Deutsche Post World Net hits the ground running in 2003

Deutsche Post World Net hits the ground running in 2003
Revenue rises to around €9.8 billion, with above-average EBITA growth to €951 million

Sustained contribution to earnings from STAR program
Deutsche Post World Net has kicked off 2003 with 0.7% growth in revenue to around €9.773 billion (previous year: €9.703 billion). Substantial revenue growth in the EXPRESS Corporate Division was a major contributor to this success.

Profit from operating activities (EBITA) developed encouragingly in Q1/2003, with year-on-year growth of 5% from €906 million* to €951 million. The measures implemented as part of the STAR value creation program contributed €93 million to earnings in the first three months of the year. All in all, the contributions to earnings from the STAR program to date amount to €179 million.

Net profit for the period before minority interest rose disproportionately by 22.3% to €510 million (previous year: €417 million). Consequently, earnings per share increased year-on-year from €0.37 to €0.45.

Overall, this means that Q1/2003 was extremely successful for the Group in spite of the ongoing economic weakness and global political problems.

Dr. Klaus Zumwinkel, Chairman of the Board of Management of Deutsche Post World Net, reacted positively to the course of business in Q1/2003: “The fact that Deutsche Post World Net was actually able to exceed expectations in the first quarter of this year is testimony to the strength of our Group and the success of our integration activities. Revenue and profit are both up on last year, and our Group-wide STAR program is achieving impressive, sustainable successes. In the light of our strong figures and our successful STAR program, we are more convinced than ever that we will be able to become the global leader in logistics.”

Corporate Divisions
Despite the reduction in letter rates for key mail products at the start of the year, revenue in the MAIL Corporate Division increased by 0.4% to €3.017 billion in Q1/2003 (previous year: €3.005 billion). At €757 million, profit from operating activities (EBITA) remained essentially unchanged as against the same period of the previous year (€778 million*).

As previously announced, a new reporting structure was introduced in the EXPRESS Corporate Division at the start of the year, with the Group’s global courier, express and parcel activities now being reported under the DHL umbrella brand. In Q1/2003, revenue in this area increased year-on-year by 3.4% to €3.935 billion (previous year: €3.804 billion). Profit from operating activities (EBITA) rose by 88.4% to €81 million (previous year: €43 million*). All of the regions contributed to this positive development, with Europe performing particularly well.

The LOGISTICS Corporate Division is now also operating under the DHL brand, and has altered its reporting structure accordingly. Following the transfer of the Eurocargo Business Unit to the EXPRESS segment, this Corporate Division now comprises our air and ocean freight activities, which are reported under the Danzas Air & Ocean Business Division, as well as the Solutions Business Division. In Q1/2003, revenue increased year-on-year by 2.8% to €1.394 billion (previous year: €1.356 billion). Profit from operating activities (EBITA) rose by 46.4% to €41 million in Q1 (previous year: €28 million).

In Q1/2003, the FINANCIAL SERVICES Corporate Division generated income of €2.079 billion, as against €2.220 billion in the previous year. This decrease was primarily due to the drop in interest income caused by lower interest rates. In the first three months, the Corporate Division’s profit from operating activities (EBITA) fell by 13.2% year-on-year to €118 million (previous year: €136 million*). The prior-period amount contained income from the reversal of negative goodwill at Postbank in the amount of €54 million. Excluding this income, EBITA rose by €36 million or 43.9%.

Outlook
The Group does not expect the strained global economic situation to improve in the current fiscal year 2003. However, despite the difficult environment, lowered letter rates and the elimination of the income from the reversal of negative goodwill at Postbank, we expect the Group to record a profit from operating activities of at least €2.8 billion (previous year: €2.969 billion*).
For fiscal year 2003, we are forecasting a minimum EBITA margin of 16% in the MAIL Corporate Division (previous year: 17.7%*), 2.5% in the EXPRESS Corporate Division (previous year: 2.2%*), and 3.2% in the LOGISTICS Corporate Division (previous year: 3.0%*). In the FINANCIAL SERVICES Corporate Division, Postbank’s business operations are expected to generate a return on equity of 11.5% (previous year: 10.7%).

Dr. Zumwinkel, Chairman of the Board of Management, commented on the outlook as follows: “The positive business developments in Q1 have provided us with sufficient information to make our forecasts for fiscal year 2003 as a whole. Given the impact of first-time effects such as the reduction in letter rates, the projected EBITA of €2.8 billion is a positive signal, and represents a good result for our shareholders.”

The Interim Report, containing detailed disclosures on the results of the first three months of fiscal year 2003, can be accessed here.

* (The presentation of these items has changed as against the previous fiscal year. In order to ensure comparability, the prior-period figures have been restated accordingly. The interest cost on provisions for pensions and other interest-bearing provisions is now carried under net finance costs, and not reported in EBITA as previously. For this reason, the absolute EBITA target up to 2005 has been amended from €3.1 billion to at least €3.6 billion. The planned earnings growth attributable to the STAR value creation program up to 2005 remains unchanged at €1.4 billion.)

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