11.11.2015
Deutsche Post AG DE0005552004
Deutsche Post AG: Deutsche Post DHL Group lays further important foundations for long-term success
(DGAP-Media / 11.11.2015 / 07:00)
Deutsche Post DHL Group lays further important foundations for long-term
success
- Group revenue increases by 3.0% to EUR 14.4 billion in third quarter of
2015
- Group EBIT impacted by one-off effects: decline to EUR 197 million
- EBIT of minimum EUR 2.4 billion expected in 2015
- Outlook for 2016 and 2020 confirmed
- CEO Frank Appel: "We are working systematically to achieve our
long-term targets"
Bonn, November 11, 2015: Deutsche Post DHL Group, the world's leading mail
and logistics company, has continued to lay the groundwork for long-term
business success. In the process, the Group has recorded a number of
one-off effects that impacted earnings in the third quarter of 2015.
"2015 is a transition year from our Strategy 2015 to Strategy 2020. We are
working systematically to position each of our business divisions optimally
and to achieve the long-term targets projected in Strategy 2020. We have
recorded a number of one-off effects, which will de-risk and strengthen our
ability to meet or exceed those targets. We expect that the benefits will
begin to materialize already in 2016," said Frank Appel, CEO, Deutsche Post
DHL Group.
As announced on October 28, the Group has recognized one-off effects of EUR
345 million in connection with the further course of the IT renewal roadmap
at DHL Global Forwarding. In addition to the above described measures, as
also communicated at the end of October, Deutsche Post DHL Group has
reduced risk to future earnings potential by recognizing in its outlook for
2015 further one-off effects of around EUR 200 million. These exposures
relate mainly to the updated assessment of primarily legal and regulatory
exposures in the Post - eCommerce - Parcel (PeP), Express and Global
Forwarding, Freight divisions. EUR 81 million of this sum was booked in the
third quarter.
Alongside these one-off effects, third quarter earnings have also been
impacted by further measures taken to strengthen the positioning of the
business divisions for future success: The Post - eCommerce - Parcel (PeP)
division has invested in the international expansion of its parcel network,
in order to maximize benefits from the dynamically growing e-commerce
segment outside of Germany. At the same time, the earnings of the PeP
division have been impacted in the third quarter by the postal strike in
Germany and its after-effects, and the one-time payment included in the new
tariff agreement. The Express division has continued to invest
significantly in the modernization and expansion of its unrivalled
worldwide network, in order to further bolster its leading market position.
The Supply Chain division booked further restructuring costs in line with
the implementation of its optimization program.
Overall, including the impact of the above factors, Group EBIT in the third
quarter declined to EUR 197 million. In order to recognize the one-off
effects in Global Forwarding and the additional one-off effects of EUR 200
million, the Group lowered its 2015 EBIT guidance in October and now
expects operating earnings of a minimum of EUR 2.4 billion. The Group
previously expected operating earnings of between EUR 2.95 billion and EUR
3.1 billion.
Outlook: Earnings guidance for 2015 adjusted in October. Forecast for 2016
and longer-term objectives confirmed
The DHL divisions are expected to contribute minimum EUR 1.65 billion in
2015 EBIT to the full-year 2015 target of at least EUR 2.4 billion, while
the guidance for PeP is at least EUR 1.1 billion. The Group expects
expenses for Corporate Center/Other to remain at around EUR 350 million. In
addition, the Group continues to expect sufficient free cash flow to be
generated to cover the dividend paid out in May 2015 for financial year
2014.
The one-time nature of the effects and the expected impact in delivering
structural enhancements for the individual business divisions should
contribute to a significant increase in earnings in the coming year. For
2016, Deutsche Post DHL Group therefore re-confirms its forecast of EBIT
between EUR 3.4 billion and EUR 3.7 billion. The PeP division is expected
to contribute more than EUR 1.3 billion to the 2016 target and the DHL
divisions between EUR 2.45 billion and EUR 2.75 billion.
The Group is also maintaining its objectives beyond 2016: Deutsche Post DHL
Group continues to forecast that operating profit will increase by an
average of more than 8% annually during the period from 2013 to 2020
(CAGR). The DHL divisions are expected to contribute to the improvement
with average EBIT growth of 10% per year. At PeP, operating profit is
expected to increase by an average of around 3% per year. The Group
additionally plans to keep expenses for Corporate Center/Other at less than
0.5% of consolidated revenue by 2020.
Third quarter 2015: Earnings performance marked by investments in future
growth
At EUR 14.4 billion, revenues in the third quarter increased 3.0%, or EUR
423 million, over the prior-year period (2014: EUR 14.0 billion). The DHL
divisions contributed growth of 3.3% and the PeP division an increase of
2.0% to this result. Adjusted for positive currency effects, Group turnover
was stable (-0.5%), while lower fuel surcharges held back growth levels.
Group EBIT declined in the third quarter by 70.9% to EUR 197 million (2014:
EUR 677 million). Operating earnings at PeP contracted by 50.7% to EUR 142
million. Operating earnings at Express grew by 19.3% to EUR 364 million
(2014: EUR 305 million). At Global Forwarding, Freight, EBIT declined, not
including one-off effects, to EUR 47 million (2014: EUR 71 million).
Including negative one-off effects, EBIT was EUR -337 million. EBIT in the
Supply Chain division in the third quarter totaled EUR 101 million,
compared to EUR 110 million in the prior-year period.
Consolidated net profit in the third quarter contracted to EUR 49 million
(2014: EUR 468 million), mainly due to the decline in EBIT. This equates to
basic earnings per share of EUR 0.04 (2014: EUR 0.38).
Nine months: Revenue growth of around EUR 2.6 billion
In the first nine months of the year, Group revenue climbed 6.4%, or around
EUR 2.6 billion, to EUR 43.9 billion (2014: EUR 41.3 billion). Adjusted for
positive currency effects, revenue was 0.7% above 2014 levels for the same
period. Organic revenue growth at Express, Post - eCommerce - Parcel and
Supply Chain made a positive contribution to this increase, which was
offset by an organic decline in revenue at Global Forwarding, Freight. In
addition, lower fuel surcharges held back stronger organic revenue growth.
Group operating earnings declined in the first nine months by 29.4% to EUR
1.45 billion (2014: EUR 2.06 billion). Consolidated net profit was EUR 870
million (2014: EUR 1.4 billion). Basic earnings per share were also
therefore lower at EUR 0.72 (2014: EUR 1.18).
Capital expenditure and cash flow: Foundations for future growth
strengthened
Group investments grew to EUR 547 million in the third quarter of 2015
(2014: EUR 494 million). Overall, investments in the first nine months grew
from EUR 1.0 billion in 2014 to EUR 1.2 billion in 2015. The focus was on
positioning the Group for future profitable growth in all four business
divisions. Investments were therefore made in further building up the
national and international parcel infrastructure, expanding the global and
regional Express hubs in Leipzig, Cincinnati, Singapore and Brussels,
modernizing the Express air fleet and supporting new contract start-ups in
Supply Chain.
The Group's free cash flow declined from EUR 371 million in 2014 to EUR 329
million in 2015. This reflects the lower operating earnings and higher
capital expenditures (net cash capex). Net debt for the Group was EUR 2.8
billion at the end of the third quarter. Due to an expected strong cash
flow generation in the fourth quarter, the Group expects a significant
reduction in net debt by year-end.
Post - eCommerce - Parcel: Further strong growth in Parcel business
Revenue in the Post - eCommerce - Parcel division in the third quarter grew
by 2.0% to EUR 3.8 billion (2014: 3.7 billion). EUR 1.5 billion of this
total was generated by the eCommerce - Parcel units, which continued to
grow dynamically, increasing by 9.7% over the prior year period. This
growth was based on revenue gains of 7.0% in Parcel Germany as well as 8.4%
in Parcel Europe and 20.9% in eCommerce, the latter two supported by
currency effects. This development reflects once again the successful
positioning of the Group in the dynamically growing e-commerce sector, in
Germany as well as increasingly internationally. In order to continue
building on this position, the Group is significantly investing further in
developing its national and international parcel infrastructure, as well as
in further innovative customer solutions.
In contrast to eCommerce - Parcel, revenues in the Post business declined
by 2.4% in the third quarter to EUR 2.3 billion. The structural decline in
volumes within the Mail Communication and Dialog Marketing segments was
accelerated by the strike and its after-effects. These negative effects
could only be partly mitigated by price increases for postal products in
Germany.
Operating earnings in the PeP division contracted by 50.7% to EUR 142
million (2014: EUR 288 million). Included in this decline was a EUR 42
million provision for an increase in expected payments for federal
administration of civil servant pensions. This decline also reflects
investments in the international expansion of the eCommerce business and
lower volumes as a result of the postal strike which ended on July 7, and
its after-effects. The results were also impacted by higher personnel costs
including an accrual of EUR 48 million to cover the one-time payment of EUR
400 in October to tariff-grade employees, which was part of the new tariff
agreement.
Express: Further strong revenue and earnings growth
The Express division was able to continue its successful revenue and
earnings development in the third quarter of 2015. Revenue climbed by 6.9%
to EUR 3.3 billion (2014: EUR 3.1 billion) in the period. Adjusted for
currency effects, the increase was 2.2%, while organic revenue growth was
held back by lower fuel surcharge revenues. The main driver of the positive
revenue development was the ongoing strong growth in international time
definite (TDI) shipments, where volumes grew by 9.4% over the prior-year
period.
EBIT at the Express division grew by 19.3% to EUR 364 million (2014: EUR
305 million). The continued good operating performance has been achieved
despite currency headwinds and continuing significant investment in the air
and road network. The result was also supported by a write-up of assets in
the Americas region. The EBIT margin in the third quarter was 10.9% and
above the prior-year level (2014: 9.8%).
Global Forwarding, Freight: One-off effects impact earnings
Revenue at Global Forwarding, Freight declined in the third quarter of 2015
by 5.7% to EUR 3.6 billion (2014: EUR 3.8 billion). The main reason for
this development, alongside the weak market environment, is the division's
selective market strategy.
The measures introduced in the second quarter to improve the operating
performance of the division have delivered their first benefits to the cost
efficiency and margin of Global Forwarding, which helped reduce the rate of
decline in operating earnings in the third quarter on an adjusted basis,
compared to the rate of decline in the first half of this year.
As announced on October 28, the Group, while still weighing potential
alternatives to NFE, is looking at implementing a step-by-step replacement
and upgrade of the IT set-up at DHL Global Forwarding. This could rely on a
flexible IT architecture, potentially enhancing and converging existing
systems and also incorporating advanced 'off-the-shelf' solutions that have
been commercially proven within the freight forwarding industry. The aim
would be a business-centric, gradual IT renewal roadmap which could best
support the improvements in operating performance that the division is
targeting. This could include enhancing shipment visibility through better
capture, management and display of operational milestones, and reduction of
paper work through greater use of a document management system which has
already been proven in our U.S. business. The Group is still in discussion
with vendors, including the NFE implementation partner, and remains
committed to allowing the NFE implementation partner the opportunity to
fulfill its contractual obligations.
Given the decreased likelihood that DHL Global Forwarding will be able to
realize benefits from the originally pursued New Forwarding Environment
(NFE) system due to continued issues, the Group has recognized one-off
effects of a total of EUR 345 million in combination with defining the new
IT renewal roadmap. This sum relates to the EUR 308 million write-down of
investments to the NFE system that were activated on the balance sheet, as
well as EUR 37 million in provisions which cover expenses during an
expected roll back of NFE in the countries where it is piloted. The
division has also booked EUR 39 million in one-off effects related
primarily to a legal dispute with a joint venture partner. Overall, these
one-off effects have contributed to a decline in the Global Forwarding,
Freight division's EBIT to EUR -337 million (2014: EUR 71 million).
Factoring out these effects, EBIT was EUR 47 million, a decrease of 33.8%
over the prior-year period.
Supply Chain: Optimization program continues as planned
Revenue at the Supply Chain division grew by 9.4% to EUR 4.0 billion (2014:
EUR 3.7 billion) in the third quarter. Adjusted for currency effects,
revenue was 3.2% over the prior year period. This growth is mainly due to
new contract wins and higher volumes in developed markets. Despite a
strict, selective focus on profitable new contracts, the division was able
to secure new contracts totaling EUR 262 million (annualized) in the third
quarter, in particular in the strong growth sectors 'Retail', 'Consumer'
and 'Automotive'.
Operating earnings in the period from July to September were EUR 101
million, 8.2% lower than the prior-year period (2014: EUR 110 million). The
main reason for this decline was planned restructuring costs totaling EUR
31 million relating to the division's optimization program. The division
intends to take advantage of the optimization program to drive further
standardization, greater efficiency and improved utilization of economies
of scale in order to increase its operating margin to 4% to 5% by 2020.
Excluding the restructuring costs, the operating earnings of the division
would have been significantly higher than the prior-year period.
- End -
Note to newsrooms: At www.dpdhl.com you will find an interview with CEO
Frank Appel. The Group's investor conference call will be webcast beginning
at 2 p.m (CET).
Media contact
Deutsche Post DHL Group
Media Relations
Dan McGrath/Christina Neuffer
Phone: +49 228 182-9944
E-mail: [email protected]
On the Internet: www.dpdhl.com/press
Follow us: www.twitter.com/DeutschePostDHL
Deutsche Post DHL Group
Deutsche Post DHL Group is the world's leading logistics and mail
communications company. The Group is focused on being the first choice for
customers, employees and investors in its core business areas worldwide. It
makes a positive contribution to the world by connecting people and
enabling global trade while being committed to responsible business
practices and corporate citizenship.
Deutsche Post DHL Group operates under two brands: Deutsche Post is
Europe's leading postal service provider. DHL is uniquely positioned in the
world's growth markets, with a comprehensive range of international
express, freight transportation, eCommerce, and supply chain management
services.
Deutsche Post DHL Group employs about 480,000 people in over 220 countries
and territories worldwide. The Group generated revenues of more than 56
billion euros in 2014.
The postal service for Germany. The logistics company for the world.
Group financial highlights for the third quarter of 2015
3rd 3rd quarter quarter Change in million euros 20141) 2015 in % Revenues 14,001 14,424 3.0% - of which international 9,858 10,284 4.3% Profit from operating activities (EBIT) 677 197 -70.9% Consolidated net profit2) 468 49 -89.5% Basic earnings per share (in euros) 0.38 0.04 -89.5% Diluted earnings per share (in euros) 0.37 0.04 -89.2%Divisional revenues in the third quarter of 2015 3rd Share of 3rd Share of quarter total quarter total Change in million euros 2014 revenues 2015 revenues in % Post - eCommerce - 3,731 26.6% 3,805 26.4% 2.0% Parcel Express 3,112 22.2% 3,328 23.1% 6.9% Global Forwarding, 3,803 27.2% 3,587 24.9% -5.7% Freight Supply Chain 3,660 26.1% 4,005 27.8% 9.4% Corporate Center / -305 n.a. -301 n.a. 1.3% Other and consolidation Group 14,001 100% 14,424 100% 3.0%Divisional EBIT in the third quarter of 2015 3rd quarter 3rd quarter Change in million euros 20141) 2015 in % Post - eCommerce - Parcel 288 142 -50.7% DHL 487 127 -73.9% - Express 305 364 19.3% - Global Forwarding, Freight 71 -337 < -100% - Supply Chain 110 101 -8.2% Corporate Center / Other and consolidation -97 -73 24.7% Group 677 197 -70.9%1) Prior-year amounts adjusted. 2) After non-controlling interests. Group financial highlights in the first nine months of 2015 Change in million Euros 9M 20141) 9M 2015 in % Revenues 41,265 43,891 6.4% - of which international 28,700 31,253 8.9% Profit from operating activities (EBIT) 2,060 1,454 -29.4% Consolidated net profit2) 1,431 870 -39.2% Basic earnings per share (in euros) 1.18 0.72 -39.0% Diluted earnings per share (in euros) 1.14 0.69 -39.5%Divisional revenues in the first nine months of 2015 Share of Share of total total Change in million Euros 9M 2014 revenues 9M 2015 revenues in % Post - eCommerce - 11,333 27.5% 11,618 26.5% 2.5% Parcel Express 9,080 22.0% 10,023 22.8% 10.4% Global Forwarding, 10,964 26.6% 11,154 25.4% 1.7% Freight Supply Chain 10,784 26.1% 11,992 27.3% 11.2% Corporate Center / -896 n.a. -896 n.a. 0.0% Other and consolidation Group 41,265 100% 43,891 100% 6.4%Divisional EBIT in the first nine months of 2015 Change In million Euros 9M 20141) 9M 2015 in % Post - eCommerce - Parcel 873 616 -29.4% DHL 1,439 1,064 -26.1% - Express 912 1,072 17.5% - Global Forwarding, Freight 222 -280 < -100% - Supply Chain 304 273 -10.2% Corporate Center / Other and consolidation -251 -227 9.6% Group 2,060 1,454 -29.4%1) Prior-year amounts adjusted. 2) After non-controlling interests. End of Media Release --------------------------------------------------------------------- Issuer: Deutsche Post AG Key word(s): Enterprise 11.11.2015 Dissemination of a Press Release, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: Deutsche Post AG Charles-de-Gaulle-Straße 20 53113 Bonn Germany Phone: +49 (0)228 182 - 63 100 Fax: +49 (0)228 182 - 63 199 E-mail: [email protected] Internet: www.dpdhl.com ISIN: DE0005552004 WKN: 555200 Indices: DAX Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime Standard), Hamburg, Hanover, Munich, Stuttgart; Terminbörse EUREX End of News DGAP Media --------------------------------------------------------------------- 411421 11.11.2015
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