Österreichische Post AG

EANS-Adhoc: AUSTRIAN POST IN 2011: Increase in revenue (+4.2%) and earnings (EBIT +7.3%); Dividend proposal to the Annual General Meeting of EUR 1.70 per share (+6.3%)

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annual report

15.03.2012

- Higher revenue
  - Revenue rise of 4.2% from the previous year on a comparable basis 
  - Mail Division +4.4%, Parcel & Logistics +5.6% 
- Further increase in earnings
  - EBITDA of EUR 282.7m represents a margin of 12.0%
  - EBIT up 7.3% to EUR 168.3m
- Strong cash flow and solid balance sheet
  - Free cash flow up 5.8% to EUR 162.5m
  - Equity ratio of 42.1%
- Attractive dividend
  - Dividend proposal to the Annual General Meeting of EUR 1.70 per share
(+6.3%)
  - Dividend yield of 7.3% based on closing share price at end of 2011
- Outlook 2012 with growth target
  - Stable or slight rise in revenue expected on a comparable basis 
  - EBITDA margin once again at the upper end of the targeted range of 10-12%

OVERVIEW OF DEVELOPMENTS AT AUSTRIAN POST
The 2011 financial year proceeded very satisfactorily for Austrian Post. The
revenue and earnings indicators once again demonstrated the fact that the
strategic orientation of the Group is on the right track. Austrian Post
succeeded in maintaining its leading market position even after complete
liberalisation of Austria´s letter mail market at the beginning of 2011. Not
only parcels but also the letter mail and direct mail segments showed a good
development. "Our goal is to offer innovative services to our customers", says
Austrian Post CEO Georg Pölzl. "The new option to choose between `Premium´ and
`Economy´ letters as well as the positive development of business parcels and
advertising mail show that we can also offer the solutions that businesses
demand even in a challenging market environment", he adds. 
In 2011, Austrian Post increased its Group revenue by 4.2% on a comparable basis
to EUR 2,348.7m. Thus, the revenue increase was significantly higher than the
medium-term growth target of 1-2% per year. Revenue growth was achieved by the
Parcel & Logistics Division (+5.6%) as well as by the Mail Division (+4.4%). In
the letter mail segment, innovative new customer solutions, volume growth from
e-commerce as well as the new range of products and stamps were the primary
reasons for growth.
The market environment in the Parcel & Logistics Division in 2011 was
characterised by positive volume developments and growth in market share. With
regard to profitability, the business development in Austria and in South East
and Eastern Europe was very satisfactory, but the performance in the
German/Benelux market was below expectations. As a result, a comprehensive
performance improvement programme was initiated at the end of 2011, which in
particular led to one-off effects involving structural measures and impairment
losses. Above all, the extraordinary expenses related to the restructuring and
disposal of the subsidiaries in Belgium and the Netherlands. 
In spite of these one-off effects, Group earnings were further improved on the
basis of the revenue increase and strict cost discipline. EBITDA amounted to EUR
282.7m, corresponding to a margin of 12% and thus at the upper end of the
targeted EBITDA range. EBIT climbed by 7.3% to EUR 168.3m. This positive
development, combined with a solid balance sheet and a high equity ratio, is the
basis for a sustainable dividend policy. A dividend increase of 6.3% to EUR 1.70
per share will be proposed to the Annual General Meeting. 
For the year 2012, a stable or slightly positive development of Group revenue on
a comparable basis is expected following the 4.2% revenue growth in 2011. With
respect to the earnings development of Austrian Post, the objective of
generating a sustainable EBITDA margin of 10-12% remains valid. Austrian Post
also aims to further improve earnings before interest and tax (EBIT).  
Moreover, Austrian Post will also focus on the development of innovative
solutions tailored to customer requirements in 2012. "After successful pilot
operations in autumn 2011, we have been delivering national direct mail items
bundled in the collective advertising folder KUVERT throughout the country since
February 2012. We are also investing in innovative self-service systems such as
the drop-off and pick-up boxes. These have been successively rolled out in urban
areas following test operations carried out in 2011. All these solutions have
one goal in mind: greater flexibility and simplified services for customers",
Georg Pölzl concludes.  

REVENUE DEVELOPMENT IN DETAIL
For the following analysis of Austrian Post´s revenue development, revenue in
2010 was adjusted for the meiller companies deconsolidated as of December 20,
2010. The deconsolidation of these companies reduced the comparable revenue of
the Mail Division by EUR 98.0m in 2010. The joint venture MEILLERGHP established
at the end of 2010, in which Austrian Post has a 65% stake, is consolidated at
equity.   
Revenue on a comparable basis increased to EUR 2,348.7m in 2011, a rise of 4.2%.
Revenue growth was generated in the Parcel & Logistics Division (+5.6%) and the
Mail Division (+4.4%). In contrast, revenue of the Branch Network Division fell
by 3.0% in the same period. There were 250 calendar working days in 2011, two
working days less than in the previous year (252 calendar working days).  
Revenue in the Mail Division rose to EUR 1,347.6m, an increase of 4.4% on a
comparable basis. The ongoing substitution of letters by electronic media was in
contrast to the positive effects related to the shifting of volumes from parcel
to letter mail services in e-commerce, additional revenue generated in the field
of Mail Solutions as well as the new product portfolio and range of stamps
introduced in May 2011. Moreover, the growth in revenue derived from addressed
and unaddressed direct mail items clearly shows the sound nature of the
advertising industry, in which direct mailings provided by Austrian Post
constitute an important component of its marketing mix.   
Revenue in the Parcel & Logistics Division climbed by 5.6% in 2011 to EUR
846.5m, due to rising volumes and against the backdrop of ongoing price
pressure. Growth was generated in Austria as well as in the regions
Germany/Benelux and South East and Eastern Europe. 
The organisational structure of the Branch Network Division is currently
undergoing change. Over the last 12 months, the number of third-party operated
postal partner offices has risen from 1,117 to 1,258 as at the end of 2011. This
change has affected the division´s revenue and cost structure as well as the
redefined partnership with BAWAG P.S.K. Since January 1, 2011, revenue from the
financial services business has been subject to a new cost-based compensation
plan. Thus, the division´s external sales were down 3.0% to EUR 153.1m. 

INCOME STATEMENT
The revenue growth of 4.2%, or EUR 95.6m on a comparable basis, also affected
the cost structure of the Group. Higher revenue and parcel volumes increased the
purchase of external transport services carried out by parcel logistics
subcontractors. Moreover, the growing reliance on postal partner offices led to
an increase in the services used by the Group, although staff costs declined. As
a consequence, operating expenses for raw materials, consumables and services
used rose by 6.6% on a comparable basis, to EUR 759.8m. 
Staff costs on a comparable basis at EUR 1,050.1m were 3.4% below the prior-year
level. Operational staff costs fell by EUR 28.0m, to a total of EUR 1,017.0m.
Savings in operational staff costs were achieved by taking advantage of
voluntary employee departures. On a comparable basis, the average number of
employees fell by 673 year-on-year to 23,369 employees (full-time equivalents).
Non-operational staff costs, which amounted to EUR 33.0m in 2011, include all
investments designed to achieve a sustainable improvement in the cost structure,
such as structural measures, termination payments or staff-related provisions.
Other operating income fell by 14.5% on a comparable basis to EUR 74.6m. This
was primarily due to lower proceeds from the disposal of property, plant and
equipment, which only amounted to EUR 8.8m in 2011. Income from rents and leases
of EUR 23.7m were at the same level as in the previous year.  
Other operating expenses were up 14.8% on a comparable basis to EUR 320.0m. This
increase is partly due to measures relating to the commercial realisation of the
operating companies in Belgium and the Netherlands. Moreover, costs arose for
the conversion to the new cluster box units, which must be carried out by the
end of 2012 in accordance with the stipulations of the Postal Market Act. 
Earnings before interest, tax, depreciation and amortisation (EBITDA) of
Austrian Post improved to EUR 282.7m in 2011, a rise of 7.9%. Accordingly, the
EBITDA margin was 12.0% and was at the upper end of the targeted range of
10-12%, as predicted.
Depreciation, amortisation and impairment losses of Austrian Post totalled EUR
114.4m in the reporting period. This figure consisted of depreciation and
amortisation of EUR 86.8m as well as impairment losses of EUR 27.6m. Earnings
before interest and tax (EBIT) of Austrian Post rose by 7.3% to EUR 168.3m,
corresponding to an EBIT margin of 7.2%.
All operating divisions improved their earnings during the period under review.
EBIT of the Mail Division climbed to EUR 295.7m, and the Branch Network Division
continued its restructuring efforts, concluding 2011 with an EBIT of minus EUR
17.8m, a significant improvement compared to minus EUR 30.8m in the previous
year.
EBIT of the Parcel & Logistics Division amounted to minus EUR 28.3m in 2011.
This includes impairment losses on goodwill and property, plant and equipment of
EUR 16.8m as well costs for structural measures at the amount of EUR 22.0m, and
deconsolidation effects of EUR 3.3m. These expenses were mainly related to the
restructuring and commercial realisation of the subsidiaries in Belgium and the
Netherlands. The disposal process initiated in the fourth quarter resulted in
the assets and liabilities of these subsidiaries being classified as a disposal
group held for sale. The valuation stipulated by IFRS 5 led to impairment losses
and provisions, which are included in the recognised structural measures. On a
comparable basis, excluding structural measures and impairment losses, EBIT of
the Parcel & Logistics Division actually rose by 9.3% to EUR 13.8m.   
EBIT of the Corporate segment was down from minus EUR 57.7m in 2010 to minus EUR
81.3m in 2011. This difference can be attributed to higher income from real
estate sales in the 2010 financial year as well as higher depreciation and
amortisation in the reporting period. Moreover, the Corporate segment also
encompasses costs for central departments, as well as changes in staff-related
provisions and restructuring.
Earnings before tax rose 9.7% to EUR 163.1m. After deducting income taxes
totalling EUR 39.3m, the Group net profit (profit after tax for the period)
amounted to EUR 123.8m. This corresponds to earnings of EUR 1.83 per share for
the 2011 financial year (+4.6%) from the EUR 1.75 per share in 2010.

CASH FLOW
The operating cash flow before changes in working capital amounted to EUR
248.6m, significantly higher than in the previous year. Improved earnings, lower
tax payments compared to the prior year and higher other non-cash transactions
contributed to this development.  The cash flow from operating activities
increased by 27.6% to EUR 228.2m. 
The cash flow from investing activities was minus EUR 65.8m in 2011, including
the purchase of property, plant and equipment (CAPEX) amounting to EUR 73.8m and
proceeds from the disposal of property, plant and equipment of EUR 23.9m. Total
free cash flow was EUR 162.5m, a rise of 5.8% from the prior-year level.  

EMPLOYEES
During the period under review, the average number of full-time employees at
Austrian Post fell by 2.8% from the prior-year figure, or 673 people, to 23,369.
Most of Austrian Post´s labour force, namely 19,907 full-time equivalent
employees, works for the parent company, Österreichische Post AG (Austrian
Post). Approximately 3,500 people are employed by subsidiaries.

OUTLOOK FOR 2012
In 2012, Austrian Post assumes that its business development will continue to be
impacted by two main factors: the structural change in the letter mail business
and the overall economic situation. Against this backdrop, the company expects a
stable or slightly positive development of Group revenue for the 2012 financial
year following the strong revenue growth of 4.2% in 2011. Austrian Post´s
medium-term growth target of 1-2% per year remains unchanged.
The structural change is manifested by the steady decline in addressed letter
mail volumes. Austrian Post expects the decrease to amount to 3-5% p.a.,
reflecting international trends. In contrast, increasing e-commerce will ensure
ongoing growth in the transported parcel volumes, especially in the private
customer segment. 
The dampened economic forecasts for 2012 could lead to restrained consumer
activity but also impact the advertising industry. However, Austrian Post
expects that direct mail items, the most efficient advertising tool, will
continue to maintain its importance as part of the marketing mix of companies.
Against this backdrop, Austrian Post assumes it will succeed in maintaining its
strategic path and also achieving its operating targets, even in the face of a
difficult market environment. 
One focal point of the Group is to enhance the profitability of the services
offered, especially in business areas which have been performing below
expectations. With respect to sustainable earnings development, Austrian Post
confirms the targeted EBITDA margin in the range of 10% to 12%. The company is
also striving to achieve a further improvement in earnings before interest and
tax (EBIT).  
The operating cash flow generated by Austrian Post will continue to be prudently
used mainly to finance sustainable efficiency improvements and future-oriented
investments. In terms of its financing requirements, Austrian Post anticipates
total capital expenditure to reach a level of about EUR 80-90 million in 2012.
This will primarily focus on replacement investments in existing facilities as
well as on continuous modernisation and efficiency enhancement, for example on
the basis of a new sorting technology for direct mail items. Acquisitions to
round off and safeguard Austrian Post´s core business are a probability.
However, no major acquisitions are expected at the present time. 
The Management Board of Austrian Post will propose to the upcoming Annual
General Meeting, scheduled for April 17, 2012, the distribution of a dividend of
EUR 1.70 per share for the 2011 financial year. The current attractive dividend
policy will continue based on a solid balance sheet structure and suitable cash
flow generation. Austrian Post aims to achieve a dividend payout ratio to
shareholders of at least 75% of Group net profits. The dividend should develop
further in line with Group net profits assuming a continuation of the company´s
good business development.

PERFORMANCE OF DIVISIONS 
MAIL DIVISION 
External sales of the Mail Division rose by 4.4% or EUR 56.3m from the
prior-year period. Revenue generated by the Letter Mail Business Area improved
by 4.5% on a year-on-year comparison, to EUR 755.6m. The ongoing substitution of
letters by electronic media was offset by positive effects such as the shifting
of volume from parcel to letter mail services in e-commerce, revenue growth in
the field of Mail Solutions as well as the newly-designed product and regular
stamp portfolio launched in May 2011. The new option for business customers to
choose either "Premium" or "Economy" products offers greater flexibility in
selecting the desired delivery speed. Most customers decided in favour of the
"Premium" products in 2011.    
In the 2011 financial year, revenue achieved by the Infomail Business Area
(addressed and unaddressed direct mail) rose by 4.9% or EUR 21.3m on a
comparable basis. This increase reflects the robust activity on the part of the
advertising industry in 2011. Innovative solutions, for example individualised
advertising mail, were well received by the market.
Revenue of the Media Post Business Area amounted to EUR 137.7m in 2011, a slight
rise of 1.7%. 
On balance, EBITDA of the Mail Division during the period under review improved
to EUR 322.8m. Automation and efficiency enhancement measures resulted in a
clearly pronounced cost discipline in 2011. As a result, EBIT of the Mail
Division rose to EUR 295.7m.  
PARCEL & LOGISTICS DIVISION 
External sales of the Parcel & Logistics Division climbed by 5.6% to EUR 846.5m
in 2011. The basis for this increase was higher parcel volumes for private
customers and an increase in e-commerce despite price pressure in almost all
markets. The standard parcels product segment used mainly for shipments to
private customers also posted steady growth in 2011. Revenue rose by 3.8%, to
EUR 166.8m.  
The premium parcel segment (parcel delivery within 24 hours), which is mainly
used in the business-to-business area, generated a revenue increase of 4.7% in
2011, to EUR 659.9m. The German subsidiary trans-o-flex accounted for about 60%
of this revenue. Parcel volumes from business customers in Austria and in South
East and Eastern Europe continued to develop very positively. Revenue growth was
also achieved in Belgium and the Netherlands, but the negative earnings
situation of the affected subsidiaries could not be improved despite the higher
revenue. For this reason, Austrian Post initiated extensive structural measures
in 2011 in order to develop a new logistics solution for this region.  
Reported EBIT of the Parcel & Logistics Division amounted to minus EUR 28.3m in
2011. However, this includes impairment losses on goodwill and property, plant
and equipment totalling EUR 16.8m as well as structural measures totalling EUR
22.0m and deconsolidation effects of EUR 3.3m. These expenses primarily related
to the restructuring as well as the commercial realisation of the subsidiaries
in Belgium and the Netherlands. 
On a comparable operating basis, excluding the structural measures and
impairment losses, EBIT of the Parcel & Logistics Division actually rose by 9.3%
to EUR 13.8m. 

BRANCH NETWORK DIVISION 
The enormous changes taking place in the branch network are reflected in the
changed structure of postal service points. On a year-on-year comparison, the
number of third-party operated postal partner offices increased during the last
twelve months by 141 to a total of 1,258 at the end of 2011. On balance,
Austrian Post has more than 1,880 postal service points. This change also
affects the revenue and cost structure of the Branch Network Division, as does
the contractually redefined partnership with Austrian Post´s banking partner
BAWAG P.S.K. Since the beginning of 2011, financial services are no longer based
on commissions but compensated primarily on the basis of the actual costs
incurred.  
In 2011, external sales of the Branch Network Division fell by 3.0% to EUR
153.1m, which is related to declining sales of retail and telecommunication
products. Internal sales, i.e. postal services provided by the branch network,
also decreased slightly once again. However, the restructuring of operations in
the branch offices has had a positive impact. Loss-making and inefficient
structures are being eliminated or streamlined and fixed costs are being
reduced. As a result, EBIT increased by EUR 13.0m from the prior-year level, to
minus EUR 17.8m.

The Annual Report 2011 is available in the internet: www.post.at/ir/en -->
Publications --> Financial Reports


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

Austrian Post
Mr. Michael Homola
Group Communications
Press Spokesman
Tel.: +43 (0) 57767 32010
michael.homola@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
 



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