Deutsche Post to increase div payout ratio mid-term, mulls share buyback
Deutsche Post AG said it plans to increase its dividend payout ratio to shareholders over the medium term and that it may launch a share buyback programme to improve the stock's performance.
'Management and shareholders are pursuing the same goals of achieving an increase in the share price and returns, and thus securing the attractiveness of the company over the long term,' chief executive Klaus Zumwinkel said in a statement released at Deutsche Post's AGM.
'One option we could consider is a share buyback and we will be reviewing this.'
Deutsche Post will pay a 2005 dividend of 0.70 eur, an increase of 40 pct compared to the year-earlier period.
This corresponds to a payout ratio of 37.4 pct of Deutsche Post's 2005 net profit.
Deutsche Post Press Release – 10 May 06
Deutsche Post 2006 Annual General Meeting: Dividend increased by 40 percent
· 2005 dividend increased to 70 cents; further rise in payout ratio planned
· Group reaffirms strategy and confirms operating targets for 2006
Cologne/Bonn, May 10, 2006: Deutsche Post World Net has brought fiscal 2005 to a successful close, promoted its continued growth by further developing its corporate strategy and set the strategic course for the coming years. "In 2005, the Company generated its best result yet, and we met our target of becoming the world's leading logistics provider," Chairman and Chief Executive Officer Klaus Zumwinkel told shareholders at today's Annual General Meeting in Cologne.
Consequently, the Board of Management and Supervisory Board are proposing a dividend 40 percent higher than in the previous year at 70 euro cents per share to the Annual General Meeting. This corresponds to a payout ratio of 37.4 percent of net income for the period. Zumwinkel announced that, over the medium term, the Group intends to increase distribution to shareholders further. Deutsche Post's dividend is tax-exempt for shareholders based in Germany.
"Management and shareholders are pursuing the same goals of achieving an increase in the share price and returns, and thus securing the attractiveness of the Company over the long term," affirmed Zumwinkel. "One option we could consider is a share buy-back and we will be reviewing this."
Key figures 2005
Revenue grew by 3.3 percent to 44.6 billion euros in 2005. Profit from operating activities (EBIT) rose to 3.76 billion euros in 2005 from 3 billion euros the year before. Consolidated net income climbed 39.9 percent to 2.24 billion euros, corresponding to earnings per share of 1.99 euros. The STAR value creation program, now concluded, contributed 1.44 billion euros to operating results in 2005, exceeding original expectations. "2005 was the most successful year in the corporate history of Deutsche Post World Net," said Zumwinkel.
Challenges 2006
At Express Americas, integrating two airports prevented DHL from maintaining its usual quality of performance in the fourth quarter of 2005, resulting in customer fall-off in the U.S. This led to a loss in the U.S. business for 2005 and the financial effects of integration are still in evidence in 2006. "We have not been able to meet expectations in all areas. One of our greatest challenges is now to restore Express Americas to profitability. I am confident that we will succeed in this, even if it takes longer than originally planned," Zumwinkel said. The previously high quality of performance has since been attained once more and the Group expects that Express Americas will make a positive contribution to earnings in 2009.
Deutsche Post World Net assumes that the German mail market will be fully open to competition as of January 1, 2008. The MAIL Corporate Division is already well prepared to face intensified competition in its German home market. In addition to further increases in cost flexibility and productivity, the Group intends to reinforce leadership in quality as well as maintain revenue and profitability in the MAIL business through internationalization, already successfully introduced.
After acquiring Exel, the Company is now focused on improving the quality of its products and services so as to become the first choice for customers worldwide. A key component of this strategy, to be in place until 2009, is First Choice, a Group program unveiled in March. First Choice comprises a package of medium-term measures designed to meet customer needs in all sectors and to promote organic revenue growth.
Outlook
The Company confirmed that it expects operating profit for 2006 as a whole to be at least 3.7 billion euros. This includes significant non-recurring charges for the integration of Exel and BHW. In the same year, revenue will be in the order of 60 billion euros. In 2009, operating profit is expected to rise to at least 5 billion euros.
Revenue in the MAIL Corporate Division is expected to remain stable or rise slightly, with EBIT at around 2 billion euros. In the EXPRESS Division, the Group is anticipating single-digit revenue growth in 2006 and operating results of around 450 million euros, equivalent to 2005 without goodwill amortization. In the LOGISTICS Division, augmented by Exel, revenue is expected to be well in excess of 18 billion euros, with EBIT of over 500 million euros. In FINANCIAL SERVICES, income is forecast to rise, driven in part by the addition of BHW Holding. This should be accompanied by double-digit growth in operating results, which will increase to at least 900 million euros
