EANS-News: Österreichische Post AG / AUSTRIAN POST Q1 2016: REVENUE DECREASE OF 1.2%, EBIT NEGATIVELY IMPACTED BY INTEREST RATE EFFECTS, STABLE OUTLOOK FOR 2016 CONFIRMED

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3-month report

- Revenue - Revenue decline of 1.2% to EUR 592.8m - Mail revenue
decline attributable to volume decrease and specific effects -
Stable development in the parcel segment

- Earnings

- EBIT down 5.3% to EUR 51.1m
- Earnings negatively impacted by interest rate effects for staff-related
provisions
- Earnings per share of EUR 0.57

- Cash flow and balance sheet
- Increase in the cash flow from operating activities to EUR 60.1m
- Strong cash position and low level of financial liabilities

- Outlook 2016
- Revenue forecast of EUR 2.0 bn (current business portfolio)
- Targeted stable development of operating earnings (EBIT)

OVERVIEW OF AUSTRIAN POST

Revenue of the Austrian Post Group in the first quarter of 2016
totalled EUR 592.8m, a slight decline from the previous year. The
parcel segment showed a stable revenue development, whereas revenue
decreased in the mail business, which continues to be impacted by the
ongoing substitution of traditional letter mail by electronic forms
of communication. In particular, public sector customers as well as
banks and insurance companies are trying to reduce mail volumes.
Moreover, in general, mail revenue is strongly influenced by election
effects. However, no elections took place during the period under
review, in contrast to the prior-year quarter. Business with direct
mail showed a diverging development of individual customer segments.
The volume of addressed direct mail items declined in contrast to the
rise in unaddressed mail volumes.

The trend towards increased e-commerce is continuing in the parcel
segment, leading to further growth of parcel volumes in Austria. At
the same time, there has been a perceptible intensification of
competition which Austrian Post is addressing through ongoing
investments at the customer interface. Customer service was enhanced
to include Saturday and evening delivery. In addition, the company
offers a range of innovative customer solutions. For example, 306
self- service zones and 218 pick-up stations throughout Austria were
available to customers as at the end of March 2016. The market trends
positively impacting the business operations of Austrian Post's
international subsidiaries in South East and Eastern Europe
continued. The German subsidiary trans-o-flex was sold, with the
closing and deconsolidation taking place effective April 8, 2016.

EBIT of Austrian Post amounted to EUR 51.1m in the first quarter of
2016, or EUR 2.8m below the prior-year quarter. This development can
be mainly attributed to interest rate effects on staff-related
provisions, which were EUR 4.7m higher than in the previous year.
However, these effects could be partially offset by further cost
optimisation and enhanced efficiency.

A dividend of EUR 1.95 per share for the past financial year was
distributed to shareholders on April 28, 2016. In this way, Austrian
Post once again remains committed to its clear capital market
positioning as a reliable dividend stock. "The focus of our strategic
activities is ensuring reliability and consistency on behalf of our
company's shareholders and other stakeholders. We intend to continue
along this path in the future," says CEO Georg Pölzl. Austrian Post
is striving to generate revenue of EUR 2.0 bn in 2016 on the basis of
its current business portfolio, taking account of the sale and
deconsolidation of the German subsidiary trans-o-flex. Furthermore,
the company also aims to achieve a stable development of its
operating earnings (EBIT).

REVENUE DEVELOPMENT IN DETAIL

In the first quarter of 2016, Group revenue of Austrian Post
decreased by 1.2% from the prior-year level to EUR 592.8m. The Parcel
& Logistics Division showed a stable revenue development, whereas the
Mail & Branch Network Division reported a revenue decline during the
period under review.

Revenue of the Mail & Branch Network Division totalled EUR 370.5m in
the first quarter of 2016, implying a year-on-year decrease of 1.9%.
Generally speaking, revenue development is strongly influenced by
election effects in addition to the electronic substitution of letter
mail. There were no elections in the period under review, whereas
revenue effects from elections in the first quarter of 2015 amounted
to EUR 3.5m. Moreover, the revenue decrease is due to a changed
invoicing model for mobile products and the disposal of two mail
subsidiaries in Hungary and Slovakia in 2015.

In the first quarter of 2016, revenue in the Letter Mail & Mail
Solutions business of EUR 204.9m represents a drop of 0.7% from the
prior-year level. The basic trend towards declining mail volumes
related to the substitution of letters by electronic forms of
communication continues, with the decrease in the first quarter of
2016 at the upper end of the predicted range of minus 3-5%.
Furthermore, the lack of elections and discontinuation of one-time
mailings by various customers in the fields of banking and insurance
services had a negative impact on revenue development.

Revenue in the Direct Mail business fell by 5.7% to EUR 102.9m in the
first three months of 2016. This decline is mainly attributable to
the above-mentioned lack of revenue from elections and the sale of
two mail subsidiaries. In the first quarter of 2016, Media Post
revenue rose 2.1% year-on-year to EUR 34.3m. This included the annual
index-based adjustment. Branch Services revenue at EUR 28.4m remained
stable in spite of the changed invoicing model for mobile products.

Total revenue of the Parcel & Logistics Division remained stable in
the first quarter of 2016 at EUR 222.3m. The Premium Parcels business
(parcel delivery within one working day) contributes the largest
share or 75.1% of divisional revenue and generated revenue of EUR
166.9m in the first three months of 2016, implying a rise of 1.0%. In
addition to the good development of business parcels in Austria,
above-average growth was also achieved in higher value parcels for
private customers. In contrast, business in Germany showed a negative
development, with revenue down by EUR 2.7m.

EXPENSE AND EARNINGS DEVELOPMENT

Raw materials, consumables and services used were up by 0.4% during
the period under review, rising to EUR 183.1m. Although the cost of
materials declined, primarily as a consequence of lower fuel prices,
the costs for services used increased, particularly as a consequence
of expanded international business volumes.

Austrian Post's staff costs amounted to EUR 286.4m in the first
quarter of 2016, a rise of 1.7% year-on-year. Against the backdrop of
internationally low interest rates, the discount interest rate was
adjusted for various staff- related provisions, which in turn led to
a negative earnings effect of EUR 9.5m compared to EUR 4.8m in the
first quarter of 2015. The operational staff costs for salaries and
wages, which are part of total staff costs, remained largely stable
compared to the previous year.

In addition to the ongoing operational staff costs, staff costs also
encompass 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. In
addition to the previously-mentioned adjustment to the parameters for
interest-bearing provisions, costs for termination benefits totalled
EUR 4.9m during the period under review.

In the first quarter of 2016, other operating income at EUR 23.5m was
higher than the prior-year figure due to the positive accounting
effect arising from the sale of Austrian Post's subsidiary
trans-o-flex. On balance, the net amount of accounting effects in
connection with the sale of trans-o-flex offset against the operating
earnings of the company in the first quarter of 2016 was slightly
positive. Other operating expenses climbed 1.2% to EUR 77.3m, which
is due to higher maintenance, repair and consulting expenditures,
amongst other factors.

On balance, earnings before interest, tax, depreciation and
amortisation (EBITDA) of Austrian Post fell by 7.6% or EUR 5.7m to
EUR 69.4m in the first quarter of 2016. This decline is primarily due
to the above-mentioned interest rate effect for staff-related
provisions as well as the drop in revenue. The corresponding EBITDA
margin was 11.7%.

Earnings before interest and tax (EBIT) in the first three months of
the 2016 financial year reached a level of EUR 51.1m, down 5.3% or
EUR 2.8m from the previous year. The EBIT margin was 8.6%.

The other financial result fell to minus EUR 0.2m, from EUR 3.4m in
the prior- year quarter. This development is mainly attributable to
interest income arising in March 2015 as a consequence of the early
termination of a cross-border leasing transaction for various postal
sorting facilities. Accordingly, earnings before tax (EBT) in the
first quarter of 2016 were EUR 50.8m, compared to EUR 57.4m in the
previous year. After deducting income tax to the amount of EUR 12.2
m, the Group net profit for the period (profit after tax) amounted to
EUR 38.7m, down from the prior-year figure of EUR 43.8m. This
corresponds to undiluted earnings per share of EUR 0.57 for the first
three months of 2016.

From a divisional perspective, the Mail & Branch Network Division
generated EBITDA of EUR 79.7m in the first quarter of 2016, a decline
of 5.7%. Due to the lower revenue contributions described above, EBIT
of the division amounted to EUR 71.6m, a drop of 6.6% or EUR 5.1m
from the previous year.

EBITDA of the Parcel & Logistics Division in the first three months
of 2016 amounted to EUR 10.5m, compared to the prior-year level of
EUR 12.3m. EBIT of the division in the reporting period totalled EUR
7.8m, up EUR 0.6m from the previous year.

EBIT of the Corporate Division(including Consolidation) improved by
EUR 1.6m to minus EUR 28.3m, although the previously-mentioned
parameter adjustment for staff-related provisions resulting in
expenses of EUR 9.5m reduced divisional earnings by EUR 6.5m.

CASH FLOW AND BALANCE SHEET

Cash flow from operating activities of EUR 60.1m was slightly above
the prior- year level of EUR 59.6m. The decline in trade receivables
had a positive effect, whereas higher payments led to a decrease in
provisions.

Cash flow from investing activities reached a level of minus EUR
21.8m in the first three months of 2016, compared to a positive cash
flow of EUR 33.7m in the prior-year period. This development was
mainly related to the sale of Austrian Post's former corporate
headquarters, for which the outstanding balance of the purchase price
of EUR 60.0m was paid in the first quarter of 2015. Cash outflows for
the acquisition of property, plant and equipment (CAPEX) amounted to
EUR 17.1m in the first quarter of 2016, above the level of EUR 15.8m
in the previous year. CAPEX included payments of EUR 9.6m relating to
the construction of Austrian Post's new corporate headquarters. In
aggregate, free cash flow during the reporting period was EUR 38.3m,
down from EUR 93.3m in the previous year. The difference is primarily
due to the above-mentioned sale of Austrian Post's former corporate
headquarters. Adjusted to take account of this special effect as well
as payments for the new corporate headquarters, operating free cash
flow before acquisitions/securities and other cash flow from
investing activities amounted to EUR 52.6m in the first quarter of
2016, compared to the prior-year figure of EUR 46.9m.

Austrian Post pursues a conservative balance sheet and financing
structure. This is demonstrated by the high equity ratio, low
financial liabilities and the solid level of cash and cash
equivalents invested with the least possible risk. Equity of the
Austrian Post Group totalled EUR 675.5m as at March 31, 2016,
corresponding to an equity ratio of 41.2%. An analysis of the
financial position of the company shows a high level of current and
non-current financial resources of EUR 397.7m, including cash and
cash equivalents of EUR 336.2m as well as financial investments in
securities of EUR 61.4m. These financial resources contrast with
financial liabilities of only EUR 12.2m.

EMPLOYEES

The average number of employees (full-time equivalents) at the
Austrian Post Group totalled 22,952 people during the first three
months of 2016. Most of Austrian Post's staff or a total of 17,359
full-time equivalents is employed by the parent company
Österreichische Post AG.

OUTLOOK 2016

National and international trends prevailing over the last quarterly
periods confirm the basic development in the mail and parcel
segments. The volume of addressed letter mail continues to decline
against the backdrop of cost-savings measures implemented by
customers sending large quantities of mail. In contrast, parcel
volumes are rising thanks to the steadily growing online business. On
the basis of its current business portfolio, Austrian Post is
striving to generate revenue of EUR 2.0 bn in the 2016 financial year
after its German subsidiary trans-o-flex was sold and deconsolidated
as at April 8, 2016.

In the mail business, the substitution of traditional letter mail by
electronic forms of communications is expected to continue, with the
decline in recent years within a range of minus 3-5%. In particular,
public sector customers as well as banks and insurance companies are
trying to reduce mail volumes, so that the decrease in the upcoming
quarterly periods is likely to be at a level of about 5%. The volume
of direct mail will remain volatile and show a diverging development
in the individual customer segments. On balance, the Parcel &
Logistics Division is expected to benefit from a growing market, but
one which will simultaneously feature intensified competition.
Innovative solutions are important to gain market share.

Austrian Post is continuously optimising its structures and processes
in order to further enhance efficiency in all the services it
provides. In addition to technological improvements and route
optimisation measures, the focus in mail logistics is also on
nationwide teamwork models in the delivery organisation. In the
Parcel & Logistics Division, the emphasis is on further expanding the
quality leadership in Austria. Both delivery quality and the
improvement of the service offering are guarantees for a high level
of customer satisfaction.

The earnings development of Austrian Post in 2016 will be impacted by
volume trends in the mail segment, the market development in the
parcel business and the success in implementing the planned
efficiency enhancement programme. On balance, Austrian Post aims to
achieve a stable development in 2016, with operating earnings (EBIT)
at the prior-year level.

The operating cash flow generated by Austrian Post will continue to
be used prudently and in a targeted manner to finance sustainable
efficiency increases, structural measures and future-oriented
investments. With this in mind, operational capital expenditure
(CAPEX) of about EUR 80m is planned in 2016, focusing on sorting
technologies, logistics and customer solutions. In addition, Austrian
Post is in the process of building its new corporate headquarters in
Vienna's third district. The project is expected to be completed in
2017. Austrian Post expects a cash flow development enabling the
company to continue its attractive dividend policy.

KEY FIGURES

Change
EUR m Q1 2015* Q1 2016 % EUR m
Revenue 599.9 592.8 -1.2% -7.2
thereof Mail & Branch Network 377.5 370.5 -1.9% -7.0
thereof Parcel & Logistics 222.4 222.3 -0.1% -0.2
thereof Corporate 0.0 0.0 - -
Other operating income 16.4 23.5 43.4% 7.1
Raw materials, consumables and
services used -182.5 -183.1 -0.4% -0.7
Staff costs -281.7 -286.4 -1.7% -4.7
Other operating expenses -76.3 -77.3 -1.2% -0.9
Results from financial assets
accounted for using the equity method -0.6 0.1 >100% 0.7
Earnings before interest, tax,
depreciation and amortisation (EBITDA) 75.1 69.4 -7.6% -5.7
Depreciation, amortisation and
impairments -21.2 -18.4 13.5% 2.9
Earnings before interest and
tax (EBIT) 53.9 51.1 -5.3% -2.8
thereof Mail & Branch Network 76.6 71.6 -6.6% -5.1
thereof Parcel & Logistics 7.2 7.8 7.8% 0.6
thereof Corporate/Consolidation -29.9 -28.3 5.5% 1.6
Other financial result 3.4 -0.2 <-100% -3.7
Earnings before tax (EBT) 57.4 50.8 -11.4% -6.5
Income tax -13.6 -12.2 10.5% 1.4
Profit for the period 43.8 38.7 -11.7% -5.1
Earnings per share (EUR)** 0.65 0.57 -11.6% -0.1
Cash flow from operating activities 59.6 60.1 0.8% 0.5
Investments in property, plant
and equipment (CAPEX) -15.8 -17.1 -8.2% -1.3
Free cash flow before
acquisitions/securities 104.6 42.4 -59.5% -62.2

* The presentation of revenue in the Parcel & Logistics Division and raw

materials, consumables and services used was adjusted. Exported
services are recognised according to the net method (previously
reported as revenue and expenses for services used). ** Undiluted
earnings per share in relation to 67,552,638 shares

The interim financial report Q1 2016 is available on the Internet at
www.post.at/ir --> Publications --> Financial Reports.

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

Austrian Post
Ingeborg Gratzer
Head of Press Relations & Internal Communications
Tel.: +43 (0) 57767-32010
ingeborg.gratzer@post.at

end of announcement euro adhoc
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company: 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