EANS-News: AUSTRIAN POST: A GOOD YEAR FOR AUSTRIAN POST IN 2018: Increase in revenue (+1.0%) and earnings (+1.5%)
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Annual Result
Vienna -
Revenue increase in 2018 on the back of robust mail business and parcel growth
- Revenue up by 1.0% to EUR 1,958.5m
- Mail decline (-2.5%) offset by parcel increase (+11.5%)
Earnings increase based on good revenue development
- EBITDA increased by 3.7% to EUR 305.4m
- EBIT up by 1.5% to EUR 210.9m
Attractive dividend policy and outlook for 2019 confirmed
- Dividend proposal of EUR 2.08 per share (+1.5%) to the Annual General Meeting
- Aiming for stability in revenue and operating earnings also in 2019
Austrian Post will become a delivery partner of Deutsche Post DHL Group in
Austria
- Cooperation planned in the course of 2019 upon review by competition
authorities
The business of Austrian Post has developed very well in 2018. Group revenue
increased by 1.0% to EUR 1,958.5m. Growth in the parcel business (+11.5%) could
offset the decline in the mail Business (-2.5%) in spite of the challenging
market environment. Austrian Post has also succeeded in achieving its 2018
targets. Based on the solid revenue development combined with stringent cost
discipline, Group EBIT amounted to EUR 210.9m, comprising a year-on-year
increase of 1.5%.
The mail business area in the reporting period continued to be characterised by
a general decrease in addressed letter mail volumes caused by electronic
substitution, lower direct mail revenue compared to the strong advertising
business in the previous year and a redimensioned financial services business.
The new product and rate model which took effect on July 1, 2018, offering
customers the option to choose between time-critical and not time-critical mail
items, had a positive impact on revenue development.
Significant increases were generated in the parcel business, where Austrian Post
profited from dynamic market growth driven by the ongoing e-commerce trend. The
related competition and price pressure remain high. Parcel volumes have
increased by 11% to 108 million parcels despite these challenging conditions.
Further volume growth is expected in the parcel segment despite own delivery by
a large-volume customer in the Vienna region. "The top priority is to double the
logistics capacity of Austrian Post in the medium term", says Chief Executive
Officer Georg Pölzl. "The first step of a comprehensive investment programme was
already taken through the construction of a new logistics centre in Hagenbrunn",
Pölzl adds. The facility is scheduled to be completed in the summer of 2019,
enabling additional sorting capacity of up to 14,000 parcels per hour. This
implies a 25% expansion of the existing capacity. Construction of a new
logistics centre in Kalsdorf near Graz is in preparation. The ground-breaking
ceremony will take place on March 18, 2019.
On the basis of the good earnings, strong cash flow and solid balance sheet, the
Management Board will propose that the Annual General Meeting approves a
dividend of EUR 2.08 per share for the 2018 financial year (2017: EUR 2.05 per
share). The 1.5% dividend increase is consistent with EBIT growth. This once
again underlines the positioning of Austrian Post as a reliable and predictable
investment. This is also beneficial for the employees. For the last 17 years
Austrian Post has voluntarily offered its employees a profit-sharing scheme.
Eligible employees will receive a bonus of EUR 889, which is by 1.6% higher than
in the previous year.
Austrian Post is striving for stability in its operating earnings once again in
the 2019 financial year. The efficiency of services should be increased,
accompanied by a change in structures and processes. For example, mail and
parcel logistics are combined under one unified operational management as of the
beginning of 2019. The objective is to leverage further synergies in the new
structure based on volume forecasts for Austrian Post's mail and parcel business
in order to further expand its role as the quality leader on the Austrian mail
and parcel market. The long-term partnership con-cluded with Deutsche Post DHL
Group will also contribute to this. The cooperation is subject to a review by
the Austrian and German competition authorities. Subject to the favourable
decision to be taken, this partnership should start in the course of 2019, in
which case the delivery of DHL parcels to private customers in Austria will be
handled by Austrian Post.
"The key to our success is the capability to precisely satisfy current customer
needs", CEO Georg Pölzl states. "Our comprehensive delivery services throughout
Austria stand for quality and reliability. This is guaranteed on a daily basis
by the tireless commitment of our employees, for which we would like to
sincerely thank them. Together we will succeed in remaining the preferred
partner of our customers", Georg Pölzl concludes.
KEY FIGURES
Change 2017/2018
EUR m 2017 2018 % EUR m Q4 2017 Q4 2018
Revenue 1,938.9 1,958.5 1.0% 19.6 534.3 542.1
Mail & Branch Network 1,447.8 1,412.3 -2.5% -35.6 392.5 384.9
Parcel & Logistics 495.6 552.4 11.5% 56.9 143.1 159.6
Corporate/ -4.5 -6.2 -38.9% -1.7 -1.4 -2.4
Consolidation
Other operating income 112.7 96.2 -14.7% -16.5 69.5 22.3
Raw materials,
consumables and -409.9 -441.2 -7.6% -31.3 -113.4 -128.0
services used
Staff costs -1,020.1 -1,008.7 1.1% 11.4 -275.3 -251.8
Other operating -325.0 -295.7 9.0% 29.3 -118.3 -84.5
expenses
Results from financial
assets accounted for -1.9 -3.6 -85.4% -1.7 -0.8 -1.9
using the equity
method
EBITDA 294.6 305.4 3.7% 10.8 95.9 98.3
Depreciation,
amortisation and -86.8 -94.5 -8.9% -7.7 -28.0 -29.4
impairment losses
EBIT 207.8 210.9 1.5% 3.1 67.9 68.9
Mail & Branch Network 289.6 289.8 0.1% 0.2 89.6 90.7
Parcel & Logistics 42.8 41.3 -3.5% -1.5 13.9 14.7
Corporate/ -124.7 -120.2 3.5% 4.4 -35.6 -36.5
Consolidation
Other financial result 12.8 -13.1 <-100% -25.9 12.2 -17.3
Earnings before tax 220.6 197.8 -10.3% -22.8 80.0 51.6
Income tax -55.6 -53.6 3.6% 2.0 -20.9 -12.7
Profit for the period 165.0 144.2 -12.6% -20.8 59.1 38.9
Earnings per share 2.45 2.13 -13.0% -0.32 0.88 0.57
(EUR)1
Cash flow from 255.7 295.9 15.7% 40.2 89.1 43.4
operating activities
Investment in
property, plant and -102.1 -139.4 -36.6% -37.3 -52.6 -53.2
equipment (CAPEX)
Free cash flow 146.6 158.4 8.0% 11.8 30.7 28.7
Free cash flow before
acquisitions/ 178.3 231.9 30.0% 53.6 43.1 27.2
securities and Growth
CAPEX2
1 Undiluted earnings per share in relation to 67,552,638 shares
2 2017: Free cash flow before acquisitions/securities and new corporate
headquarters
EXCERPTS FROM THE GROUP MANAGEMENT REPORT:
REVENUE DEVELOPMENT IN DETAIL
The Group revenue of Austrian Post improved by 1.0 % to EUR 1,958.5m in the 2018
financial year. Revenue growth of 11.5 % in the Parcel & Logistics Division
compensated for the 2.5 % revenue decline in the Mail & Branch Network Division.
The Mail & Branch Network Division accounted for 71.9 % of the Group revenue.
Revenue development during the period under review continued to be impacted by
the fundamental decline in addressed letter mail as a result of electronic
substitution, lower direct mail revenue compared to the strong advertising
business in the previous year and the redimensioning of the financial services
business. In turn, the new product structure, expansion in the area of Mail
Solutions and growth driven by higher international e-commerce volumes helped to
increase revenue. The Parcel & Logistics Division generated 28.1 % of the total
Group revenue in the reporting period against the backdrop of an ongoing upward
trend. The 11.5 % revenue increase was driven primarily by the organic volume
growth in Austria.
Revenue of the Mail & Branch Network Division totalled EUR 1,412.3m in the 2018
financial year. Of this amount, 57.0 % can be attributed to the Letter Mail &
Mail Solutions business, Direct Mail accounted for 27.1 % of total divisional
revenue and Media Post had a share of 9.3 %. Branch Services generated 6.6 % of
the division's revenue.
Letter Mail & Mail Solutions revenue amounted to EUR 804.8 m, representing a
year-on-year increase of 2.8 %. The downward volume development as a consequence
of the substitution of letters by electronic forms of communication continued.
Revenue was also impacted by various special effects. Transported volumes were
supported by numerous one-off mailings by banks. Furthermore, a positive pricing
outcome took place due to the launch of the new product structure as of July 1,
2018. Moreover, the additional revenue of EUR 18.2m was achieved by increased
international e-commerce volumes, which were partly recognised as direct mail
revenue in the previous year. New services for the transport of traditional
letter mail also increased the revenue. The Mail Solutions business area
generated a higher revenue of EUR 5.0 m, mainly in the fields of document
logistics and output management. Furthermore, the 2018 financial year had two
more working days than in the previous year. In contrast, Austrian Post's exit
from the mail business in South East and Eastern Europe as well as the segment
change of the Croatian subsidiary Weber Escal d.o.o. assigned to the Parcel &
Logistics Division since January 1, 2018 have negatively impacted revenue.
Revenue of the Direct Mail business amounted to EUR 382.6m in 2018, comprising a
year-on-year decline of 7.4 %. The revenue decrease resulted from a drop in
operating revenue of about 2 - 3 % and the previously mentioned change in the
product assignment of international mail items currently presented under Letter
Mail. In addition, increased direct mail revenue was generated in the previous
year due to higher special effects from elections and a strong rise related to
selected sales initiatives. Several customers showed uncertainty with respect to
addressed mail items as a result of the new General Data Protection Regulation.
Similarly, the exit of Austrian Post from the direct mail business in South East
and Eastern Europe also had the effect of reducing the revenue.
Media Post revenue from the delivery of newspapers and magazines was down by 4.3
% in a year-on-year comparison to EUR 131.2m. This development is mainly
attributable to the declining subscription business for newspapers and
magazines. Branch Services revenue amounted to EUR 93.7m in the 2018 financial
year, below the prior-year figure of EUR 114.6m. In line with the agreement
concluded with the banking partner BAWAG P.S.K., the termination of the
partnership will take place by the end of 2020. Revenue from consulting services
will be continuously reduced in 2019. The change in accounting treatment of
sales in the area of telecommunications and services in line with IFRS 15 also
reduced the revenue, accompanied with a decrease in the corresponding expense
item.
Total revenue of the Parcel & Logistics Division increased to EUR 552.4m from
EUR 495.6m in the previous year. The segment change of the Croatian subsidiary
Weber Escal d.o.o. effective January 1, 2018 increased the revenue during the
reporting period, given the fact that the company was still recognised as part
of the Mail & Branch Network Division in the prior-year period. ACL advanced
commerce labs GmbH, which has been fully consolidated since November 1, 2017,
also contributed to revenue growth of the division. Adjusted for Weber Escal
d.o.o. and ACL advanced commerce labs GmbH, the divisional revenue was up by 8.1
%. This strong growth in the parcel business resulted mainly from the ongoing e-
commerce trend in Austria, which in turn led to a substantial increase in
private customer parcels. Generally speaking, the Austrian parcel market is
developing very dynamically. Intense competition still prevails. At the same
time, the demand for quality and delivery speed as well as price pressure are
increasing. From a regional perspective, 80.4 % of the total revenue in the
Parcel & Logistics Division was generated in Austria in 2018, and 19.6 % by the
subsidiaries in South East and Eastern Europe. The business in Austria showed
revenue growth of 11.4 % in 2018. Taking account of the full consolidation of
ACL advanced commerce labs GmbH, the increase in revenue equalled 10.0 % in
Austria on a like-for-like basis. Revenue in the highly competitive South East
and Eastern European region was up by 11.8 % during the period under review.
Divisional revenue in the CEE/SEE region in 2018 showed a stable development
taking into account the segment change of Weber Escal d.o.o., Croatia.
EXPENSE AND EARNINGS DEVELOPMENT
Staff costs comprise a major factor in the cost structure of Austrian Post's
operating expenses. Accordingly, 54.8 % of total operating expenses incurred by
Austrian Post in 2018 were attributed to staff costs. The second largest expense
item, accounting for 24.0 % of operating expenses, was raw materials,
consumables and services used, of which a large part related to external
transport services. Other operating expenses comprised 16.1 % of total costs,
whereas depreciation, amortisation and impairments accounted for 5.1 %.
Austrian Post's staff costs amounted to EUR 1,008.7m in the 2018 financial year,
equating to a year-on-year decline of 1.1 %. The included operational staff
costs for wages and salaries were largely stable compared to the previous year.
The underlying objective is to ensure that steady efficiency improvements and
structural changes make it possible to offset salary increases mandated by
collective wage agreements. On balance, the Austrian Post Group employed an
average of 20,545 people (fulltime equivalents) in the 2018 financial year,
compared to 20,524 employees in 2017.
In addition to operational staff costs, staff costs of Austrian Post also
include various non-operational costs such as termination benefits and changes
in provisions, which are primarily related to the specific employment situation
of civil servants at Austrian Post. Non-operational staff costs including
changes in provisions and various parameter adjustments in the 2018 financial
year were below the prior-year level due to various parameter adjustments. As in
the previous year, provisions allocated for the redimensioning of financial
services totalling EUR 21.5m in the 2018 financial year comprised the largest
share of these costs. In contrast, lower expenses for social plan models had the
opposite effect.
Raw materials, consumables and services used increased by 7.6 % to EUR 441.2m
during the financial year 2018, which was primarily related to higher transport
costs as a result of increased parcel volumes.
Earnings show a stable to slightly positive development. EBITDA at EUR 305.4m
was 3.7 % above the previous year, corresponding to an EBITDA margin of 15.6 %.
In total, depreciation, amortisation and impairment losses in the reporting
period amounted to EUR 94.5 m, compared to EUR 86.8m in the previous year.
Planned depreciation and amortisation increased to EUR 80.6 m, whereas
impairment losses at EUR 13.9m were slightly below the prior-year level. The
impairment losses recognised in the 2018 financial year primarily related to
adjustments made to goodwill as well as impairment losses on real estate in
Croatia and Austria. EBIT in 2018 totalled EUR 210.9m compared to EUR 207.8m in
the previous year. The EBIT margin equalled 10.8 %.
The other financial result fell from EUR 12.8m in 2017 to minus EUR 13.1m in the
2018 financial year. The other financial result in the previous year included a
positive effect in the amount of EUR 11.0m from the sale of shares in BAWAG
Group AG. In contrast, there was a negative effect in the reporting period
resulting from the write-down of EUR 14.4m related to shares of FinTech Group
AG. Earnings before tax were EUR 197.8m in 2018 compared to EUR 220.6m in the
previous year. The income tax expense in the reporting period amounted to EUR
53.6 m, down by EUR 2.0m from the 2017 financial year. After deducting income
tax, the Group's profit for the period (profit after tax) totalled EUR 144.2 m,
compared to the prior-year figure of EUR 165.0m. Accordingly, undiluted earnings
per share were EUR 2.13 for the 2018 financial year compared to EUR 2.45 in the
previous year.
From a divisional perspective, EBITDA of the Mail & Branch Network Division
totalled EUR 311.2m in 2018, comprising a decrease of 0.5 % from the prior-year
period. Divisional EBIT improved by 0.1 % in the period under review to EUR
289.8m. The high level of cost discipline intensified synergies in logistics as
a result of the increased delivery of parcels and packets by letter mail
logistics have positively impacted earnings.
The Parcel & Logistics Division achieved revenue growth against the backdrop of
intense competition and margin pressure and generated an EBITDA of EUR 54.9m (-
5.5 %) and EBIT of EUR 41.3m (-3.5 %) in the 2018 financial year. This decrease
is mainly attributable to higher costs in the logistics network to avoid
capacity bottlenecks as well as an increase in IT expenses. EBIT of the
Corporate Division (incl. Consolidation) improved by EUR 4.4m to minus EUR
120.2m, primarily due to the reduced need to allocate provisions in comparison
to the previous year.
The Corporate Division provides non-operational services for the purpose of
managing and controlling at a Corporate Group level. These services include,
among others, the management of commercial properties owned by the Group, the
provision of IT services, the development of new business models, and the
administration of the Internal Labour Market of Austrian Post.
CASH FLOW AND BALANCE SHEET
The cash flow in the 2018 financial year was impacted by various special
effects. A special payment of EUR 107.0m from BAWAG P.S.K. in connection with
the termination of the cooperation agreement with Austrian Post less the
financial services provided in the amount of EUR 37.0m in the reporting period
resulted in a positive special cash flow effect of EUR 70.0m. In contrast,
higher maintenance and growth CAPEX totalling EUR 139.4 m, above the prior-year
level of EUR 102.1 m, had the opposite effect. Higher payments relating to
provisions and the income tax expense as well as the acquisition of a 6.5 %
shareholding in FinTech Group AG within the context of the planned financial
services partnership also reduced the cash flow. The gross cash flow totalled
EUR 352.9m in the 2018 financial year, compared to EUR 316.6m in the prior-year
period. The cash flow from operating activities amounted to EUR 295.9m in the
period under review, up from EUR 255.7m in the previous year. The cash flow from
investing activities amounted to minus EUR 137.5m in 2018 in comparison to minus
EUR 109.1m in the previous year. This increase resulted from payments for the
acquisition of property, plant and equipment (CAPEX) and relates mainly to
payments for investments made as part of the parcel logistics capacity expansion
programme. Growth CAPEX in the reporting period amounted to EUR 58.1m. The
disposal of property, plant and equipment had the opposite effect. The free cash
flow before acquisitions/securities and growth CAPEX amounted to EUR 231.9m in
the 2018 financial year, compared to the prior-year level of EUR 178.3m. This
provides a good foundation for Austrian Post's ability to finance investments
and dividends in the future.
Austrian Post pursues a conservative balance sheet policy and financing
structure. This is demonstrated by the high equity ratio, low financial
liabilities and the solid amount of cash and cash equivalents invested at the
lowest possible risk. The balance sheet total of Austrian Post amounted to EUR
1,681.2m as at December 31, 2018. On the assets side, property, plant and
equipment constituted the largest single balance sheet item at EUR 652.8 m,
whereas intangible assets totalled EUR 83.3m. This included goodwill of EUR
58.7m reported for acquisitions as at December 31, 2018. Receivables,
constituting the second largest single balance sheet item on the asset side,
totalled EUR 320.2m. The equity and liabilities side of the balance sheet is
characterised by a high equity ratio of 41.6 % as at December 31, 2018. This
corresponds to equity of EUR 699.1m. Non-current liabilities were EUR 421.7m at
the end of the reporting period, whereas current liabilities totalled EUR
560.4m.
OUTLOOK 2019
Current developments in Austrian Post's core business show that the basic trends
in the mail and parcel business are expected to continue. The traditional
addressed letter mail business is anticipated to show ongoing volume declines of
about 5 % annually in the future. In contrast, the direct mail business strongly
depends on the economic environment as well as the advertising behaviour of
high-volume senders.
Prospects for the market development of the parcel business are considered to be
clearly positive. Against the backdrop of further growth in online business,
upper single-digit market growth is expected. This sector is characterised by
high demands imposed on delivery quality and speed as well as innovative service
solutions. In turn, it is impacted by changed competitive conditions and price
pressure.
In the light of this market environment, Austrian Post once again forecasts a
stable revenue development in the 2019 financial year (2018 revenue: EUR 1,958.5
m). The underlying planning assumptions are the ongoing trends in the letter
mail and direct mail markets. It is also assumed that the postage rate model
introduced on July 1, 2018 (next-day PRIO delivery and ECO delivery within 2 - 3
days) will continue to be well received.
Austrian Post's parcel business will further expand in 2019. It is expected that
the quality and performance advantages of Austrian Post will be reflected in
revenue increases against the backdrop of higher competition and price pressure
as well as own delivery in Vienna on the part of a large-volume customer.
The company's branch network is currently dissolving the financial services
cooperation with the previous banking partner. However, the goal remains of
maintaining the offering of financial services in the branch network in the
future because it is an important and meaningful complement for customers to
Austrian Post's range of services.
In addition to numerous market initiatives, the capacity expansion investment
programme in the parcel business is of considerable importance to the further
development of the company. The objective is to gradually double the 2018
sorting capacity in the years to come. For this reason, in addition to
maintenance investments of about EUR 70 m, in excess of EUR 50m of growth
investments are planned again for 2019. Moreover, there is the possibility of
expanding existing commercial properties or newly acquiring land, for example by
the existing logistics centre in the south of Vienna. Capacity is already
expected to increase by 25 % when the parcel centre in Hagenbrunn to the north
of Vienna is put into operation in the summer of 2019.
In terms of its earnings, Austrian Post is also pursuing the target of achieving
stability in its operating results of the core business in 2019 (2018 EBIT: EUR
210.9 m). An important priority will be to enhance the efficiency of services
and change structures and processes. For example, mail and parcel logistics were
merged under one unified operational management at the beginning of 2019. The
aim is to leverage further synergies in the new organisational structure as a
means of further expanding upon Austrian Post's role as the quality leader on
the Austrian mail and parcel markets. This is based on volume forecasts for
Austrian Post's mail and parcel business. Furthermore, business plans will be
examined in 2019 to what extent Austrian Post can continue offering financial
services in the future.
Stability and security comprise the cornerstones of the company's financial
management. In recent years the company has generated the financial resources
for the required growth investments, and they will now be used to expand
Austrian Post's strategic positioning. The operating cash flow generated by
Austrian Post will continue to be used prudently and in a targeted manner to
finance sustainable investments in business operations and to pay dividends.
The Management Board will propose to the Annual General Meeting scheduled for
April 11, 2019, to approve the distribution of a dividend in the amount of EUR
2.08 per share. Thus, the company is once again continuing its attractive and
predictable dividend policy on the basis of a solid balance sheet structure and
generated cash flow. Austrian Post continues to pursue the objective of
distributing at least 75 % of the Group's net profit to its shareholders.
Further inquiry note:
Austrian Post
Ingeborg Gratzer
Head of Press Relations & Internal Communications
+43 57767-32010
ingeborg.gratzer@post.at
Harald Hagenauer
Head of Investor Relations, Group Auditing & Compliance
+43 57767-30400
harald.hagenauer@post.at
end of announcement euro adhoc
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issuer: Österreichische Post AG
Rochusplatz 1
A-1030 Wien
phone: +43 (0)57767-0
FAX:
mail: investor@post.at
WWW: www.post.at
ISIN: AT0000APOST4
indexes: ATX
stockmarkets: Wien
language: English
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