EANS-News

AUSTRIAN POST IN 2017: INCREASE IN REVENUE AND EARNINGS

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Financial Figures/Balance Sheet/Annual Result

Vienna -
Revenue increase in 2017 driven by dynamic parcel growth
- Revenue up 2.3% to EUR 1,938.9m (excl. trans-o-flex)
- Mail revenue decline (-2.1%) more than offset by parcel growth (+17.7%)

Expansion of service offering and logistics structures
- Growth leads to higher market share in the parcel business
- Extensive capacity increases and expansion of service offering planned

Earnings improvement based on good revenue development
- EBIT increase of 2.7% to EUR 207.8m
- Increase in earnings per share to EUR 2.45 due to special effect

Outlook for 2018 and attractive dividend policy confirmed
- Target of stable revenue and EBIT development also in 2018
- Dividend proposal to the Annual General Meeting of EUR 2.05/share (+2.5 %)

Austrian Post showed a very satisfactory business development in the 2017
financial year. Group revenue increased by 2.3% to EUR 1,938.9m compared to EUR
1,895.6m in the previous year (excl. trans-o-flex). The Mail & Branch Network
Division reported a revenue decline of 2.1% to EUR 1,447.8m due to the ongoing
trend of e-substitution, which was more than offset by the 17.7% increase in
Parcel & Logistics divisional revenue up to EUR 495.6m. The parcel business
showed strong growth as a result of the e-commerce trend against the backdrop of
continuing high competitive intensity. In spite of these challenging conditions,
parcel volumes rose by 20%, thus increasing Austrian Post's overall market share
from 45% to 47%. "This proves that the services provided by Austrian Post meet
the highest standards with respect to quality and delivery speed. We are
striving in both the mail and the parcel segment to improve our high quality
level and steadily develop our products on the basis of current customer needs
even further", says CEO Georg Pölzl.

The trends over previous quarterly periods continued in the fourth quarter.
Traditional addressed letter mail volumes decreased in the year under review by
about 5%. That is why it is even more important to maintain the high quality
standards and to continually develop the product offering - both physical and
electronic - in line with customer requirements. Direct mail volumes rose by
about 5% during the reporting period, underlining the fact that flyers and
interactive marketing remain indispensable components of the advertising mix of
companies. The parcel business showed an even higher growth, with a rise of 20%
to 97m parcels on the back of the ongoing trend of online-shopping.

FURTHER EARNINGS IMPROVEMENT
The set goal to further increase earnings was also achieved. Group EBIT rose to
EUR 207.8m (+2.7% compared to EUR 202.3m in 2016). The Mail & Branch Network
Division slightly improved earnings to EUR 289.6m in spite of declining revenue,
whereas EBIT of the Parcel & Logistics Division at EUR 42.8m surpassed the
prior-year results significantly. The intensification of logistics synergies
between the mail and parcel businesses positively impacted earnings during the
reported period. About 52% of all parcels were delivered by letter mail
logistics in 2017, and this share is expected to increase in the future. Profit
for the period was up to EUR 165.0m in 2017 from EUR 152.7m in the previous
year, including the positive effect in the other financial result from the sale
of securities. This corresponds to earnings per share of EUR 2.45, up from EUR
2.26 in 2016.

HIGHER DIVIDENDS (+2.5%) AND EMPLOYEE PROFIT SHARING (+2.6%)
Based on the strong cash flow and solid balance sheet, the Management Board of
Austrian Post will propose to the Annual General Meeting scheduled for April 19,
2018 to approve a dividend of EUR 2.05 per share (2016: EUR 2.00). This once
again underlines Austrian Post's positioning as a reliable and predictable
company. Employees also benefit from this development. Austrian Post has offered
its employees a voluntary profit-sharing scheme for 16 years. Employees entitled
to participate will receive a bonus of EUR 875, up 2.6% from the prior-year
level.

STABLE OUTLOOK CONFIRMED FOR 2018
Austrian Post confirms its previously communicated outlook for the 2018
financial year expecting a stable revenue development. Stable operating earnings
are also targeted, assuming a continuation of current basic mail and parcel
trends. Against the backdrop of ongoing market growth for private customer
parcels, measures are being taken to double sorting capacities over the next
four years to more than 100,000 parcels/hour. For this reason, in addition to
ongoing investments in the core business, also growth investments in the field
of parcel logistics are planned."Our objective is to expand existing sorting
capacities as quickly as possible. We want to maintain our positioning as a
reliable company in the future, and continue to keep the focus of our operations
geared to quality and reliability", concludes CEO Georg Pölzl.

The complete version of the outlook and detailed information from the Management
Report 2017 can be found starting on page 4. The entire version is available on
the Internet at www.post.at/ir --> Reporting.

KEY FIGURES

Change 2016/2017
EUR m 20161 2017 % EUR m Q4 20161 Q4 2017
Revenue 2,030.5 1,938.9 -4.5% -91.6 520.1 534.3
Revenue excl. trans- 1,895.6 1,938.9 2.3% 43.3 520.1 534.3
o-flex
Mail & Branch 1,478.5 1,447.8 -2.1% -30.7 399.7 392.5
Network
Parcel & Logistics 556.0 495.6 -10.9% -60.4 121.4 143.1
Parcel & Logistics 421.1 495.6 17.7% 74.4 121.4 143.1
excl. trans-o-flex
Corporate/ -4.0 -4.5 -12.5% -0.5 -1.1 -1.4
Consolidation
Other operating 70.1 112.7 60.7% 42.6 20.0 69.5
income
Raw materials,
consumables and -495.2 -409.9 17.2% 85.2 -111.2 -113.4
services used
Staff costs -1,035.2 -1,020.1 1.5% 15.1 -250.4 -275.3
Other operating -294.1 -325.0 -10.5% -30.9 -93.9 -118.3
expenses
Results from
financial assets 0.9 -1.9 <-100% -2.9 0.7 -0.8
accounted for using
the equity method
EBITDA 277.1 294.6 6.3% 17.5 85.3 95.9
Depreciation,
amortisation and -74.8 -86.8 -16.1% -12.0 -18.5 -28.0
impairment losses
EBIT 202.3 207.8 2.7% 5.5 66.8 67.9
Mail & Branch 285.1 289.6 1.6% 4.6 87.4 89.6
Network
Parcel & Logistics 18.5 42.8 >100% 24.3 -6.3 13.9
Corporate/ -101.3 -124.7 -23.1% -23.4 -14.4 -35.6
Consolidation
Other financial -0.7 12.8 >100% 13.5 0.5 12.2
result
Earnings before tax 201.5 220.6 9.5% 19.1 67.3 80.0
Income tax -48.8 -55.6 -13.9% -6.8 -15.0 -20.9
Profit for the 152.7 165.0 8.0% 12.3 52.3 59.1
period
Earnings per share 2.26 2.45 8.2% 0.18 0.77 0.88
(EUR)2
Cash flow from 223.6 255.7 14.4% 32.1 64.6 89.1
operating activities
Investment in
property, plant and -103.3 -102.1 1.2% 1.2 -47.0 -52.6
equipment (CAPEX)
Free cash flow 118.5 146.6 27.5% 28.1 16.5 30.7
Operating free cash 156.8 171.4 9.3% 14.6 25.5 36.2
flow3

1 Adjustment of revenue in segment reporting as well as adjustment of other
operating expenses and income for financial assets accounted for using the
equity method
2 Undiluted earnings per share in relation to 67,552,638 shares
3 Free CF before acq./securities and new headquarters; 2017 adjusted for the
effect of temporary cash holdings belonging to customers but not yet remitted to
them

EXCERPTS FROM THE GROUP MANAGEMENT REPORT:

REVENUE DEVELOPMENT IN DETAIL
In the 2017 financial year, Group revenue of Austrian Post fell by EUR 91.6m to
EUR 1,938.9m as compared to the prior-year level. This decline is due to the
disposal of the subsidiary trans-o-flex in April 2016. Taking account of trans-
o-flex the adjusted revenue was up 2.3% or EUR 43.3m. The Parcel & Logistics
Division, adjusted for trans-o-flex, generated revenue growth of 17.7% in 2017,
whereas revenue of the Mail & Branch Network Division fell by 2.1% in the same
period. Dynamic parcel growth more than compensated for the revenue decrease in
the mail business. The launch of a simplified product structure on January 1,
2017 with a mailing offering featuring the "Packet" tailored to the requirements
of the e-commerce market also had a positive impact on revenue development.

Revenue of the Mail & Branch Network Division totalled EUR 1,447.8m. Of this
amount, 54.1% can be attributed to the Letter Mail & Mail Solutions business,
whereas Direct Mail accounted for 28.5% of total divisional revenue. Media Post
i.e. the delivery of newspapers and magazines had a share of 9.5%. Branch
Services generated 7.9% of the division's revenue. In the 2017 financial year,
Letter Mail & Mail Solutions revenue amounted to EUR 782.8m, a drop of 2.4% from
the previous year. The downward volume development as a consequence of the
substitution of letters by electronic forms of communication continued. As a
result, letter mail volume was down by about 5% during the reporting period. Mix
effects related to the new product structure and postal rate adjustments for
individual products, for example letters with advice of receipt, positively
impacted revenue development. In contrast, the segment change of the Bulgarian
subsidiary M&BM Express OOD, which has been assigned to the Parcel & Logistics
Division since January 1, 2017, had the opposite effect of reducing divisional
revenue.

Revenue of the Direct Mail business fell by 0.8% to EUR 413.3m in the 2017
financial year. This slight drop in revenue can be attributed to the South East
and Eastern European region, where Austrian Post is increasingly focusing on the
parcel segment and gradually withdrawing from the mail business. The direct mail
revenue decrease of EUR 4.6m in South East and Eastern Europe was mainly due to
the deconsolidation of the subsidiaries in Romania and Poland. The advertising
business in Austria showed a revenue increase during the year under review in
spite of the lower revenue contributions from elections compared to the previous
year. The unaddressed direct mail segment generated a considerable revenue
increase, driven in part by the good development with customers in the food
retailing business, whereas revenue from addressed direct mail items fell
slightly. On balance, direct mail volumes in Austria rose by about 5% in 2017.
Media Post revenue fell by 3.1% year-on-year to EUR 137.1m. This development is
mainly due to the declining subscription business for newspapers and magazines.

Branch Services revenue totalling EUR 114.6m represents a decrease of 3.2% from
the previous year. Higher sales of retail products were in contrast to the
structural decline in revenue from financial services.

Reported total revenue of the Parcel & Logistics Division decreased in 2017 from
EUR 556.0m to EUR 495.6m. Divisional revenue was up 17.7 % excluding trans-o-
flex which was deconsolidated in April 2016 and contributed revenue of EUR
134.8m in the previous year. Adjusted for positive one-off effects, the
underlying revenue growth in 2017 is estimated to be about 12%. Additional
revenue during the reporting period was generated by the launch of a simplified
product structure featuring the new "Packet". Moreover, the segment change of
the Bulgarian subsidiary M&BM Express OOD, which was still assigned to the Mail
& Branch Network Division in the previous year, took place as of January 1,
2017. Revenue of the Parcel & Logistics Division was up 15.3 % when adjusted to
take account of M&BM Express OOD. This strong growth resulted mainly from the
ongoing e-commerce trend, which led to a substantial increase in private
customer parcels. Generally, the Austrian parcel market is developing very
dynamically, producing double-digit growth rates. Austrian Post once again
benefitted disproportionately from this market growth in the reporting period.
Intense competition still prevails. At the same time, quality requirements and
delivery speed as well as price pressure are increasing.

From a regional perspective, 80.4% of total revenue in the Parcel & Logistics
Division was generated in Austria in the 2017 financial year and 19.6% by the
subsidiaries in South East and Eastern Europe. The business in Austria as well
as in the CEE/SEE markets showed substantial growth rates. Revenue rose 16.2% in
Austria in the period under review. Revenue increased by 24.0% in South East and
Eastern Europe, with EUR 9.9m being due to M&BM Express OOD, Bulgaria, which is
now assigned to the Parcel & Logistics Division. On a like-for-like basis,
revenue in CEE/SEE was up by 11.3% in 2017.

EXPENSE AND EARNINGS DEVELOPMENT
Staff costs comprise a major factor in the cost structure of Austrian Post's
operating expenses. Accordingly, 55.4% of total operating expenses incurred by
Austrian Post in 2017 were attributed to staff costs. The second largest expense
item, accounting for 22.3% of operating expenses, was raw materials, consumables
and services used, of which a large part related to external transport services.
Other operating expenses comprised 17.6% of total costs, whereas depreciation,
amortisation and impairments accounted for 4.7%.

Raw materials, consumables and services used fell to EUR 409.9m in the 2017
financial year from EUR 495.2m in the previous year. Taking account of the
disposal of trans-o-flex, this item increased by EUR 13.3m, mainly due to higher
costs for outsourced transport services required to handle parcel volume growth.
Austrian Post's staff costs amounted to EUR 1,020.1m in 2017, comprising a drop
of 1.5% from the previous year. On a like-for-like basis excluding trans-o-flex,
total staff costs were up by EUR 8.9m from the prior-year level. This was
primarily attributable to the increased allocation to provisions for non-
operational staff cost.

This rise was in contrast to a stable development for salaries and wages, which
demonstrates that the resolute continuation of measures to enhance efficiency
and improve the staff structure was able to compensate for annual salary
increases mandated by collective agreements and biennial pay rises. On balance,
the Austrian Post Group employed an average of 20,524 people (full-time
equivalents) in the 2017 financial year, compared to 21,187 employees (excl.
trans-o-flex) working for Austrian Post in 2016. In addition to operational
staff costs, staff costs of Austrian Post also include various non-operational
costs, for the most part termination benefits and changes in provisions, which
are primarily related to the specific employment situation of civil servants at
Austrian Post. The above-mentioned increase in the need to allocate provisions
resulted mainly from the realignment of the financial services business in the
branch network. In the context of the gradual separation of the cooperation with
the banking partner BAWAG P.S.K., an initial agreement was concluded with
regards to the redimensioning of bank consultancy services for which
corresponding provisions were allocated. These provisions were netted against
amounts stipulated in the change agreement and tended to increase expenses.

The year 2017 showed a considerable increase in both other operating expenses
and other operating income. Other operating income rose to EUR 112.7m compared
to EUR 70.1m in the previous year. Other operating income in the reporting
period included claims related to non-wage labour costs paid in previous
periods. Netted against any compensation payments, which are reported under
other operating expenses, these claims amounted to EUR 21.0m in 2017. As a
result of these compensation payments along with higher IT and consulting costs,
other operating expenses in the period under review amounted to EUR 325.0m
compared to EUR 294.1m in the previous year. The year 2016 included a negative
effect of EUR 16.7m relating to the requirement to recognise the currency
translation reserves in profit and loss, which was attributable to the change in
reporting for Austrian Post's stake in Aras Kargo a.s. to a financial asset
(previously a financial asset accounted for using the equity method).

EBITDA of the Austrian Post Group totalled EUR 294.6m in 2017, up from EUR
277.1m in 2016. This represents an increase by EUR 17.5m or 6.3%. As a result,
the EBITDA margin of the Group rose from 13.6% to 15.2%. In addition to the
operating development of the mail and parcel businesses, earnings in both 2016
and 2017 were impacted by positive and negative special effects which, on
balance, largely offset each other. These special effects in 2016 almost
completely impacted EBITDA. In contrast, the negative effects in the period
under review were related to impairment losses. For this reason, the 2017
financial year showed a substantial increase in EBITDA, which was reduced on the
level of EBIT and profit for the period.

In total, depreciation, amortisation and impairment losses in the reporting
period amounted to EUR 86.8m, compared to EUR 74.8m in the previous year.
Planned depreciation and amortisation at EUR 72.8m in 2017 was at the prior-year
level, whereas impairment losses rose from EUR 2.3m to EUR 14.1m. The impairment
losses recognised in the 2017 financial year related to goodwill of
subsidiaries, as well as impairment losses on selected properties and buildings.
EBIT in 2017 reached EUR 207.8m compared to the prior-year level of EUR 202.3m,
comprising a rise of 2.7% or EUR 5.5m and an improvement in the EBIT margin from
10.0% to 10.7%.

The other financial result increased from minus EUR 0.7m in the previous year to
EUR 12.8m in the 2017 financial year. This rise was mainly due to a positive
effect in the amount of EUR 11.0m from the sale of indirectly held shares in
BAWAG Group AG. After deducting income tax, the Group's profit for the period
(profit after tax) increased to EUR 165.0m from the prior-year figure of EUR
152.7m. Accordingly, undiluted earnings per share were EUR 2.45 for the 2017
financial year compared to EUR 2.26 in the previous year.

From a divisional perspective, EBITDA reported by the Mail & Branch Network
Division totalled EUR 312.8m in 2017, comprising a year-on-year decrease of
2.1%. Divisional EBIT in the reporting period improved by 1.6% to EUR 289.6m
despite the revenue decline. The intensification of logistics synergies and the
increased delivery of parcels and the new "Packet" by mail logistics positively
impacted the division's earnings development during the period under review. In
2017, about 52% of parcels were already delivered by mail logistics.

The Parcel & Logistics Division generated an EBITDA of EUR 58.1m in the year
under review, up from EUR 29.8m in the previous year. EBIT was EUR 42.8m
compared to the prior-year figure of EUR 18.5m. The year 2016 included a change
in reporting for the stake held in Aras Kargo a.s. to a financial asset, which
negatively impacted earnings in the amount of EUR 16.7m. Adjusted for this
effect, earnings in the previous year totalled EUR 35.2m. Accordingly, on an
operating basis the division succeeded in improving earnings by 21.7%. The high
level of profitability is above all attributable to the good utilisation of the
logistics infrastructure in the Austrian parcel business.

EBIT of the Corporate Division (incl. Consolidation) fell by EUR 23.4m to minus
EUR 124.7m. A positive effect in staff costs related to various legal changes
increased earnings in 2016, whereas the Corporate Division was impacted by both
positive and negative earnings effects in the reporting period. Claims related
to non-wage labour costs paid in previous periods comprised a positive effect.
In contrast, impairment losses and an increased need to allocate provisions in
connection with the realignment of financial services in the branch network
negatively impacted earnings.

CASH FLOW AND BALANCE SHEET
The gross cash flow totalled EUR 273.7m in the 2017 financial year compared to
EUR 274.7m in the 2016 financial year. The cash flow from operating activities
of EUR 255.7m was EUR 32.1m higher than in the previous year. The increase is
attributable to lower payments in connection with provisions compared to the
previous year as well as higher liabilities. The increase in trade and other
receivables had the opposite effect. The cash flow from investing activities
reached a level of minus EUR 109.1m in 2017 compared to the prior-year level of
minus EUR 105.1m. Free cash flow in 2017 thus totalled EUR 146.6m. Operating
free cash flow (before acquisitions/securities and the new corporate
headquarters) rose from EUR 156.8m in 2016 to EUR 178.3m in the year under
review. This rise can be partly attributed to increased cash holdings by
customers. In the context of business activities of one of its subsidiaries,
Austrian Post holds temporarily cash belonging to customers, which has not been
remitted to them yet. These cash holdings are subject to fluctuations, which do
not reflect the operating development of the company. Adjusted for this effect,
the operating free cash flow of Austrian Post amounted to EUR 171.4m in the 2017
financial year. 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 level of cash and cash equivalents invested at the
lowest possible risk. Equity of the Austrian Post Group amounted to EUR 698.8m
as at December 31, 2017, corresponding to an equity ratio of 41.7%. The analysis
of the company's finan­cial position shows a high level of liquidity. This
includes cash and cash equivalents of EUR 290.0m and securities of EUR 80.6m.
These financial resources are in contrast to financial liabilities of only EUR
6.8m.

OUTLOOK 2018 UNCHANGED
Developments over the past quarterly periods confirm the basic underlying trends
in the mail and parcel businesses. The company continues to anticipate volume
declines of about 5% p.a. in the traditional addressed letter mail business,
although volume developments in individual customer segments differ. The direct
mail business strongly depends on corporate advertising budgets and the economic
environment and is therefore subject to fluctuations. Parcel volumes are
developing positively as a result of the increase in online shopping. The e-
commerce trend should continue to result in double-digit volume growth of
private customer parcels. At the same time, customer requirements with respect
to quality and delivery are rising against the backdrop of increasing price
pressure.

All in all, Austrian Post forecasts an ongoing stable revenue development in the
2018 financial year (2017 revenue: EUR 1,938.9m). The expected business
development is based on various planning assumptions, such as a continuation of
the basic trends in the mail and parcel businesses. Addressed letter mail
volumes will likely continue to decline by about 5% p.a., whereas a stable
development of direct mail revenue should be supported through the projected
economic upswing. On a medium-term basis, Austrian Post will be required to
adjust its service and product offering in the mail segment to current customer
needs. In line with international trends, the company aims to expand the product
range and enhance the customer's freedom of choice. As stipulated by law,
customers should also be able to select the option of delivery within several
working days. In the branch network, structurally related changes in the
financial services business are expected to continue. Therefore, the task is to
define products and services, which are up to date and will also expand the
service offering of the branch network in the future. All strategic options for
the period following the end of the cooperation agreement with Austrian Post's
current banking partner BAWAG P.S.K. are being evaluated. An amicable and
gradual separation of the cooperation with BAWAG P.S.K. should take place for
the most part by the end of 2019. At the same time, a redimensioning of bank
consulting services will be carried out, though the offering of counter
transactions will be maintained. In the medium term, however, the financial
services business will remain an important part of Austrian Post's business
operations, in light of the fact that it comprises a meaningful complement to
postal services.Double-digit growth rates are expected in the Austrian parcel
market due to the ongoing online shopping boom. This could lead to more
intensive competition, stronger price pressure or partial delivery by individual
large-volume customers. On the basis of robust market growth and potential
market share shifts, growth rates from the mid-single digit to low double-digit
range are possible for Austrian Post's parcel business.

With respect to its earnings development, Austrian Post is pursuing the goal of
generating stable operating earnings in 2018 (2017 EBIT: EUR 207.8m). Austrian
Post is continually optimising its structures and processes in order to further
enhance the efficiency of all its services. In spite of declining volumes, the
company anticipates good capacity utilisation of its mail logistics
infrastructure, which is being used now more efficiently by means of the joint
delivery of letters and parcels. In contrast, Austrian Post is faced with the
challenges posed by the structural decline in the traditional banking business
and the corresponding need to take structural measures to lay the foundation for
a sustainable successful financial services business. Austrian Post will
continue to resolutely make investments designed to enhance efficiency and
service quality at the customer interface. Against the backdrop of ongoing
market growth in the private customer parcel segment, measures are being taken
to double sorting capacities within the next four years. As a result, increasing
investments in Austrian parcel logistics are being earmarked in the medium term.
In addition to the ongoing investments in the core business of about EUR 60-70m
annually, additional growth investments are planned for the coming years. The
objective is to expand existing sorting capacities as quickly as possible and
invest at least EUR 50m for this purpose in 2018. In addition, there is the
possibility of expanding existing commercial properties or newly acquiring land.
As in the past, 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. The Management Board will propose to the Annual General
Meeting scheduled for April 19, 2018 to approve the distribution of a dividend
amounting to EUR 2.05 per share for the 2017 financial year. Thus, the company
is once again continuing its attractive and predictable dividend policy on the
basis of solid balance sheet structure and the generated cash flow. Austrian
Post adheres to its objective of distributing at least 75% of the Group's net
profit to its shareholders.





Further inquiry note:
Austrian Post
Harald Hagenauer
Head of Investor Relations, Group Auditing & Compliance
Tel.: [phone]
[e-mail]

Austrian Post
Ingeborg Gratzer
Head of Press & Internal Communications
Tel.: [phone]
[e-mail]

end of announcement euro adhoc
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issuer: Österreichische Post AG
Rochusplatz 1
A-1030 Wien
phone: [phone]
FAX:
mail: [e-mail]
WWW: www.post.at
ISIN: AT0000APOST4
indexes: ATX
stockmarkets: Wien
language: English