AUSTRIAN POST Q1-3 2019
POSITIVE REVENUE DEVELOPMENT OF +3.2% IN THE FIRST NINE MONTH OF 2019
- Revenue up by 3.2 % to EUR 1,462.2m
- Good parcel growth (+11.3 %) and slight increase in the Mail & Branch Network Division (+0.6 %)
- Positive EBIT development in the core business
- Reported EBIT down by 8.4 % to EUR 130.0m due to provision for data protection in Q3 2019
- Earnings per share of EUR 1.48 compared to prior-year level of EUR 1.56
- Increased operating free cash of EUR 153.2m
- Balance sheet total increase to EUR 1,975.4m due to capitalisation of right-of-use assets (leases) pursuant to IFRS 16
- Austrian Post anticipates the revenue to increase in both 2019 and 2020
- Earnings (EBIT) outlook: Targeted stability in operating earnings in 2019 (before provision for data protection) and also in 2020 (before start-up costs for new financial services)
The mail business (+0.6% to EUR 1,033.5m) continues to be characterised by the ongoing substitution of traditional letter mail by electronic forms of communication. Similar to addressed direct mail volumes, it is subject to a structural decline which is also impacted by uncertainty relating to the General Data Protection Regulation. Financial services revenue in the branch offices of Austrian Post is continuously declining as a consequence of the termination of the cooperation with BAWAG P.S.K. The division achieved positive revenue effects in the first half-year on the back of a new product and postal rate structure and, in the course of the year, due to one-off mailings and elections.
In the reporting period, significant volume increases were generated in the parcel business (+11.3% to EUR 437.2m), as Austrian Post capitalised on dynamic market growth resulting from the ongoing online shopping trend. However, the related competitive intensity and price pressure remain high. Parcel revenue growth was driven primarily by the e-commerce trend and the related increase of parcel volumes in Austria. “The partnership with Deutsche Post DHL Group to deliver parcels in Austria had a very good start. Since 1 August 2019, DHL parcels for Austria are delivered by Austrian Post. As a consequence, total monthly transport and delivery volumes are now about 25% higher than in the previous year”, says Austrian Post CEO Georg Pölzl.
Against the backdrop of this parcel volume development, Austrian Post is intensifying its parcel logistics capacity expansion drive. Capacities were already substantially increased as of September 2019 when the parcel logistics centre Lower Austria (Hagenbrunn) became fully operational. The next milestones will be the completion of the parcel logistics centre Styria (Kalsdorf) and of the delivery base Thalgau/Salzburg in the middle of next year.
From an earnings perspective, EBIT of the Austrian Post Group showed an upward operating trend in the first nine months of 2019, consistent with the previous two quarters. The reported EBIT of EUR 130.0m was down by 8.4% from the previous year due to the provision for data protection totalling EUR 19.8m, allocated in the third quarter of 2019. Earnings per share equalled EUR 1.48, compared to EUR 1.56 in the first three quarters of 2018.
In addition to the investment programme designed to provide sufficient capacities and quality against the backdrop of parcel growth, Austrian Post’s top priority in the upcoming quarterly periods is to further develop its product portfolio and the set-up of the Bank of the Post.
The product portfolio of ECO and PRIO products in the mail business is being adjusted in order to meet customer requirements and counteract declining volumes and cost increases. Starting in April 2020, innovative solutions in the product line will be introduced and postage rates will be increased moderately to compensate the inflation. As part of the universal service, the ECO rate for standard mail items for example will be increased from EUR 0.70 to EUR 0.74 and the PRIO rate from EUR 0.80 to EUR 0.85. The postage rate for small packets (Packet S) will amount to EUR 2.55 compared to the previous cost of EUR 2.50.
A new independent offering of financial services is planned to be launched in the second quarter of 2020. Following the positive decision of the European Central Bank, the goal is to make all the required technical and operational arrangements in order to offer a focused and risk-averse service portfolio, both online and through physical outlets, in just a few months from now. It will be done via Austrian Post’s about 1,800 postal services points. The service offering will focus on current accounts and payment transactions, complemented by financial services and insurance products provided by external cooperation partners.
For the full-year 2019, Austrian Post expects an increase in revenue as in previous periods. Based on the good trends in the core business, a stable operating earnings (EBIT) is broadly being targeted, including various start-up costs for setting up the financial services business. This does not include the administrative fine by the Austrian Data Protection Authority. For 2020, Austrian Post also forecasts a stable to slightly higher revenue and plans further broad stability in operating earnings (EBIT). In addition, start-up costs in the process of setting up the new financial services business are expected. “On the back of the high level of liquidity, Austrian Post is in a position to finance on its own targeted growth investments in the logistics infrastructure and new financial services. The generated operating cash flow will continue to be used for investments in the operating business and for maintaining the company’s attractive dividend policy”, adds CEO Georg Pölzl.
The entire report is available at post.at/ir (Reporting).
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