Staff costs | – 4,964 | – 5,430 |
| Depreciation, amortisation and impairment losses | –769 | – 883 |
| Other operating expenses | –1,094 | –1,086 |
| Net income from investments accounted for using the equity method | 1 | –1 |
| Profit from operating activities (EBIT) | 905 | 1,159 |
| Financial income | 44 | 52 |
| Finance costs | –174 | –211 |
| Foreign currency losses | – 5 | – 5 |
| Net finance costs | –135 | –164 |
| Profit before income taxes | 770 | 995 |
| Income taxes | –139 | –219 |
| Consolidated net profit for the period | 631 | 776 |
| attributable to Deutsche Post AG shareholders | 600 | 746 |
| attributable to non-controlling interests | 31 | 30 |
| Basic earnings per share (€) | 0.49 | 0.60 |
| Diluted earnings per share (€) | 0.48 | 0.60 |
1 For reasons of transparency, changes in inventories and work performed and capitalised were transferred out of other operating income and presented separately.
€ m
| 2018 | 2019 | |
|---|---|---|
| Consolidated net profit for the period | 631 | 776 |
| Items that will not be reclassified to profit or loss | ||
| Change due to remeasurements of net pension provisions | –329 | – 577 |
| Reserve for equity instruments without recycling | 2 | 1 |
| Income taxes relating to components of other comprehensive income | –23 | 25 |
| Share of other comprehensive income of investments accounted for using the equity method, net of tax | 0 | 0 |
| Total, net of tax | –350 | – 551 |
| Items that may be reclassified subsequently to profit or loss IAS 39 hedging reserve |
||
| Changes from unrealised gains and losses | 2 | – 9 |
| Changes from realised gains and losses | –11 | 14 |
| Currency translation reserve | ||
| Changes from unrealised gains and losses | –71 | 303 |
| Changes from realised gains and losses | 0 | 32 |
| Income taxes relating to components of other comprehensive income | 3 | –2 |
| Share of other comprehensive income of investments accounted for using the equity method, net of tax | –2 | 2 |
| Total, net of tax | –79 | 340 |
| Other comprehensive income, net of tax | – 429 | –211 |
| Total comprehensive income | 202 | 565 |
| attributable to Deutsche Post AG shareholders | 172 | 524 |
| attributable to non-controlling interests | 30 | 41 |
| € m | ||
|---|---|---|
| 31 Dec. 2018 | 31 March 2019 | |
| ASSETS | ||
| Intangible assets | 11,850 | 11,993 |
| Property, plant and equipment | 19,202 | 19,298 |
| Investment property | 18 | 23 |
| Investments accounted for using the equity method | 119 | 126 |
| Non-current financial assets | 730 | 765 |
| Other non-current assets | 353 | 235 |
| Deferred tax assets | 2,532 | 2,520 |
| Non-current assets | 34,804 | 34,960 |
| Inventories | 454 | 524 |
| Current financial assets | 943 | 958 |
| Trade receivables | 8,247 | 8,593 |
| Other current assets | 2,369 | 2,987 |
| Income tax assets | 210 | 232 |
| Cash and cash equivalents | 3,017 | 2,961 |
| Assets held for sale | 426 | 23 |
| Current assets | 15,666 | 16,278 |
| TOTAL ASSETS | 50,470 | 51,238 |
| EQUITY AND LIABILITIES Issued capital |
1,233 | 1,233 |
| Capital reserves | 3,469 | 3,476 |
| Other reserves | – 947 | – 618 |
| Retained earnings | 9,835 | 10,033 |
| Equity attributable to Deutsche Post AG shareholders | 13,590 | 14,124 |
| Non-controlling interests | 283 | 318 |
| Equity | 13,873 | 14,442 |
| Provisions for pensions and similar obligations | 4,348 | 4,746 |
| Deferred tax liabilities | 54 | 76 |
| Other non-current provisions | 1,655 | 1,660 |
| Non-current financial liabilities | 13,869 | 14,017 |
| Other non-current liabilities | 205 | 248 |
| Non-current provisions and liabilities | 20,131 | 20,747 |
| Current provisions | 1,073 | 1,094 |
| Current financial liabilities | 2,593 | 2,614 |
| Trade payables | 7,422 | 6,634 |
| Other current liabilities | 4,432 | 4,992 |
| Income tax liabilities | 718 | 715 |
| Liabilities associated with assets held for sale | 228 | 0 |
| Current provisions and liabilities | 16,466 | 16,049 |
| TOTAL EQUITY AND LIABILITIES | 50,470 | 51,238 |
€ m
| 2018 | 2019 | |
|---|---|---|
| Consolidated net profit for the period | 631 | 776 |
| Income taxes | 139 | 219 |
| Net finance costs | 135 | 164 |
| Profit from operating activities (EBIT) | 905 | 1,159 |
| Depreciation, amortisation and impairment losses | 769 | 883 |
| Net loss / income from disposal of non-current assets | 8 | – 474 |
| Non-cash income and expense | 19 | – 45 |
| Change in provisions | –175 | –112 |
| Change in other non-current assets and liabilities | – 48 | 41 |
| Dividend received | 0 | 1 |
| Income taxes paid | –157 | –184 |
| Net cash from operating activities before changes in working capital | 1,321 | 1,269 |
| Changes in working capital | ||
| Inventories | – 63 | – 65 |
| Receivables and other current assets | –756 | – 829 |
| Liabilities and other items | –134 | –123 |
| Net cash from operating activities | 368 | 252 |
| Subsidiaries and other business units | 0 | 657 |
| Property, plant and equipment and intangible assets | 22 | 48 |
| Other non-current financial assets | 13 | 15 |
| Proceeds from disposal of non-current assets | 35 | 720 |
| Subsidiaries and other business units | –2 | 0 |
| Property, plant and equipment and intangible assets | – 557 | – 634 |
| Investments accounted for using the equity method and other investments | –17 | – 9 |
| Other non-current financial assets | 0 | –1 |
| Cash paid to acquire non-current assets | – 576 | – 644 |
| Interest received | 12 | 16 |
| Current financial assets | – 6 | –2 |
| Net cash used in / from investing activities | – 535 | 90 |
| Proceeds from issuance of non-current financial liabilities | 16 | 166 |
| Repayments of non-current financial liabilities | – 415 | – 477 |
| Change in current financial liabilities | –1 | – 53 |
| Other financing activities | 18 | 16 |
| Dividend paid to non-controlling interest shareholders | –2 | –3 |
| Purchase of treasury shares | – 46 | 0 |
| Interest paid | –107 | –121 |
| Net cash used in financing activities | – 537 | – 472 |
| Net change in cash and cash equivalents | –704 | –130 |
| Effect of changes in exchange rates on cash and cash equivalents | –28 | 41 |
| Changes in cash and cash equivalents associated with assets held for sale | 0 | 33 |
| Changes in cash and cash equivalents due to changes in consolidated group | 0 | 0 |
| Cash and cash equivalents at beginning of reporting period | 3,135 | 3,017 |
| Cash and cash equivalents at end of reporting period | 2,403 | 2,961 |
1 January to 31 March
| € m | Other reserves | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Issued capital |
Capital reserves |
IAS 39 revalu ation reserve |
IAS 39 hedging reserve |
Reserve for equity in struments without recycling |
Currency translation reserve |
Retained earnings |
Equity attributable to Deutsche Post AG share holders |
Total equity |
||
| Balance at 1 January 2018 | 1,224 | 3,327 | 10 | 19 | – | –1,027 | 9,084 | 12,637 | 266 | 12,903 |
| Adjustments due to new IFRS | –10 | 11 | –1 | – 50 | – 50 | –2 | – 52 | |||
| Balance at 1 January 2018, adjusted | 1,224 | 3,327 | – | 19 | 11 | –1,028 | 9,034 | 12,587 | 264 | 12,851 |
| Capital transactions with owner Dividend |
0 | 0 | –2 | –2 | ||||||
| Transactions with non-controlling interests | – | 0 | 0 | 0 | 0 | 0 | 0 | |||
| Changes in non-controlling interests due to changes in consolidated group |
0 | 0 | 0 | |||||||
| Issue / retirement of treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | ||||
| Purchase of treasury shares | –1 | – 45 | – 46 | – 46 | ||||||
| Convertible bonds | 5 | 102 | 107 | 107 | ||||||
| Share-based payment schemes (issuance) | 52 | 52 | 52 | |||||||
| Share-based payment schemes (exercise) | 0 | 0 | 0 | 0 | 0 | |||||
| 113 | –2 | 111 | ||||||||
| Total comprehensive income Consolidated net profit for the period |
600 | 600 | 31 | 631 | ||||||
| Currency translation differences | –72 | –72 | –1 | –73 | ||||||
| Change due to remeasurements of net pension provisions |
–352 | –352 | 0 | –352 | ||||||
| Other changes | – | – 6 | 2 | 0 | – 4 | 0 | – 4 | |||
| 172 | 30 | 202 | ||||||||
| Balance at 31 March 2018 | 1,228 | 3,481 | – | 13 | 13 | –1,100 | 9,237 | 12,872 | 292 | 13,164 |
| Balance at 1 January 2019 | 1,233 | 3,469 | – | –7 | 8 | – 948 | 9,835 | 13,590 | 283 | 13,873 |
| Capital transactions with owner Dividend |
0 | 0 | –3 | –3 | ||||||
| Transactions with non-controlling interests | 0 | 0 | 0 | 3 | 3 | –3 | 0 | |||
| Changes in non-controlling interests due to changes in consolidated group |
0 | 0 | ||||||||
| Issue of treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | ||||
| Purchase of treasury shares | 0 | 0 | 0 | 0 | ||||||
| Differences between purchase and issue prices of treasury shares (share-based |
||||||||||
| payment schemes) Convertible bonds |
0 | 0 0 |
0 0 |
0 0 |
||||||
| Share-based payment schemes (issuance) | 7 | 7 | 7 | |||||||
| Share-based payment schemes (exercise) | 0 | 0 | 0 | 0 | 0 | |||||
| 10 | – 6 | 4 | ||||||||
| Total comprehensive income Consolidated net profit for the period |
746 | 746 | 30 | 776 | ||||||
| Currency translation differences | 325 | 325 | 11 | 336 | ||||||
| Change due to remeasurements of net pension provisions |
– 551 | – 551 | 0 | – 551 | ||||||
| Other changes | 4 | 0 | 0 | 4 | 0 | 4 | ||||
| 524 | 41 | 565 | ||||||||
| Balance at 31 March 2019 | 1,233 | 3,476 | – | –3 | 8 | – 623 | 10,033 | 14,124 | 318 | 14,442 |
Deutsche Post AG is a listed corporation domiciled in Bonn, Germany. The condensed consolidated interim financial statements of Deutsche Post AG and its subsidiaries cover the period from 1 January to 31 March 2019 and have been reviewed.
The condensed consolidated interim financial statements as at 31 March 2019 were prepared in accordance with the International Financial Reporting Standards (IFRS s) and related interpretations issued by the International Accounting Standards Board (IASB) for interim financial reporting, as adopted by the European Union. These interim financial statements thus include all information and disclosures required by IFRS s to be presented in condensed interim financial statements.
Preparation of the condensed consolidated interim financial statements in accordance with IAS 34 requires the Board of Managementto exercise judgement and make estimates and assumptions that affect the application of accounting policies in the Group and the presentation of assets, liabilities, income and expenses. Actual amounts may differ from these estimates. The results obtained thus far in financial year 2019 are not necessarily an indication of how business will develop in the future.
The accounting policies applied to the condensed consolidated interim financial statements are generally based upon the same accounting policies used in the consolidated financial statements for financial year 2018. Exceptions are the new or revised International Financial Reporting Standards (IFRS s) required to be applied for the first time in financial year 2019 that however have not had a material influence on the consolidated interim financial statements. Detailed explanations of these can be found in the 2018 Annual Report in note 5 to the consolidated financial statements.
The income tax expense for the reporting period was deferred on the basis of the tax rate expected to apply to the full financial year. The tax rate for 2019 will increase primarily because a small additional recognition of deferred taxes on tax loss carryforwards is expected due to the use of tax losses compared with the previous year.
The companies listed in the following table are consolidated in addition to the parent company Deutsche Post AG:
| 31 Dec. 2018 |
31 March 2019 |
|
|---|---|---|
| Number of fully consolidated companies (subsidiaries) |
||
| German | 127 | 127 |
| Foreign | 616 | 607 |
| Number of joint operations German |
1 | 1 |
| Foreign | 0 | 0 |
| Number of investments accounted for using the equity method |
||
| German | 1 | 1 |
| Foreign | 18 | 14 |
In addition to the disposal of companies resulting from the deconsolidation of the Supply Chain business in China, Hong Kong and Macao, see note 2.3, an additional 4.9 % interest in Relais Colis SAS, France, which is accounted for using the equity method, was acquired in the first quarter of 2019.
There were no acquisitions in the first quarter of 2019.
Variable purchase prices were agreed for certain companies acquired in previous years:
| Company | Basis | Period for financial years from / to |
Results range from / to |
Fair value of total obligation at the acquisition date |
Remaining payment obligation at 31 December 2018 |
Remaining payment obligation at 31 March 2019 |
|---|---|---|---|---|---|---|
| Mitsafetrans S. r. l. | EBITDA | 2016 to 2018 | €0 to 19 million | €15 million | €5 million | €5 million |
| Suppla Group | EBITDA | 2018 to 2019 | €0 to 10 million 1 | €12 million | €10 million | €10 million |
1 Adjusted in 2018 due to reassessments.
Gains are shown in other operating income; losses are reported in other operating expenses.
In mid-February 2019, Deutsche Post DHL Group sold its Supply Chain business in China, Hong Kong and Macao to S. F. Holding, China. The table below shows the effects of the disposal of twelve consolidated companies and three companies accounted for using the equity method.
| € m | |
|---|---|
| Supply chain | |
| business in | |
| 1 January to 31 March 2019 | China |
| Non-current assets | 212 |
| of which goodwill | 91 |
| Current assets | 194 |
| Cash and cash equivalents | 33 |
| ASSETS | 439 |
| Non-current provisions and liabilities | 45 |
| Current provisions and liabilities | 179 |
| EQUITY AND LIABILITIES | 224 |
| Net assets | 215 |
| Cash consideration received | 686 |
| Losses from the currency translation reserve | –32 |
| Deconsolidation gain | 439 |
In addition, Deutsche Post DHL Group will receive an annual amount linked to revenue over the next ten years in a strategic partnership.
In addition to the sale of the Supply Chain business in China, note 2, the following significant transactions occured:
During the first quarter of 2019,restructuring expenses of €58 million in the Supply Chain division and €23 million in the eCommerce Solutions division were made for measures intended to improve earnings.
| Q 1 2018 | Q 1 2019 | |
|---|---|---|
| Post & Parcel Germany 1 | 3,721 | 3,741 |
| Post | 2,435 | 2,338 |
| Parcel | 1,267 | 1,384 |
| Other | 19 | 19 |
| Express | 3,676 | 3,876 |
| Global Forwarding, Freight | 3,387 | 3,523 |
| Global Forwarding | 2,483 | 2,586 |
| Freight | 904 | 937 |
| Supply Chain | 3,076 | 3,244 |
| eCommerce Solutions 1 | 857 | 936 |
| Corporate Functions 1 | 32 | 33 |
| Total revenue | 14,749 | 15,353 |
1 Prior-period amounts adjusted due to new segment structure, note 15.
| Q 1 2018 | Q 1 2019 | |
|---|---|---|
| Income from the disposal of assets | 7 | 487 |
| Income from the remeasurement of liabilities | 16 | 70 |
| Insurance income | 54 | 59 |
| Reversals of impairment losses on receivables and | ||
| other assets | 28 | 49 |
| Income from currency translation | 57 | 43 |
| Income from fees and reimbursements | 30 | 27 |
| Income from the reversal of provisions | 35 | 24 |
| Commission income | 19 | 17 |
| Income from prior-period billings | 16 | 13 |
| Sublease income | 7 | 12 |
| Operating lease income | 12 | 11 |
| Income from derivatives | 21 | 8 |
| Income from loss compensation | 8 | 6 |
| Income from the derecognition of liabilities | 3 | 5 |
| Recoveries on receivables previously written off | 4 | 4 |
| Subsidies | 4 | 4 |
| Miscellaneous | 85 | 91 |
| Total | 406 | 930 |
Since the fourth quarter of 2018, changes in inventories and work performed and capitalised have been presented in a separate item in the income statement, note 6. The prior-period amounts were adjusted accordingly.
Income from the disposal of assets increased, in particular, due to the sale of the Supply Chain business in China, note 2.
Miscellaneous other operating income includes a large number of smaller individual items.
| Total | 77 | 90 |
|---|---|---|
| Work performed and capitalised | 47 | 92 |
| Income (+) / expense (–) from changes in inventories | 30 | –2 |
| Q 1 2018 | Q 1 2019 | |
| € m |
Changes in inventories and work performed and capitalised were transferred out of other operating income, where they had previously been recognised, and have been presented as a separate income statement item since the fourth quarter of 2018, note 5. The prior-period amounts were adjusted accordingly.
Changes in inventories as well as work performed and capitalised are largely attributable to the production of electric vehicles by StreetScooter GmbH.
| Q 1 2018 48 |
Q 1 2019 54 |
|---|---|
| 327 | |
| 501 | |
| 0 | 0 |
| 0 | 1 |
| 883 | |
| 283 438 769 |
The impairmentlosses are attributable mainly to eCommerce Solutions. This includes the goodwill impairment, which relates to the most recent measurement prior to reclassification of the assets of DHL Paket (Austria) GmbH as held for sale, see note 12.
| Q 1 2018 | Q 1 2019 | |
|---|---|---|
| Cost of purchased cleaning and security services | 99 | 108 |
| Warranty expenses, refunds and compensation | ||
| payments | 83 | 91 |
| Travel and training costs | 79 | 80 |
| Other business taxes | 63 | 74 |
| Write-downs of current assets | 60 | 70 |
| Expenses for advertising and public relations | 72 | 63 |
| Telecommunication costs | 51 | 55 |
| Office supplies | 42 | 47 |
| Insurance costs | 78 | 46 |
| Currency translation expenses | 59 | 42 |
| Services provided by Bundesanstalt für Post und | ||
| Telekommunikation (German federal post and | ||
| telecommunications agency) | 37 | 39 |
| Entertainment and corporate hospitality expenses | 39 | 37 |
| Customs clearance-related charges | 31 | 35 |
| Contributions and fees | 26 | 30 |
| Voluntary social benefits | 22 | 30 |
| Consulting costs (including tax advice) | 28 | 27 |
| Monetary transaction costs | 16 | 17 |
| Losses on disposal of assets | 15 | 15 |
| Commissions paid | 14 | 14 |
| Legal costs | 12 | 9 |
| Audit costs | 7 | 7 |
| Donations | 8 | 4 |
| Miscellaneous | 153 | 146 |
| Total | 1,094 | 1,086 |
For reasons of transparency, the disclosure of personal insurance expenses was standardised as staff costs in the reporting period. Insurance expenses declined accordingly.
Miscellaneous other operating expenses include part of the restructuring expenses for Supply Chain and eCommerce Solutions.
Basic earnings per share in the reporting period were €0.60 (previous year: €0.49).
| shares outstanding Basic earnings per share |
€ | number 1,225,895,902 0.49 |
1,232,879,764 0.60 |
|---|---|---|---|
| Weighted average number of | |||
| Consolidated net profit for the period attributable to Deutsche Post AG shareholders |
€ m | 600 | 746 |
| Q 1 2018 | Q 1 2019 |
Diluted earnings per share in the reporting period were €0.60(previous year: €0.48).
| Q 1 2018 | Q 1 2019 | ||
|---|---|---|---|
| Consolidated net profit for the period attributable to |
|||
| Deutsche Post AG shareholders | € m | 600 | 746 |
| Plus interest expense on the | |||
| convertible bond | € m | 2 | 2 |
| Less income taxes 1 | € m | 0 | 0 |
| Adjusted consolidated net profit | |||
| for the period attributable to | |||
| Deutsche Post AG shareholders | € m | 602 | 748 |
| Weighted average number of | |||
| shares outstanding | number 1,225,895,902 | 1,232,879,764 | |
| Potentially dilutive shares | number | 40,910,970 | 21,206,525 |
| Weighted average number of | |||
| shares for diluted earnings | number 1,266,806,872 | 1,254,086,289 | |
| Diluted earnings per share | € | 0.48 | 0.60 |
1 Rounded below €1 million.
Investments in intangible assets (not including goodwill), property, plant and equipment acquired and right-of-use assets amounted to €1,028 million in the first quarter of 2019 (previous year: €796 million).
| € m | ||
|---|---|---|
| 31 March | 31 March | |
| 2018 | 2019 | |
| Intangible assets (not including goodwill) | 41 | 44 |
| Property, plant and equipment acquired | ||
| Land and buildings | 18 | 24 |
| Technical equipment and machinery | 24 | 24 |
| Transport equipment | 19 | 15 |
| Aircraft | 8 | 17 |
| IT equipment | 16 | 15 |
| Operating and office equipment | 14 | 14 |
| Advance payments and assets under | ||
| development | 187 | 295 |
| 286 | 404 | |
| Right-of-use assets | ||
| Land and buildings | 381 | 470 |
| Technical equipment and machinery | 9 | 11 |
| Transport equipment | 24 | 47 |
| Aircraft | 55 | 50 |
| Advance payments | 0 | 2 |
| 469 | 580 | |
| Total | 796 | 1,028 |
Goodwill changed as follows:
€ m
| 2018 | 2019 | |
|---|---|---|
| Cost | ||
| Balance at 1 January | 12,239 | 12,236 |
| Additions from business combinations | 45 | 0 |
| Disposals | –127 | 1 |
| Currency translation differences | 79 | 168 |
| Balance at 31 December / 31 March | 12,236 | 12,405 |
| Depreciation, amortisation and impairment losses | ||
| Balance at 1 January | 1,070 | 1,037 |
| Disposals | –32 | 1 |
| Impairment losses | 0 | 1 |
| Currency translation differences | –1 | 18 |
| Balance at 31 December / 31 March | 1,037 | 1,057 |
| Carrying amount at 31 December / 31 March | 11,199 | 11,348 |
The disposal in the first quarter of 2019 includes the sale of the chemical goods transport business (asset deal) of DHL Supply Chain Limited, UK. The impairment loss relates to the strategic partnership with Austrian Post, see note 12.
| Non-current | Total | ||||
|---|---|---|---|---|---|
| 31 Dec. 2018 |
31 March 2019 |
31 Dec. 2018 |
31 March 2019 |
31 Dec. 2018 |
31 March 2019 |
| 499 | 493 | 100 | 108 | 599 | 601 |
| 43 | 63 | 0 | 0 | 43 | 63 |
| 188 | 209 | 843 | 850 | 1,031 | 1,059 |
| 730 | 765 | 943 | 958 | 1,673 | 1,723 |
| Current |
Net impairment losses amounted to €–11 million in the first quarter of 2019 (previous year: €–24 million).
The amounts reported in this note relate to the following items:
| € m | ||||
|---|---|---|---|---|
| Assets | Liabilities | |||
| 31 Dec. 2018 |
31 March 2019 |
31 Dec. 2018 |
31 March 2019 |
|
| DHL Paket (Austria) GmbH, Austria – asset deal (eCommerce Solutions segment) | 0 | 11 | 0 | 0 |
| DHL Freight GmbH, Germany – property sale (Global Forwarding, Freight segment) | 9 | 9 | 0 | 0 |
| Exel Logistics Property Limited, UK – property sale (Supply Chain segment) | 3 | 3 | 0 | 0 |
| Sale of the Supply Chain business in China, Hong Kong and Macao (Supply Chain segment) | 414 | 0 | 228 | 0 |
| Other | 0 | 0 | 0 | 0 |
| Assets held for sale and liabilities associated with assets held for sale | 426 | 23 | 228 | 0 |
The sale of the Supply Chain business in China to S. F. Holding, China, was completed in February 2019, see note 2.
Following the agreement of a long-term partnership between Deutsche Post DHL Group and Austrian Post, some of the assets of DHL Paket (Austria) GmbH that will be sold to Austrian Post after the transaction is completed were reclassified to assets held for sale and liabilities associated with assets held for sale. These include mainly property, plant and equipment (sorting machines). The most recent measurement prior to reclassification led to an impairment loss of €2 million.
KfW Bankengruppe (KfW) held a 20.5 % interest in the share capital of Deutsche Post AG as at 31 March 2019. The remaining shares are in free float.
| Issue / sale of treasury shares Balance at 31 December / 31 March |
2,169,550 –3,628,651 |
4,967 –3,623,684 |
|---|---|---|
| Purchase of treasury shares | –1,284,619 | 0 |
| Treasury shares Balance at 1 January |
– 4,513,582 | –3,628,651 |
| Balance at 31 December / 31 March | 1,236,506,759 | 1,236,506,759 |
| Addition due to contingent capital increase (Performance Share Plan) |
2,420,108 | 0 |
| Addition due to contingent capital increase (convertible bond) |
5,379,106 | 0 |
| Issued capital Balance at 1 January |
1,228,707,545 | 1,236,506,759 |
| € | 2018 | 2019 |
The issued capital is composed of 1,236,506,759 no-par value registered shares (ordinary shares) with a notional interest in the share capital of €1 per share, and is fully paid up.
As at 31 March 2019, Deutsche Post AG held 3,623,684 treasury shares.
| € m | ||
|---|---|---|
| 2018 | 2019 | |
| Balance at 1 January | 3,327 | 3,469 |
| Share Matching Scheme | ||
| Addition | 73 | 1 |
| Exercise | – 64 | 0 |
| Total for Share Matching Scheme | 9 | 1 |
| Performance Share Plan | ||
| Addition | 26 | 6 |
| Exercise | –28 | 0 |
| Total for Performance Share Plan | –2 | 6 |
| Retirement / issue of treasury shares | 26 | 0 |
| Differences between purchase and issue prices of treasury shares |
7 | 0 |
| Capital increase through exercise of conversion | ||
| rights under convertible bond 2012 / 2019 | 102 | 0 |
| Balance at 31 December / 31 March | 3,469 | 3,476 |
| € m | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 January to | Post & Parcel Germany 1 |
Express | Global Forwarding, Freight |
Supply Chain | eCommerce Solutions 1 |
Corporate Functions 1 Consolidation 1, 2 |
Group | |||||||||
| 31 March | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 |
| External revenue | 3,721 | 3,741 | 3,676 | 3,876 | 3,387 | 3,523 | 3,076 | 3,244 | 857 | 936 | 32 | 33 | 0 | 0 | 14,749 | 15,353 |
| Internal revenue | 86 | 93 | 96 | 95 | 204 | 239 | 48 | 23 | 60 | 63 | 318 | 307 | – 812 | – 820 | 0 | 0 |
| Total revenue | 3,807 | 3,834 | 3,772 | 3,971 | 3,591 | 3,762 | 3,124 | 3,267 | 917 | 999 | 350 | 340 | – 812 | – 820 | 14,749 | 15,353 |
| Profit / loss from operating activities (EBIT) |
405 | 227 | 461 | 453 | 70 | 100 | 55 | 486 | –14 | –28 | –71 | –79 | –1 | 0 | 905 | 1,159 |
| of which net income / loss from invest ments accounted for using the equity method |
1 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | –1 | –1 | 0 | –1 | 0 | 0 | 1 | –1 |
| Segment assets 3 | 5,577 | 6,161 | 13,766 | 13,890 | 8,728 | 8,889 | 8,248 | 8,109 | 1,750 | 1,710 | 4,935 | 5,144 | – 96 | – 92 | 42,908 | 43,811 |
| of which invest ments accounted for using the equity method |
0 | 0 | 33 | 33 | 24 | 24 | 12 | 12 | 30 | 36 | 21 | 21 | –1 | 0 | 119 | 126 |
| Segment | ||||||||||||||||
| liabilities 3 | 2,311 | 2,744 | 3,635 | 3,468 | 3,105 | 3,043 | 3,229 | 2,948 | 589 | 583 | 1,520 | 1,541 | –75 | – 62 | 14,314 | 14,265 |
| Net segment assets / liabilities 3 |
3,266 | 3,417 | 10,131 | 10,422 | 5,623 | 5,846 | 5,019 | 5,161 | 1,161 | 1,127 | 3,415 | 3,603 | –21 | –30 | 28,594 | 29,546 |
| Capex (assets acquired) |
86 | 85 | 80 | 121 | 20 | 26 | 70 | 75 | 30 | 39 | 39 | 102 | 2 | 0 | 327 | 448 |
| Capex (right- of-use assets) 3 |
1 | 26 | 120 | 219 | 37 | 35 | 113 | 151 | 26 | 18 | 171 | 130 | 1 | 1 | 469 | 580 |
| Total capex | 87 | 111 | 200 | 340 | 57 | 61 | 183 | 226 | 56 | 57 | 210 | 232 | 3 | 1 | 796 | 1,028 |
| Depreciation and amortisa tion |
70 | 74 | 267 | 313 | 56 | 63 | 191 | 216 | 35 | 49 | 150 | 161 | –1 | 1 | 768 | 877 |
| Impairment losses |
0 | 0 | 0 | 0 | 0 | 0 | 1 | 1 | 0 | 5 | 0 | 0 | 0 | 0 | 1 | 6 |
| Total depreci ation, amortisa tion and impairment losses |
70 | 74 | 267 | 313 | 56 | 63 | 192 | 217 | 35 | 54 | 150 | 161 | –1 | 1 | 769 | 883 |
| Other non-cash income (–) and expenses (+) |
–78 | 52 | 87 | 51 | 28 | 16 | 46 | 88 | 3 | 16 | 36 | 6 | –1 | 0 | 121 | 229 |
| Employees 4 | 93,550 | 96,184 | 43,347 | 43,956 151,877 155,405 | 29,493 | 31,415 | 12,272 | 12,655 | 0 | |||||||
| 159,032 158,797 | 0 489,571 498,412 |
1 Prior-period amounts adjusted.
2 Including rounding.
3 As at 31 December 2018 and 31 March 2019.
4 Average FTEs.
The following changes concerning segments were effective as of 1 January 2019: The Post - eCommerce - Parcel division was separated into a German and an international division, each led by a separate member of the Board of Management. The German business was renamed Post & Parcel Germany and has been under the leadership of Dr Tobias Meyer since 1 April 2019. Ken Allen now heads the new eCommerce Solutions division. In the second quarter of 2018, Street-Scooter GmbH was spun off from the former Post - eCommerce - Parcel division and assigned to Corporate Functions. The prior-period amounts were adjusted accordingly.
| € m | Germany | Europe (excluding Germany) |
Americas | Asia Pacific | Other regions | Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 January to 31 March | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 |
| External revenue | 4,698 | 4,746 | 4,498 | 4,627 | 2,490 | 2,764 | 2,481 | 2,599 | 582 | 617 | 14,749 | 15,353 |
| Non-current assets 1 | 9,229 | 9,365 | 10,065 | 10,133 | 6,740 | 6,797 | 4,563 | 4,577 | 524 | 542 | 31,121 | 31,414 |
| Capex | 310 | 434 | 251 | 275 | 148 | 159 | 71 | 119 | 16 | 41 | 796 | 1,028 |
1 As at 31 December 2018 and 31 March 2019.
€ m
| Consolidated net profit for the period | 631 | 776 |
|---|---|---|
| Income taxes | –139 | –219 |
| Profit before income taxes | 770 | 995 |
| Net finance costs | –135 | –164 |
| Profit / loss from operating activities (EBIT) | 905 | 1,159 |
| Reconciliation to Group / Consolidation | –1 | 0 |
| Corporate Functions | –71 | –79 |
| Total income of reported segments | 977 | 1,238 |
| Q 1 2018 | Q 1 2019 | |
The following table shows the fair values of financial instruments with each class of financial instrument presented by the level in the fair value hierarchy to which it is assigned:
| Level 1 1 | Level 2 2 | Level 3 3 | Total |
|---|---|---|---|
| 232 | 416 | 20 | 668 |
| 800 | 50 | 0 | 850 |
| 1,032 | 466 | 20 | 1,518 |
| 5,822 | 802 | 0 | 6,624 |
| 9 | 8 | 15 | 32 |
| 5,831 | 810 | 15 | 6,656 |
| 231 | 398 | 0 | 629 |
| 800 | 43 | 0 | 843 |
| 1,031 | 441 | 0 | 1,472 |
| 5,687 | 652 | 0 | 6,339 |
Current financial liabilities 9 21 15 45 Financial liabilities 5,696 673 15 6,384
1 Quoted prices for identical instruments in active markets.
2 Inputs other than quoted prices that are directly or indirectly observable for instruments.
3 Inputs not based upon observable market data.
Level 1 comprises mainly equity and debtinstruments measured atfair value and debt instruments measured at amortised cost.
In addition to financial assets and financial liabilities measured at amortised cost, commodity, interest rate and currency derivatives are reported under Level 2. The fair values of financial assets measured at amortised cost are determined, amongst other things, using the multiplier method. The fair values of the derivatives are measured on the basis of discounted expected future cash flows,taking into account forward rates for currencies, interest rates and commodities (market approach). Forthis purpose, price quotations observable in the market (exchange rates, interest rates and commodity prices) are imported from standard marketinformation platforms into the treasury management system. The price quotations reflect actualtransactions involving similar instruments on an active market. If currency options are used, they are measured using the Black-Scholes option pricing model. All significant inputs used to measure derivatives are observable on the market.
Level 3 comprises mainly the fair values of equity investments and derivatives associated with M & A transactions. They are measured using recognised valuation models, taking plausible assumptions into account. The fair values of derivatives as well as of assets and liabilities depend, to a large extent, upon financial ratios. Increasing financial ratios lead to higherfair values, whilst decreasing financialratios result in lower fair values.
The financial instruments categorised within Level 3 did not have any effects on profit or loss as at 31 March 2019.
The Group's contingent liabilities and other financial obligations, such as purchase obligations, have not changed significantly compared with 31 December 2018.
Dr Tobias Meyer was appointed to manage the Post & Parcel Germany division as at 1 April 2019. It was formerly managed by CEO Dr Frank Appel in a dual role. Furthermore there were no significant changes in related party disclosures in the first quarter of 2019 as against 31 December 2018.
On 18 April 2019, the German Federal Network Agency (Bundesnetzagentur) published for comment the draft decision regarding the bundling of services as well as the proposed pricing metrics for the pricecap regulation forletter mail items of up to 1,000g from 1 January 2019. According to the draft decision, Deutsche Post AG is expected to have a pricing scope of 10.63 % from 1 July 2019 on the basket of products that are subject to the price-cap procedure. This decision is expected to be valid until 31 December 2021. The final decision of the Federal Network Agency is expected by the end of May 2019. After the final decision, Deutsche Post AG will be permitted to apply to the Federal Network Agency for the specific stamp price increases which will be valid from 1 July 2019 onwards for the letter products subject to the price-cap regulation. The price-cap regulation essentially applies to
postage rates forletters and special services forletter mail sent within Germany and abroad, unless the contracts stipulate consignments of at least fifty letters per operation.
Beyond that, there were no reportable events after the reporting date.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit 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 financial year.
Bonn, 8 May 2019
Deutsche Post AG The Board of Management
Dr Frank Appel Ken Allen
John Gilbert Melanie Kreis
Dr Tobias Meyer Dr Thomas Ogilvie
John Pearson Tim Scharwath
To Deutsche Post AG
We have reviewed the condensed consolidated interim financial statements – comprising the income statement and statement of comprehensive income, balance sheet, cash flow 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 2019, which are part of the quarterly financialreport pursuantto section 115 ofthe Wertpapierhandelsgesetz (WpHG – German Securities Trading Act). The preparation of the condensed consolidated interim financial statements in accordance with the IFRS s applicable to interim financialreporting 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 management reports is the responsibility of the company's Board of Management. Our responsibility is to issue a review report on the condensed consolidated interim financial statements and on the interim group management report based on our review.
We conducted ourreview of the condensed consolidated interim financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (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). Those 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 financial statements have not been prepared, in all material respects, in accordance with the IFRS s applicable to interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all materialrespects, in accordance with the provisions of the German Securities Trading Act applicable to interim group managementreports. A review is limited primarily to inquiries of company personnel and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordancewith our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.
Based on ourreview, no matters have come to our attention that cause us to presume that the condensed consolidated interim financial statements have not been prepared, in all material respects, in accordance with the IFRS s applicable to interim financial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all materialrespects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.
Düsseldorf, 8 May 2019
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft
Dietmar Prümm Verena Heineke Wirtschaftsprüfer Wirtschaftsprüferin
(German public auditor) (German public auditor)
Investor Relations Tel.: + 49 (0) 228 1826 36 36 Fax: + 49 (0) 228 1826 31 99 Email: ir @ dpdhl.com
Press Offi ce Tel.: + 49 (0) 228 18299 44 Fax: + 49 (0) 228 18298 80 Email: pressestelle @ dpdhl.com
External Email: ir @ dpdhl.com dpdhl.com/en/investors
Internal GeT and DHL Webshop Mat. no. 675602581
Published on 10 May 2019.
The English version of the Interim Report as at 31 March 2019 of Deutsche Post DHL Group constitutes a translation of the original German version. Only the German version is legally binding, insofar as this does not confl ict with legal provisions in other countries. Deutsche Post Corporate Language Services et al.
6 August 2019 Interim Report as at 30 June 2019
12 November 2019 Interim Report as at 30 September 2019
10 March 2020 2019 Annual Report
12 May 2020 Interim Report as at 31 March 2020 13 May 2020 2020 Annual General Meeting
18 May 2020 Dividend payment
5 August 2020 Interim Report as at 30 June 2020
10 November 2020 Interim Report as at 30 September 2020
Further dates, updates as well as information on live webcasts: dpdhl.com/en/investors
Printed on EnviroTop, recycled paper produced from 100 % recovered fi bre, which is manufactured climate neutrally and is, amongst other things, FSC certifi ed, has Nordic Ecolabel 244 053 and complies with the EU Ecolabel AT/11/002 guidelines.
This Interim Report contains forwardlooking statements that relate to the business, fi nancial performance and results of operations of Deutsche Post AG. Forwardlooking 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 upon current plans, estimates and projections, they are subject to risks and uncertainties that could cause actual results to be materially diff erent from the future development, performance or results expressly or implicitly assumed in the forwardlooking statements. Readers are cautioned not to place undue reliance on these forwardlooking 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.
Deutsche Post AG Headquarters Investor Relations 53250 Bonn Germany
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