14.11.2013 – 07:34

Österreichische Post AG

EANS-Adhoc: Österreichische Post AG
Austrian Post Q1-3 2013: Revenue growth and earnings development in the first nine months; outlook for 2013 confirmed

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Financial Figures/Balance Sheet/9-month report
14.11.2013


- Stable market environment
  - Satisfactory mail business in Austria, positive revenue effects due to
elections
  - Ongoing robust growth in the Austrian parcel market
  - Strong competition in the international parcel business
- Higher revenue
  - Revenue increase Q1-3 of 1.7% (excl. Benelux)
  - Slight growth in both the mail and parcel business (excl. Benelux)
- Increased earnings
  - Non-cash balance sheet measures in the third quarter
  - Slightly improved EBIT Q1-3 of EUR 131.5m in spite of impairment losses
- Outlook for 2013 confirmed
  - Stable or slightly positive revenue development expected
  - Goal of earnings improvement

 
OVERVIEW OF AUSTRIAN POST
The positive development during the first half of 2013 continued in the third
quarter of the year. Accordingly, total revenue of Austrian Post in the first
nine months of the current financial year, adjusted to take account of the
disposed Benelux subsidiaries, increased by 1.7% from the previous year. In
particular, the mail business developed very gratifyingly, benefitting in part
from special effects. In addition to the revenue contributions of the newly
acquired companies in Central and Eastern Europe, parliamentary elections and
several regional elections and referendums generated additional revenue. At the
same time, the structural trend of declining letter mail volumes as a
consequence of electronic substitution is continuing. Moreover, the advertising
spending of several customer sectors remains restrained due to slow economic
momentum. The Austrian parcel business, in turn, continues to profit from the
online shopping boom. As a result, both the private and business customer
segments once again posted growth during the period under review.
 
The situation in the international parcel and logistics business is more
difficult. In particular, the German trans-o-flex Group is subject to strong
competition and high price pressure. This also turns out to be the reason for a
special effect which impacted the earnings situation of the Group in the
reporting period. In light of the challenging market environment which trans-o-
flex Group faces, and the reduced earnings situation, an impairment loss on
goodwill of EUR 27.0m was reported in the third quarter of 2013. On an
operational level, within the context of a far-reaching earnings improvement
programme, external services at important locations are being reintegrated in
order to sustainably improve the earnings situation.
 
In addition to the non-cash effect of the above-mentioned impairment on
goodwill, there were also positive special effects such as the added revenue
generated by the election year 2013 and a decline in the provisions required in
the third quarter. As a result, earnings before interest and tax (EBIT) of
Austrian Post improved slightly to EUR 131.5m. The earnings per share at EUR
1.54 also surpassed the prior-year level. "Based on these results, we can
confirm our outlook for the 2013 financial year. Revenue should remain stable or
increase slightly, and we are striving to improve EBIT", says Austrian Post CEO
Georg Pölzl.  
 
In order to achieve these targets, great importance will be attached to cost
discipline and efficiency enhancement throughout the Group also in the future,
which will simultaneously push ahead with efforts to modernise business
processes. Austrian Post also wants to exploit opportunities in promising
markets. An important milestone was recently achieved in this regard with the
acquisition of a 25% stake in Aras Kargo a.s. enabling the company's entry into
the Turkish parcel market. In order to further enhance our level of service, the
focus of all activities will be persistently oriented to the needs of our
customers. 
 
REVENUE DEVELOPMENT IN DETAIL 
In the first three quarters of 2013, Austrian Post's reported revenue totalled
EUR 1,734.2m, an increase of 0.7% from the comparable prior-year period.
Adjusted to take account of the revenue of EUR 17.3m generated by the disposed
and deconsolidated subsidiaries in the Benelux region in the first half of 2012,
the revenue increase in the first three quarters of 2013 amounted to 1.7%.
 
Revenue of the Mail & Branch Network Division rose by 1.5%, or EUR 16.5m, to EUR
1,107.7m. On the one hand, this gratifying development can be attributed to the
consolidation of new subsidiaries in Poland, Romania and Bulgaria (EUR 17.5m).
On the other hand, the revenue increase is also due to the positive impetus
provided by elections and referendums held in Austria during the first nine
months of 2013. In addition, services offered in the field of Mail Solutions
also posted growth during the reporting period. Before special effects, the
trend towards declining mail volumes and restrained advertising spending led to
a revenue decline in the mail business of about 2.5%.
 
In the Parcel & Logistics Division, revenue in the first three quarters of 2013,
adjusted to take account of the disposed subsidiaries in the Benelux region,
rose by 2.1% to EUR 627.5m. From a regional perspective, the Austrian parcel
market generated the strongest growth, with revenue up 9.6%, whereas revenue

declined in Germany by 2.1%.  

REVENUE BY DIVISION*
                                             Change                
EUR m                    Q1-3 2012 Q1-3 2013 %      EUR m Q3 2012 Q3 2013
Total revenue            1,722.9   1,734.2   0.7%   11.3  549.8   561.1
Revenue excl. Benelux
subsidiaries**           1,705.7   1,734.2   1.7%   28.5  549.8   561.1
Mail & Branch Network    1,091.2   1,107.7   1.5%   16.5  349.6   353.1
Parcel & Logistics       632.0     627.5     -0.7%  -4.5  201.1   208.5
Parcel & Logistics excl.
Benelux subsidiaries**   614.7     627.5     2.1%   12.7  201.1   208.5
Corporate                10.6      5.1       -52.5% -5.6  5.3     1.3
Consolidation            -10.9     -6.0      44.8%  4.9   -6.2    -1.8
Calendar working days in

Austria                  188       188       -      -     64      65
 
* External sales of the divisions
** The closing of the disposal of trans-o-flex Nederland B.V. took place as of
March 15, 2012, for trans-o-flex Belgium B.V.B.A as of May 31, 2012
 
INCOME STATEMENT 
The positive revenue development of the Group included increases in Austria and
in South East and Eastern Europe, whereas revenue declined in the German parcel
and logistics business, which is characterised by a high share of external
transport services. This is the underlying reason for the decrease in operating
expenses for raw materials, consumables and services used, which fell by 1.1% to
EUR 556.5m.
 
Staff costs were down slightly by 1.3% year-on-year to EUR 784.4m. This figure
encompasses all operational staff costs as well as non-operational staff costs
in the Group, which are primarily designed to enable a sustainable improvement
in the cost structure, such as severance payments, restructuring measures and
provisions. 
 
Operational staff costs amounted to EUR 764.4m in the first three quarters of
the year, equivalent to a slight rise of 0.5%. Non-operational staff costs
totalled EUR 19.9m in the nine months of 2013 compared to the prior-year level
of EUR 34.0m. In addition to ongoing severance payments, this figure also
includes changes in provisions. Due to the continuing reduction in the
workforce, the need for provisions for employee under-utilisation decreased in
comparison to 2012. Accordingly, this provision fell by a total of EUR 16.3m in
the third quarter of 2013. As a consequence, total provisions for employee
under-utilisation have dropped since the beginning of 2013 from EUR 229.1m to
EUR 217.8m. 
 
The results of the investments consolidated at equity amounted to minus EUR 4.9m
in the first three quarters of 2013. The comparable prior-year results of minus
EUR 12.1m included the impairment loss of EUR 9.6m reported for Austrian Post's
stake in the company MEILLERGHP, which is consolidated at equity. 
 
In the first three quarters of 2013, earnings before interest, tax, depreciation
and amortisation (EBITDA) of Austrian Post Group increased to EUR 222.6m. The
rise of EUR 29.4m is mainly the result of the previously-mentioned reduced need
for staff-related provisions to the amount of EUR 16.3m in the third quarter of
2013. As a consequence of this special balance sheet measure, the EBITDA margin
improved to 12.8%. 

On balance, depreciation, amortisation and impairment losses totalled EUR 91.0m
during the period under review. This includes the impairment loss on goodwill
for the German trans-o-flex Group. Goodwill on the balance sheet of Austrian
Post was written down by the amount of EUR 27.0m to EUR 84.4m, which is related
to the intensely competitive market situation and the reduced earnings
situation. These two non-cash special balance sheet measures with respect to
staff costs and depreciation, amortisation and impairments resulted in earnings
before interest and tax (EBIT) of EUR 131.5m, slightly higher than in the first
three quarters of the previous year. 
 

EBIT BY DIVISION

EUR m              Q1-3 2012   Q1-3 2013   Change         Q3 2012    Q3 2013
                   adjusted*               %      EUR m   adjusted*     
Total EBIT         131.0       131.5       0.4%   0.5     36.3       33.2
Mail & Branch
Network            193.4       208.8       8.0%   15.4    56.3       66.9
Parcel & Logistics 17.0        -14.4       -      -31.3   5.3        -26.8
Parcel & Logistics 
before impairments 17.0        12.6        -25.6% -4.3    5.3        0.2
Corporate          -78.7       -63.0       19.9%  15.7    -24.8      -7.0
 

* Adjusted due to the application of IAS 19; refer to Note 1. Summary of
Accounting Principles
 
From a divisional perspective, the company's earnings situation is also impacted
by the above-mentioned special balance sheet measures. The Mail & Branch Network
Division generated an EBIT of EUR 208.8m, a rise of EUR 15.4m. This increase can
be attributed to the positive revenue effects in the election year 2013 as well
as the fact that earnings in the prior-year period were negatively impacted by
an impairment loss of EUR 9.6m recognised for Austrian Post's stake in
MEILLERGHP, which is consolidated at equity. 
 
EBIT of the Parcel & Logistics Division in the first three quarters of 2013
amounted to minus EUR 14.4m. However, after taking account of the EUR 27.0m
impairment loss on goodwill for the trans-o-flex Group, operating EBIT totalled
EUR 12.6m. These earnings also include additional one-off effects of EUR 5.1m,
primarily for write-downs on receivables in the third quarter of 2013. The
earnings improvement programme in the trans-o-flex Group includes the selective
reintegration of external services at important locations. The underlying
objective is to improve the cost structure throughout the entire network. In
addition, market opportunities will be exploited by a stronger focus on
pharmaceuticals and health care on the basis of the EU's new Good Distribution
Practice (GDP) guidelines.
 
The Corporate segment basically encompasses costs for central departments in the
Group as well as staff-related provisions. The above-mentioned reduced need for
provisions for employee under-utilisation to the amount of EUR 16.3m in the
third quarter of 2013 resulted in an improved EBIT of minus EUR 63.0m compared
to minus EUR 78.7m in the comparable prior-year period.
 
After deducting income taxes, the Group net profit (profit after tax) in the
first three quarters of 2013 amounted to EUR 104.9m, a rise of 6.0% from the
results of the prior-year period. Following the deduction of the profit for the
period attributable to non-controlling interests, this corresponds to undiluted
earnings per share of EUR 1.54, an increase of 5.2%. In the third quarter
earnings per share amounted to EUR 0.42 after EUR 0.39 EUR in the previous year.
 
CASH FLOW
In the first nine months of 2013, operating cash flow before changes in working
capital totalled EUR 236.8m, slightly above the prior-year level. On balance,
the changes in net working capital totalled minus EUR 65.0m during the period
under review. As a result of this development, the cash flow from operating
activities amounted to EUR 171.7m, nearly identical to the comparable prior-year
figure.  
 
The cash flow from investing activities of minus EUR 152.5m in the first three
quarters of 2013 was primarily impacted by higher cash outflows for acquisitions
and capital expenditures. Payments for the purchase of property, plant and
equipment (CAPEX) totalled EUR 63.4m during the period under review, including
investments of EUR 10.8m relating to the new logistics centre in Upper Austria
which will be completed by the middle of 2014. In addition, cash outflows of EUR
71.5m related to acquisitions. EUR 50m of this related to the acquisition of a
25% stake in the Turkish company Aras Kargo a.s. Moreover, there was a change in
cash flow relating to the securities portfolio, which shifted investments of
cash and cash equivalents at the amount of EUR 20.9m to medium-term securities.
On balance, free cash flow before acquisitions and securities totalled EUR
109.1m in the first three quarters of 2013.   
 
EMPLOYEES
The average number of full-time employees at the Austrian Post Group totalled
24,257 people in the first nine months of 2013. This comprises an increase of
996 employees from the prior-year period, about 1,600 of whom can be attributed
to the newly acquired subsidiaries in Austria, Poland, Bulgaria and Romania.
Most of Austrian Post's staff is employed by the parent company Österreichische
Post AG (a total of 19,096 full-time equivalents). Austrian Post has been
offering a banker training programme in cooperation with BAWAG P.S.K. since
2009. This was complemented in September 2011 by a new training programme for
aspiring retail salespeople.More than 20 trainees are currently concluding their
vocational training. 30 new trainees will be enrolled in Vienna, Linz and Graz
in 2014.

OUTLOOK FOR 2013
Austrian Post confirms its outlook for the entire year 2013. A stable or
slightly positive revenue development is expected for the 2013 financial year.
The basic trends impacting the mail and parcel businesses will continue.

Revenue in the mail segment is primarily impacted by the ongoing volume decline
of traditional addressed letter mail due to electronic substitution, which is
likely to amount to 3-5% p.a., reflecting international trends. The market for
addressed and unaddressed direct mail items is anticipated to remain weak as a
consequence of slow economic momentum. The positive volume effects related to
various elections and referendums in Austria will no longer have an impact in
the fourth quarter of 2013. The parcel business should continue to profit from
growth in the private customer segment, whereas the intensive level of
competition in the business customer segment is expected to continue, especially
in the German market.

Enhancing the profitability of the services offered will continue to be a key
focal point of the Group's mail and parcel operations. For this reason, Austrian
Post will maintain its efforts to promote efficiency increases in the Group.
Austrian Post remains committed to its goal to improve earnings before interest
and tax (EBIT) in 2013. For the medium-term, Austrian Post confirms the targeted
EBITDA margin in the range of 10-12%.

The operating cash flow generated by Austrian Post will continue to be used
prudently and in a targeted manner to finance sustainable future-oriented
investments. Total capital expenditure is expected to reach a level of about
EUR 90m in 2013, mainly focusing on the replacement of existing facilities and
thus their continuous modernisation and efficiency enhancement.
 
PERFORMANCE OF DIVISIONS
MAIL & BRANCH NETWORK DIVISION
Divisional revenue developed very positively in the first three quarters of
2013, increasing by 1.5% to EUR 1,107.7m. This development can be mainly
attributed to the first-time full consolidation of new Group subsidiaries (EUR
17.5m) and the positive effects of various elections and referendums in Austria.
 
Revenue in the field of Letter Mail & Mail Solutions climbed by 1.6% from the
prior-year period, rising to EUR 580.9m. The substitution of letter mail by
electronic media is continuing as before. Such decreases took place, for
example, in the telecommunications customer segment. In contrast, various
elections provided added impetus, due to the fact that the possibility of voting
by absentee ballot has emerged as a popular instrument of direct democracy. New
services offered in the field of Mail Solutions also posted growth. 

Revenue in the field of Direct Mail also increased in the first three quarters
of 2013, climbing by 1.7% to EUR 324.2m. The rise here was also due to the newly
consolidated subsidiaries and the positive effects of elections on the business.
The weaker economy and the pressure of online business on retail stores have
diminished advertising spending. Media Post revenue rose as well by 1.0% during
the first nine months of 2013 to EUR 103.5m, and Branch Services revenue was up
1.2% to EUR 99.1m. This can be primarily attributed to higher sales of mobile
telephony products, which compensated for the decline in financial services.

On balance, EBIT of the Mail & Branch Network Division improved by EUR 15.4m,
which is due to the good revenue development as well as the impairment loss of
EUR 9.6m reported in the previous year on the company MEILLERGHP, which is
consolidated at equity. 
 
PARCEL & LOGISTICS DIVISION
External sales of the Parcel & Logistics Division decreased by 0.7% to EUR
627.5m in the first three quarters of 2013. However, the prior-year period still
included the revenue achieved by the Benelux subsidiaries disposed of during the
first half of 2012. Adjusted to take account of the former Benelux subsidiaries,
the division actually achieved a 2.1% revenue increase in a year-on-year
comparison. This growth was driven by increases in Austria and in South East and
Eastern Europe. In contrast, revenue slightly declined in Germany.

Premium Parcels (parcel delivery within 24 hours), which are mainly used in the
business-to-business segment, generated revenue of EUR 474.1m in the first three
quarters of 2013, a decrease of 2.0% from the previous year. This decline is
primarily due to the deconsolidation of the Benelux subsidiaries as well as the
downward trend in Germany. Parcel volumes in the business customer and higher-
value private customer segments in Austria showed above-average increases.

Standard Parcels, which mainly involve shipments to private customers, posted
growth. Revenue rose by 2.7% to EUR 130.1m. Other Parcel Services generated
revenue of EUR 23.3m during the period under review. This field includes various
additional logistics services such as fulfilment, warehousing and cash
logistics.

The earnings development of the Parcel & Logistics Division was impacted by
special effects relating to the trans-o-flex Group. In addition to an impairment
loss of EUR 27.0m recognised on goodwill, write-downs of EUR 5.1m were
recognised for outstanding receivables. External services at trans-o-flex are
being reintegrated at selected sites within the context of an earnings
improvement programme. Moreover, a stronger focus will be put on the
pharmaceutical and healthcare market.
 
For this reason, EBIT of the Parcel & Logistics Division before impairments was
below the prior-year level at EUR 12.6m. Accordingly, the EBIT margin was 2.0%
in the first three quarters of 2013. 
 
The interim report for the first three quarters of 2013 is available on the
Internet: www.post.at/ir/en --> Publications --> Financial Reports


Further inquiry note:
Austrian Post
Mr. Harald Hagenauer
Head of Investor Relations & Corporate Governance 
Tel.: +43 (0) 57767-30400 
harald.hagenauer@post.at 

Austrian Post
Ms. Ingeborg Gratzer
Head of Press & Internal Communications
Tel.: +43 (0) 57767-24730 
ingeborg.gratzer@post.at

end of announcement                               euro adhoc 
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issuer:      Österreichische Post AG
             Haidingergasse  1
             A-1030 Wien
phone:       +43 (0)57767-0
mail:         investor@post.at
WWW:      www.post.at
sector:      Transport
ISIN:        AT0000APOST4
indexes:     ATX Prime, ATX
stockmarkets: official market: Wien 
language:   English