News vom 13.11.2007
Austrian Post: Solid development in Q1-Q3 2007
- Group revenues up 31.2% compared to 2006
- Successful acquisitions in the first nine months of 2007:
- Scanpoint Europe (Germany/digitalisation and administration of documents)
- meiller direct (Germany/direct mail production)
- Road Parcel and Merland Expressz (Hungary/parcel services)
- Scherübl (Austria/temperature-controlled special logistics)
- Acquisition of parcel services providers in Holland and Belgium as at October 1, 2007
- Purchase of a 5% shareholding in the consortium acquiring Austrian Post’s banking partner BAWAG PSK
- Earnings before interest and tax (EBIT) climb 26.2% to EUR 118.3m
- Operating cash flow before changes in working capital up 7.4% to EUR 207.8m
- Improved outlook for 2007: forecast of 25%-30% higher EBIT compared to 2006
- Dividend proposal to Annual General Meeting: 40% increase for 2007 to EUR 1.40/share
Gratifying business development
Austrian Post performed very positively in the first nine months of 2007. Austrian Post increased its total revenues by 31.2%, to EUR 1,667.3m. A major contribution to the growth in revenues (about EUR 360m) can be attributed to the initial inclusion of trans-o-flex (Parcel & Logistics Division), which was acquired at the end of 2006. On balance, revenues from the Mail Division were up 3.3% during the first three quarters of 2007, and the Parcel & Logistics Division improved by 225.1% in the same period. In contrast, the Branch Network Division posted a decline in revenues of 2.5%. Austrian Post’s performance in the third quarter basically followed the same pattern. Total Austrian Post revenues improved by 34.4% in Q3 2007, to EUR 550.4m. Revenues in the Mail Division increased by 6.1% compared to Q3 2006, the Parcel & Logistics Division improved by 234.5%, whereas Branch Network Division revenues fell by 1.2%.
[download income statement]
The structure of the income statement of Austrian Post has changed considerably as a result of the consolidation of trans-o-flex, which features a very flexible cost structure, comparatively low staff costs and a high level of external services used. Accordingly, Austrian Post’s staff costs now only comprise about 50% of total revenues (previously more than 60%), whereas the share of expenses for raw materials, consumables and services used has climbed to roughly 29% of total revenues (previously about 15%).
In the first three quarters of 2007, the EBIT (earnings before interest and tax) of Austrian Post increased by 26.2%, to EUR 118.3m, in comparison to the preceding year. Accordingly, the EBIT margin amounted to 7.1%. In Q3 2007, Austrian Post achieved an EBIT of EUR 33.3m, up from EUR 27.4m in Q3 2006.
All operating divisions made a positive contribution to earnings. EBIT at the Mail Division was EUR 188.4m, at the Parcel & Logistics Division EUR 20.8m, and at the Branch Network Division EUR 9.7m.
The Other and Consolidation segment posted a negative EBIT of EUR 100.6m in the first three quarters, a considerably more favourable performance than in the preceding year (Q1-Q3 2006: minus EUR 121.5m). This item encompasses costs for central departments, expenses in connection with unused properties, as well as increases in provisions for under-utilisation.
On balance, earnings before tax rose 27.2%, to EUR 123.4m, while profit for the period improved by 35.9%, to EUR 96.1m. Accordingly, earnings per share amounted to EUR 1.37 in the first three quarters of 2007 (Q3 2007: EUR 0.40).
Solid balance sheet structure – equity ratio of 42.6%
The balance sheet structure of Austrian Post reflects the positive business development of the company in recent years. Accordingly, the equity ratio amounted to 42.6% at September 30, 2007. In addition, the financial strength of Austrian Post is extremely stable, with cash and cash equivalents totalling EUR 390.7m, despite acquisitions carried out in recent months.
In the period under review, operating cash flow before changes in working capital climbed by 7.4% compared to the first three quarters of the previous year, to EUR 207.8m. This improvement can be primarily attributed to an increase in earnings before tax.
After including the changes in working capital, total cash flow from operating activities amounted to EUR 211.3m for the first nine months of 2007.
The cash flow from investing activities totalled minus EUR 119.7m during the period under review, comprising the purchase of property, plant and equipment amounting to EUR 70.8m, the acquisitions carried out in the first three quarters (Weber Escal, Scanpoint, Scherübl, Road Parcel, Merland Expressz and meiller direct) as well as the purchase of a 5% stake in the consortium acquiring BAWAG PSK.
In the first three quarters of 2007, total free cash flow was EUR 91.6m, before the dividend payout amounting to EUR 70.0m for the 2006 financial year.
Improved outlook for 2007
Within the context of a business environment characterised by increasing competition, Austrian Post continues to expect a stable mail market for the year 2007. All in all, Austrian Post continues to anticipate that organic revenue will remain constant in the 2007 business year. Additional growth will be driven by the initial consolidation of new subsidiaries. Austrian Post has revised its original forecasts upwards, and now predicts that earnings before interest and tax (EBIT) will be 25%-30% higher in 2007 in comparison to 2006 (earlier forecast: 20%-25%). The basis for this expected increase is the contribution to earnings on the part of the new subsidiaries, as well as a further improvement in operating income.
Based on this favourable business development, the Management Board of Austrian Post will propose a 40% increase in the dividend for the 2007 financial year, amounting to EUR 1.40 per share, to the next Annual General Meeting.
Events after the end of the interim reporting period
As at October 1, 2007, Austrian Post acquired a 100% shareholding in Osselaer Pieters Colli Services (VOP), Belgium, and DDS Dedicated Distribution Services, Netherlands. Both companies are specialist logistics companies for business-to-business deliveries, focusing on combined freight services. Moreover, Austrian Post acquired a 100% shareholding in the Croatian company ST Media, legally effective as at October 31, 2007. ST Media operates in the delivery of unaddressed mail items on the Croatian market.
The reduction in parcel volume by Quelle Austria by about 7m parcels annually and the resulting changes in the market environment are expected to have a negative impact on Austrian Post’s operating income. Nevertheless, Austrian Post anticipates that its operating income in 2008 will be just slightly below the 2007 level, and then continually rise in the following years. In terms of its dividend policy, Austrian Post also expects further growth in its dividend.
The postponement of postal market liberalisation opens up a window of opportunity to create a level playing field.
At the end of 2006, the EU Commission presented its draft proposal for guidelines regulating the total liberalisation of the postal market. This proposal, which foresees a complete opening of the postal sector in 2009,was extensively discussed in the EU Parliament and the EU Council of Ministers within the framework of the co-decision procedure. The main result of these negotiations was adoption of a two-step liberalisation timetable. Generally, the full-scale opening of the European postal sector will first take place at the beginning of 2011. At the same time, the following member states were granted a two-year delay, enabling them to postpone postal sector liberalisation until the beginning of 2013: Cyprus, Czech Republic, Greece, Hungary, Latvia, Lithuania, Luxemburg, Malta, Poland, Romania and Slovakia. Austrian Post principally welcomes the postponement of the market opening until 2011, enabling countries to exploit the window of opportunity and adapt national postal laws to a fully competitive market. In particular, this applies to the creation of a level playing field for all providers of postal services, the harmonisation of labour regulations and the creation of an effective financing mechanism to ensure universal postal services in a liberalised market. However, the EU Postal Directive has not yet been formally adopted.
Performance of divisions
In the first three quarters of 2007, year-on-year external sales by the Mail Division rose by 3.3% compared to the same period last year, to EUR 990.4m. External sales in Q3 2007 were even 6.1% higher than in Q3 of the previous year.
Business development in the Letter Mail Business Area was quite satisfactory, achieving a 1.8% increase in revenues in the first three quarters of 2007, whereas Q3 2007 revenues were up 1.6% compared to Q3 2006. The growth in revenues can be primarily attributed to the good development of Scanpoint, acquired by Austrian Post as at January 1, 2007. The delivery of passports in Austria also gave a perceptible impetus to business operations. The decline in business in other areas could be more compensated for by these positive effects.
External sales of the Infomail Business Area (addressed and unaddressed advertising) climbed by 8.4%
in the first nine months of 2007, to EUR 323.1m. Q3 2007 revenue growth amounted to 19.5%. A considerable contribution was made by the initial consolidation of the direct mail services provider meiller direct (consolidated as at July 31, 2007), as well as the very satisfactory business development in Croatia and Slovakia. The Austrian market remained stable.
The 3.6% revenue decrease in the Media Post Business Area during the period under review can be attributed to the lack of positive one-off effects, as was the case in the year 2006 (extensive mailings in relation to national elections).
On balance, the Mail Division achieved an EBIT of EUR 188.4m in the first nine months of 2007 (minus 1.3%) compared to the same period in the preceding year. Q3 2007 EBIT totalled EUR 55.0m.
Parcel & Logistics Division
External sales by the Parcel & Logistics Division climbed to EUR 531.6m during the first three quarters of 2007. The increase chiefly relates to the initial consolidation of trans-o-flex, which contributed about EUR 360m in revenues, but is also partly the result of organic growth. Revenues posted by Austrian Post’s subsidiaries in Slovakia and Croatia also developed very positively.
In Q3, competition in the parcels business for private customers (business to consumer) intensified significantly. Due to the market entry of a German parcel services provider, there was a considerable decrease in parcels volumes, as previously announced, due to the fact that the owner of the new competitor was formerly an important parcels customer of Austrian Post, mailing about 8m parcels annually.
Business at trans-o-flex, included in the financial statements as at January 1, 2007, has developed as planned. Due to the fact that trans-o-flex carries out a depreciation of its customer relationships amounting to about EUR 7m annually, the operating income of the Parcel & Logistics Division is correspondingly higher.
In terms of costs, increased IT expenditures in the Parcel & Logistics Division during the first three quarters of 2007 resulted from the implementation of a new logistics software system enabling comprehensive data collection.
All in all, the Parcel & Logistics Division posted EBIT amounting to EUR 20.8m (Q1-3 2006: EUR 15.9m) in the first three quarters of 2007, an increase of 31.1%.
Branch Network Division
External sales by the Branch Network Division for the first nine months of 2007 declined by 2.5%, to EUR 141.8m, compared to the same period of the preceding year. One reason was a drop in sales of prepaid cards for mobile phones in the retail products segment. Financial services revenues also fell, in connection with a shifting of customer deposits in 2006. The new positioning of PSK Bank will be marked by a sales offensive targeting private customers in Q4 2007. This strategy encompasses an expansion of its product and services portfolio designed to increase the bank’s business in financial services.
Internal sales also fell in the first three quarters of 2007, which can be attributed to a 2.7% decline in the volume of letters posted compared to the first nine months of 2006.
Nevertheless, despite the lower revenue, the earnings before interest and tax (EBIT) of the Branch Network Division in the first three quarters of 2007 rose to EUR 9.7m, compared to an EBIT of EUR 8.5m in the comparable period of 2006.
Head of Public Relations
Tel.: +43 (0) 57767 – 32010
Head of Investor Relations & Public Relations
Tel.: +43 (0) 57767 – 30400