EANS-News: Österreichische Post AG / AUSTRIAN POST H1 2016: SLIGHT INCREASE IN REVENUE ADJUSTED FOR TRANS-O-FLEX SALE; EBIT UP 2.2%; STABLE OUTLOOK CONFIRMED

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6-month report

- REVENUE - Revenue development negatively impacted by the sale of
trans-o-flex - Revenue excl. trans-o-flex rose by 0.6%

- EARNINGS
- EBIT increase of 2.2% to EUR 98.6m
- Q2 operating earnings (EBIT) up 11.7%

- CASH FLOW AND BALANCE SHEET - 1.6% rise in the cash flow from
operating activities to EUR 109.3m - Strong cash position and low
level of financial liabilities

- OUTLOOK - Revenue forecast 2016 of EUR 2.0bn (current business
portfolio) - Targeted stable development of operating earnings
(EBIT) for 2016 and 2017

OVERVIEW OF AUSTRIAN POST

In the first half of 2016, Group revenue of Austrian Post fell from
the prior- year level of EUR 1,175.0m to EUR 1,071.1m. The revenue
decrease can be fully attributed to the sale of its subsidiary
trans-o-flex. Adjusted for the disposal of trans-o-flex at the
beginning of April 2016, Group revenue in the first half of 2016 rose
by 0.6% year-on-year and by 2.3% in the second quarter of 2016.

The mail business continues to be impacted by the structural trend
towards declining letter mail volumes caused by electronic
substitution. In particular, public sector customers as well as banks
are reducing their mail volumes. During the reporting period,
business with direct mail showed a diverging development of
individual advertising customer segments. The volume of addressed
direct mail items declined in contrast to the rise in unaddressed
mail volumes. In spite of these difficult conditions, Austrian Post
recorded a stable revenue development in the Mail & Branch Network
Division in the first six months of 2016. Second- quarter revenue
rose by 1.6%, driven by positive election effects including a record
number of votes that were cast in the Austrian presidential elections
by absentee ballot.

The trend towards increasing e-commerce is continuing in the parcel
segment, leading to further growth of parcel volumes in Austria in
spite of intensified competition. Adjusted for the revenue of
trans-o-flex, the Parcel & Logistics Division showed solid revenue
growth of 3.7% in the first half of 2016 and 4.9% in the second
quarter of the year.

Thanks to the good revenue development and stringent cost discipline,
operating earnings (EBIT) of Austrian Post were up 2.2% to EUR 98.6m.
EBIT in the second quarter even climbed by 11.7% to EUR 47.6m.
Austrian Post is continuously optimising structures and processes in
its mail and parcel logistics businesses in order to further reduce
costs and enhance efficiency. Moreover, Austrian Post is increasing
the attractiveness of its service offering. For this reason, the
company will expand its service portfolio at the beginning of 2017 in
order to provide even improved and simpler shipping options for
national and international online retailers. For example, it will be
possible to send a so- called "Packet", an optimal solution ranging
somewhere between a traditional letter and a secure parcel. The
"Packet" is as easy to handle as a letter, but still offers the
popular "track & trace" feature of a parcel.

"Innovative solutions as well as structural changes are necessary as
a means of further developing the business model of our company",
says Austrian Post CEO Georg Pölzl. "This is the only way we can
generate sustainable value for the benefit of all stakeholders,
especially customers, employees and shareholders and thus maintain
our attractive dividend policy."

REVENUE DEVELOPMENT IN DETAIL

In the first half of 2016, Group revenue of Austrian Post fell by EUR
103.9m from the prior-year level to EUR 1,071.1m, entirely driven by
the sale of trans- o-flex. Adjusted for this disposal, revenue in the
first half of 2016 rose by 0.6% in a year-on-year comparison, and
2.3% in the second quarter of 2016.

Mail & Branch Network Division revenue fell slightly by 0.2% to EUR
736.8m during the period under review. However, division revenue was
up 1.6% in the second quarter of 2016. The basic trend towards
e-substitution, which implies the replacement of traditional letter
mail by electronic forms of communication, is continuing. However,
elections generated higher revenue contributions than in the previous
year. In the first half of 2016, Letter Mail & Mail Solutions revenue
at EUR 403.5m represents an increase of 0.7% from the prior-year
level, with revenue in this business area even rising by 2.2% in the
second quarter. In the first half of 2016, revenue generated by the
Direct Mail business fell by 1.9% to EUR 206.2m. First-quarter
revenue declined but increased by 2.2% in the second quarter of the
year due to positive revenue effects from elections. Media Post
revenue rose by 1.1% year-on-year to EUR 70.4m (Q2 2016: +0.2%). In
contrast, Branch Services revenue was down 1.5% to EUR 56.7m during
the period under review. In the second quarter of 2016, the positive
development of mobile products was offset by a change in the
corresponding invoicing model. In aggregate, this led to a
second-quarter revenue decline of 2.9% in this business area.

Total revenue of the Parcel & Logistics Division fell from EUR 436.9m
to EUR 334.3m in the first half of 2016 as a consequence of the
previously-mentioned sale of the trans-o-flex subsidiary. Adjusted to
take account of trans-o-flex revenue, the division actually generated
a revenue increase of 3.7% in the first half of 2016 and 4.9% in the
second quarter of the year. Business developed positively in Austria
(+1.9%) despite tough competition and also expanded in the CEE
markets (+3.1%), whereas Austrian Post disposed of its German
subsidiary trans-o-flex on April 8, 2016.

With respect to its strategic investment in the Turkish parcel
services provider Aras Kargo, Austrian Post initiated a call option
process in order to acquire an additional 50% of the shares. However,
there are differences of opinion with the current majority
shareholder regarding implementation of the call option agreement as
well as the valuation of the shares. Accordingly, as in the past,
Austrian Post will continue to consolidate its 25% stake in Aras
Kargo at equity until further notice.

EXPENSE AND EARNINGS DEVELOPMENT

Raw materials, consumables and services used decreased from EUR
360.0m to EUR 286.3m during the period under review, which is due to
the sale of trans-o-flex. However, the costs for services used
increased, particularly as a consequence of higher international
business volumes.

Austrian Post's staff costs amounted to EUR 545.3m in the first
half-year 2016, comprising a drop of 1.2%. The disposal of
trans-o-flex reduced staff costs, whereas the adjustment of the
interest rate for various staff-related provisions led to a negative
earnings effect of EUR 14.6m in the first half of 2016. In the
previous year, this effect amounted to EUR 3.0m. The operational
staff costs for salaries and wages, which are part of total staff
costs, fell by 2.4% from the prior-year level due to the sale of
trans-o-flex. 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 in
Austria. In addition to the previously-mentioned adjustment to the
parameters for interest-bearing provisions, costs for termination
benefits totalled EUR 10.3m during the period under review compared
to EUR 11.0m in the previous year.

In the first half of 2016, other operating income at EUR 36.2m was
10.4% higher than the prior-year figure, whereas other operating
expenses were down 10.8% to EUR 139.1m. In both cases, the
differences can be attributed to the disposal of the trans-o-flex
subsidiary.

On balance, earnings before interest, tax, depreciation and
amortisation (EBITDA) of Austrian Post fell by 1.8% or EUR 2.6m to
EUR 137.2m in the first half-year 2016. The corresponding EBITDA
margin was 12.8%, comprising an improvement of 0.9 percentage points
from the comparable prior-year level. EBITDA in the second quarter of
2016 was up 4.9% to EUR 67.8m.

Total depreciation, amortisation and impairment losses in the
reporting period amounted to EUR 38.5m, a decrease of EUR 4.7m from
the first six months of 2015. This difference is mainly due to the
disposal of trans-o-flex. An impairment loss on goodwill for the
subsidiary PostMaster s.r.l., Romania, to the amount of EUR 2.0m had
the opposite effect. On balance, earnings before interest and tax
(EBIT) in the first six months of the 2016 financial year reached a
level of EUR 98.6m, representing an increase of 2.2% year-on-year.
The EBIT margin climbed from 8.2% to 9.2%. EBIT improved by 11.7% to
EUR 47.6m in the second quarter of 2016.

The other financial result fell to minus EUR 0.5m from EUR 3.4m in
the prior- year period. This development is mainly attributable to
the special effect totalling EUR 3.3m arising in March 2015 as a
consequence of the early termination of a cross-border leasing
transaction of various postal sorting facilities. Accordingly,
earnings before tax (EBT) in the first half of 2016 were EUR 98.1m,
compared to EUR 99.9m in the previous year. The income tax expense
rose 8.3% to EUR 24.4m as a result of changes in tax laws. After
deducting income tax, the Group's profit for the period (profit after
tax) amounted to EUR 73.8m in the first half of 2016, down from the
prior-year figure of EUR 77.4m. Accordingly, undiluted earnings per
share equalled EUR 1.09 for the first six months of 2016.

From a divisional perspective, the Mail & Branch Network Division
showed a stable development compared to the previous year, generating
an EBITDA of EUR 161.5m in the first half-year 2016. This reflected
the solid revenue development as well as strict cost discipline. EBIT
of the division was down 1.5% or EUR 2.2m from the prior-year level
to EUR 143.2m. This decrease is mainly due to the impairment loss on
goodwill for the Romanian subsidiary PostMaster s.r.l.

EBITDA of the Parcel & Logistics Division in the first six months of
2016 amounted to EUR 22.5m, compared to the prior-year level of EUR
23.1m. EBIT of the division in the reporting period improved from EUR
12.5m to EUR 16.9m due to the disposal of trans-o-flex.

The Corporate Division (including Consolidation) accounts for all
non-allocable expenses for central departments in the Group as well
as staff-related provisions assigned to it. Moreover, the division
includes innovation management and the development of new business
models. EBIT of the Corporate Division remained stable at minus EUR
61.5m, although the previously-mentioned parameter adjustment for
interest-bearing staff-related provisions resulting in expenses
totalling EUR 14.6m reduced divisional earnings by EUR 9.9m.

CASH FLOW AND BALANCE SHEET

Gross cash flow totalled EUR 138.3m in the first half-year 2016,
compared to EUR 151.8m in the previous year. This difference is
attributable to higher tax payments. In contrast, the cash flow from
operating activities of EUR 109.3m was slightly above the prior-year
level of EUR 107.7m.

The cash flow from investing activities reached a level of minus EUR
39.3m in the first six months of 2016, compared to EUR 16.8m in the
prior-year period. This deviation was mainly related to the sale of
Austrian Post's former corporate headquarters in Vienna's first
district, 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 38.5m in the first half of 2016, above the level of EUR 32.0m in
the previous year. CAPEX included payments of EUR 19.1m relating to
the construction of Austrian Post's new corporate headquarters. In
aggregate, free cash flow during the reporting period was EUR 70.0m,
down from EUR 124.4m in the previous year. The difference to the
prior-year is due to the above-mentioned payment of the outstanding
balance of the purchase price of Austrian Post's former corporate
headquarters in 2015. 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 89.9m in the first half of
2016, compared to the prior-year figure of EUR 86.8m.

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 573.7m as at June 30, 2016,
corresponding to an equity ratio of 39.3%. An analysis of the
financial position of the company shows a high level of current and
non-current financial resources of EUR 289.8m, including cash and
cash equivalents of EUR 229.1m as well as financial investments in
securities of EUR 60.7m. These financial resources contrast with
financial liabilities of only EUR 4.8m.

EMPLOYEES

The average number of employees (full-time equivalents) at the
Austrian Post Group totalled 22,092 people during the first six
months of 2016, comprising a reduction of 1,252 employees from the
prior-year period. The decrease is primarily due to the disposal of
the German subsidiary trans-o-flex. Most of Austrian Post's staff or
a total of 17,325 full-time equivalents are employed by the parent
company Österreichische Post AG.

OUTLOOK 2016

Austrian Post confirms its outlook for the entire year 2016 in light
of current trends and the company's solid performance in the second
quarter of 2016. Accordingly, on the basis of its current business
portfolio, Austrian Post continues to target revenue of EUR 2.0bn in
the 2016 financial year following the sale and deconsolidation of its
German subsidiary trans-o-flex as at April 8, 2016.

The volume of addressed letter mail continues to decline. In
contrast, the parcel business driven by e-commerce is showing a
consistently positive development. In the mail business, Austrian
Post still anticipates volume declines of about 5% p.a. in the light
of the increasing substitution of addressed mail items by electronic
forms of communication. The volume of direct mail will show a
diverging development in the individual customer segments and product
groups. Overall strong market growth in the Parcel & Logistics
Division will be accompanied by intensified competition and new,
innovative customer solutions.

The earnings forecast of Austrian Post also remains unchanged. The
company expects to generate stable operating earnings in 2016 with
EBIT at the prior- year level on the basis of current trends and
developments. Structures and processes are being continuously
optimised in both mail and parcel logistics in order to further
reduce costs and enhance efficiency. Furthermore, it is crucial to
increase the attractiveness of Austrian Post's service offering. For
this reason, the service portfolio will be expanded at the beginning
of 2017 in order to provide even better and simpler shipping options
for national and international online retailers. For example, it will
be possible to send a so- called "Packet", an optimal solution
ranging somewhere between a traditional letter and a secure parcel.
The "Packet" is as easy to handle as a letter, but still offers the
popular "track & trace" feature of a parcel. Innovative solutions as
well as structural changes are necessary as a means of continually
further developing the business model of the company. Austrian Post
not only aims to achieve stable operating earnings in 2016 but in
2017 as well.

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 EUR 70-80m is planned in 2016, focusing on sorting
technologies, logistics and customer solutions. In addition, Austrian
Post is making good progress with construction of its new corporate
headquarters in Vienna's third district, scheduled for completion in
2017. The expected cash flow development for the entire year 2016
should also enable Austrian Post to adhere to its attractive dividend
policy.

KEY FIGURES

Change

EUR m H1 2015* H1 2016 % EUR m Q2 2015* Q2 2016
Revenue 1,175.0 1,071.1 -8.8% -103.9 575.1 478.3
Revenue without
trans-o-flex 930.4 936.3 0.6% 5.8 456.2 466.6
thereof Mail & Branch
Network Division 738.0 736.8 -0.2% -1.3 360.5 366.3
thereof Parcel &
Logistics Division 436.9 334.3 -23.5% -102.6 214.5 112.1
thereof Corporate 0.1 0.0 - 0.0 0.0 0.0
Other operating income 32.8 36.2 10.4% 3.4 16.4 12.7
Raw materials,
consumables and
Services used -360.0 -286.3 20.5% 73.7 -177.5 -103.1
Staff costs -551.8 -545.3 1.2% 6.5 -270.1 -258.8
Other operating
expenses -156.0 -139.1 10.8% 16.9 -79.7 -61.9
Results from financial
assets accounted for
using the equity method -0.2 0.6 >100.0% 0.8 0.4 0.5
Earnings before interest,
tax, depreciation
and amortisation
(EBITDA) 139.7 137.2 -1.8% -2.6 64.6 67.8
Depreciation,
amortisation
and impairments -43.2 -38.5 10.8% 4.7 -22.0 -20.2

Earnings before

interest and tax
EBIT) 96.5 98.6 2.2% 2.1 42.6 47.6
thereof Mail & Branch
Network Division 145.4 143.2 -1.5% -2.2 68.8 71.7
thereof Parcel &
Logistics Division 12.5 16.9 35.4% 4.4 5.3 9.2
thereof Corporate/
Consolidation -61.4 -61.5 -0.2% -0.1 -31.5 -33.2
Other financial
result 3.4 -0.5 <-100.0% -3.9 -0.1 -0.3
Earnings before tax
(EBT) 99.9 98.1 -1.7% -1.7 42.5 47.3
Income tax -22.5 -24.4 -8.3% -1.9 -8.9 -12.2
Profit for the
period 77.4 73.8 -4.7% -3.6 33.6 35.1
Earnings per
share (EUR)** 1.14 1.09 -4.6% -0.05 0.50 0.52
Cash flow from
operating activities 107.7 109.3 1.6% 1.7 48.1 49.3
Investments in property,
plant and equipment
(CAPEX) -32.0 -38.5 -20.4% -6.5 -16.2 -21.4
Free cash flow before
acquisitions/securities 137.7 72.1 -47.7% -65.7 33.2 29.7

* The presentation of revenue in the Parcel & Logistics Division 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 H1 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