Deutsche Post World Net increases consolidated net profit and STAR forecast for 2003

Deutsche Post World Net has announced very positive figures for the first nine months of the current fiscal year: at €28.9 billion, revenue was slightly up on the previous year’s level (+0.3 per cent) despite negative exchange rate effects, while the profit from operating activities (EBITA) amounted to €2.039 billion (previous year: €2.141 billion). The consolidated net profit jumped from €392 million to €869 million. Earnings per share rose in line with this from €0.35 to €0.78.

The STAR group-wide value creation program has been particularly successful. Chairman of the Board Dr. Klaus Zumwinkel: “The progress made in integrating the Group and the cost savings have exceeded our expectations. As a result, we are increasing our forecast for STAR’s target earnings for 2003 from €350 million to at least €400 million.”

Overall developments in operations are encouraging, and the Group is confirming its increased total EBITA forecast of “in excess of €2.9 billion”. The 4.8 per cent decline in EBITA over the first nine months is due to three factors that have already been reported: the lower mail prices imposed at the beginning of the year, the absence of income from the reversal to the income statement of Postbank’s negative goodwill and one-time other operating income recorded in the prior year. However, these factors are increasingly being offset, as can be seen from the course of business in the third quarter: at €570 million, the profit from operating activities (EBITA) is slightly up on the previous year’s figure of €568 million.

The STAR Programme
In the first nine months of 2003, the measures implemented as part of the STAR value creation programme contributed €253 million to earnings, €79 million of which was generated in the third quarter. This brings the total improvement to earnings made to date by the STAR programme since its launch in November 2002 to €339 million. The gains are due in particular to organisational improvements at DHL, continuing consolidation of the Group’s international data centres, ongoing network optimisation and the successful restructuring of the Group’s purchasing activities. The overall projections for earnings increases due to STAR in the coming years have been confirmed, with the result that the Group expects to record a profit from operating activities (EBITA) of at least €3.6 billion in 2005.

Segment reporting – the Corporate Divisions
Since 1 August 2003, the MAIL Corporate Division has included all activities by the Mail International Business Division, which was previously part of the Express Corporate Division. All prior-period figures were adjusted to ensure comparability. The lower mail prices and one-time other operating income recorded in the prior period continued to impact revenue and earnings in the MAIL Corporate Division, although they were increasingly offset in the third quarter. Revenue by the MAIL Corporate Division was down slightly (-1.9 per cent) on the previous year’s figure (approx. €8.8 billion) to around €8.6 billion. The profit from operating activities (EBITA) fell by €116 million to approximately €1.5 billion.

The EXPRESS Corporate Division recorded operational growth in all regions, with revenue rising by 4.1 per cent to approximately €11.5 billion despite negative exchange rate effects. The profit from operating activities (EBITA) in the first nine months improved by a clear 63.4 per cent to €183 million.

The two business divisions in the LOGISTICS Corporate Division both increased revenue and the profit from operating activities (EBITA). All in all, revenue rose 3.9 per cent to approx. €4.3 billion, while the profit from operating activities rose 16.4 per cent to €135 million.

In the FINANCIAL SERVICES Corporate Division, Postbank’s operations continued to develop positively. The 5.5 per cent drop in income to approx. €6.1 billion is mainly due to a decline in interest income due to lower interest rates. The absence since the beginning of the year of the income from the reversal to the income statement of Postbank’s negative goodwill led to a 19.6 per cent drop in the profit from operating activities (EBITA) to €361 million. After adjustment for this effect, earnings in the first nine months of the current fiscal year rose by 25.3 per cent or €73 million. This is due in particular to positive operational developments at Postbank. Postbank’s return on equity (RoE) before taxes, a measure of the return on capital employed, rose from 9.5 per cent to 11.3 per cent as against the first nine months of the previous year. The cost-income ratio (CIR), a key measure of efficiency, was cut from 80.5 per cent to 76.3 per cent.

Chairman of the Board Dr. Klaus Zumwinkel sees Postbank’s development in the period since its integration with Deutsche Post World Net, including its current IPO plans, as a success story. “Postbank’s focus on retail banking has proven to be exactly the right strategy, and the company’s performance has improved consistently over the past few years. We are confident that the planned public offering will generate a sustained increase in the enterprise value of the entire Group,“ he said.