Deutsche Post World Net reports strong first half 2004

Deutsche Post World Net reports strong first half 2004
Second-quarter operating profit rises 45.2 percent
§ EBITA rises by 14.5 percent to 1.7 billion euros in the first half-year
§ First-half revenue up 9.6 percent to 21 billion euros
§ EBITA to increase by 7.5 to 12.5 percent in full-year 2004
§ STAR program contributes 178 million euros to first-half earnings
Deutsche Post World Net reported a strong first half: Profit from operating activities (EBITA) rose by 14.5 percent to 1.682 billion euros from 1.469 billion euros in the year-earlier period. Consolidated net profit rose 10.9 percent to 721 million euros. Earnings per share increased to 0.65 euros from 0.58 euros. Second-quarter EBITA increased by 45.2 percent to 752 million euros, while second-quarter net profit nearly doubled to 280 million euros.
Deutsche Post World Net group revenue rose by 9.6 percent to about 21 billion euros in the first half-year of 2004 from 19.2 billion euros in the year-earlier period. Revenue grew by 11.6 percent to 10.5 billion euros in the second quarter. The share of revenue generated outside of Germany rose by some 27 percent in the first half to about 9.9 billion euros, comprising nearly 47 percent of total group revenue.
"We are very satisfied with our earnings performance this year, particularly the increases we were able to register in the second quarter," said Klaus Zumwinkel, Chairman of the Management Board. "Our internationalization strategy is beginning to contribute handsomely to our overall results and we are competing vigorously throughout the world."
The STAR value creation and integration program contributed 178 million euros to earnings in the first half of 2004. Individual STAR successes included an increased automation rate in the mail centers in Germany as well as the progressive reduction of IT costs within the group. Since STAR began in November 2002, it has contributed 601 million euros to earnings. STAR is expected to contribute at least 1.4 billion euros to earnings by the end of 2005.
After a review of the corporation's first-half performance, Zumwinkel increased the earnings forecast for the full year: EBITA is now expected to rise by 7.5 to 12.5 percent. (Previous forecast: between 5 and 10 percent). This upward revision results from the about 75 million euros worth of net proceeds from the Postbank listing. Looking forward to 2005, the company expects EBITA to reach at least 3.6 billion euros.
MAIL Corporate Division
The MAIL Corporate Division reported strong growth in the second quarter of 2004 with operating earnings improving by nearly 15.1 percent, driven by the "Direct Marketing" and "International Mail Business" segments.
Revenue in the MAIL division reached 6.29 billion euros in the first half, up 1.5 percent. EBITA rose to 1.168 billion euros from 1.162 billion euros in the first half.
Deutsche Post World net continued to strengthen its MAIL business in the first half with acquisitions in the U.K. (SpeedMail) and the U.S. (SmartMail).
EXPRESS Corporate Division
EXPRESS revenue rose 26.3 percent to about 8.7 billion euros during the reporting period, with EBITA up 35 percent to 139 million euros. Airborne Express, which was acquired in Aug. 2003, was included in the results for the first time. The strongest revenue growth thus occurred in the Americas, where the Group is integrating the Airborne network into DHL.
Over the next few years, Deutsche Post World Net will be investing $1.2 billion in U.S. projects including 12 regional sorting centers and the bundling of air transport hubs. These measures lay the groundwork for strengthening DHL?s infrastructure in the U.S., reducing transit times and increasing competitiveness. Deutsche Post World Net reiterated it expects DHL Americas to break even in 2005.
The EXPRESS Corporate Division also saw pleasing revenue growth in Asia (+19.7 percent in the first half-year) and Europe (+8.4 percent).
LOGISTICS Corporate Division
The upward trend continued for the LOGISTICS Corporate Division throughout the first half. Divisional sales increased by 14.9 percent to about 3.2 billion euros. EBITA rose by more than 50 percent to 116 million euros. The "DHL Danzas Air & Ocean" segment had a particularly strong first half. The international sea- and airfreight business generated strong growth momentum in the reporting period.
FINANCIAL SERVICES Corporate Division
EBITA in the FINANCIAL SERVICES Corporate Division rose by 44.3 percent to 329 million euros from 228 million euros in the first half of 2003. ?We?re very pleased with the development in financial services in the first half,?? said Zumwinkel. ?Not only did we conclude a successful IPO, we?re also very satisfied with the operating results.?
Postbank will report its results separately on August 9, 2004.
Outlook
Deutsche Post World Net generated proceeds of some 2.6 billion euros from selling shares in Postbank and issuing a bond exchangeable into Postbank shares. ?The proceeds from the initial public offering will be used to reduce pension obligations in particular as well as net debt and to broaden the base of our business,?? said Chief Financial Officer Edgar Ernst.
EBITA for the MAIL Corporate Division is expected to remain unchanged this year. The EXPRESS Corporate Division forecasts an increase in EBITA by at least 20 percent compared to the previous year's reported value. The outlook for the LOGISTICS Corporate Division is optimistic, with an expected EBITA increase of at least 10 percent. The group forecasts an increase in EBITA of at least 15 percent for the FINANCIAL SERVICES Corporate Division for the full year 2004.
Deutsche Post World Net is increasing its earnings guidance for the full year 2004. The group now expects EBITA to increase by 7.5 percent and 12.5 percent compared to 2003. Previously, it forecast growth of between 5 percent and 10 percent. In 2005, EBITA is expected to reach at least 3.6 billion euros.
P:LibraryDeutsche PostDPWN 1st half 04 financial_highlights.pdf