EANS-News: Österreichische Post AG / AUSTRIAN POST Q1 2017: INCREASE IN REVENUE AND EARNINGS

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quarterly report

Revenue positively impacted by seasonal effects - Revenue increase of
4.0% to EUR 488.7m (excl. trans-o-flex) - Seasonal effects due to the
late Easter holiday and two additional working days - Basic trends in
volume development continue (letters about -5%, parcels about +10%)
Stringent focus on customer needs - New product structure tailored to
the requirements of e-commerce market - Expansion of digital service
portfolio (e.g. e-letter, shöpping.at) - Expansion of capacities in
the parcel business Earnings rise due to the good revenue development
- EBIT up 6.4% to EUR 54.4m - Continuing focus on efficiency
enhancement and cost discipline - Increase in earnings per share to
EUR 0.60 Outlook 2017 confirmed - Aim to generate stable Group
revenue in 2017 (2016: EUR 1.9bn) - Targeted EBIT in line with 2016
performance

In the first quarter of the current financial year, Austrian Post's
Group revenue amounted to EUR 488.7m. Adjusted for the subsidiary
trans-o-flex sold in April 2016, the revenue increase equals 4.0%.
This positive development was strongly influenced by seasonal
effects. There were two additional working days in a year-on-year
comparison, and the late Easter holidays had a very positive impact
on first-quarter direct mail and parcel revenue. Operating earnings
(EBIT) totalled EUR 54.4m, an increase of EUR 3.3m from the previous
year. This improvement can be attributed to the gratifying revenue
development combined with stringent cost discipline. "We are very
satisfied with the first-quarter revenue and earnings development,
although the increase was mainly driven by seasonal effects. The
basic volume development trends are continuing, with letter mail
declining as a result of electronic substitution and the parcel
business profiting from the dynamic growth of the online shopping
market. We are striving to achieve a stable development with respect
to both revenue and earnings for the entire 2017 financial year",
comments Georg Pölzl, CEO of Austrian Post.

MAIL REVENUE HELD UP WELL - FURTHER RISE IN PARCEL REVENUE Revenue of
the Mail & Branch Network Division rose by 0.5% to EUR 372.4m during
the period under review. This increase is mainly due to the
aforementioned positive seasonal effects. The general trend towards
electronic substitution of traditional letter mail with a decline of
minus 5% per year is continuing. Adjusted for the subsidiary
trans-o-flex sold in April 2016, the Parcel & Logistics Division
generated revenue growth of 17.2% in the first quarter of 2017. The
revenue increase excluding the segment change of the Bulgarian
subsidiary M&BM Express OOD equalled 14.5%. The upward revenue
development was primarily driven by the ongoing trend towards online
shopping reinforced by the previously mentioned seasonal effects.
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 positively influenced
revenue development.

QUALITY LEADERSHIP IN THE CORE BUSINESS "Thanks to the consistent
orientation of our business operations to current customer needs and
the ongoing improvement of our service offering, Austrian Post
remains the undisputed market leader in the delivery of letters,
direct mail items and parcels", Pölzl adds. In particular, the
digital service portfolio is constantly being expanded. Recently, the
company launched the e-letter. About 90,000 activations demonstrate
the enormous interest in this new solution. The new online
marketplace "shöpping.at" is also in a state of infancy. The shöpping
platform should become a business hub for domestic retailers and
consumers thanks to its broad product range and the high delivery
quality guaranteed by Austrian Post. At the same time, Austrian Post
will continue to strongly focus on enhancing efficiency and
developing new innovative solutions. Synergies in the delivery of
letters and parcels, also resulting from the market launch of the new
"Packet", are now being more efficiently used. The company is
planning to build a new logistics centre north of Vienna to ensure
its future ability to handle a strong increase in parcel volumes with
the usual high quality.

CLEAR POSITIONING: RELIABILITY AND STABILITY A dividend of EUR 2.00
per share for the past financial year was distributed on May 4, 2017.
In this way, Austrian Post once again continued its commitment to a
clear capital market positioning as a reliable dividend stock.
"Reliability and predictability for shareholders and other
stakeholders of our company continue to be the focus of our strategic
activities, and we aim to continue along this path in the future",
says Pölzl. Accordingly, Austrian Post targets a stable development
for the entire 2017 financial year. On the basis of the expected
volume development, Austrian Post aims to generate Group revenue at a
stable level in 2017 (comparable revenue in 2016 excl. trans-o-flex
of EUR 1.9bn). Fluctuations in revenue development over the
individual quarterly periods in comparison to the prior-year figures
are to be expected. The targeted revenue development combined with
cost discipline and efficiently provided services should result in a
stable operating EBIT at the same level as in 2016 (2016 EBIT: EUR
202.3m).

The entire version of the outlook as well as detailed information
(excerpts) from the Group Management Report can be found below the
key figures table. The complete Interim Report Q1 2017 is available
at www.post.at/ir--> Reporting.

KEY FIGURES

Change
EUR m Q1 2016 Q1 2017 % EUR m
Revenue excl. trans-o-flex 469.7 488.7 4.0% 19.0
Revenue 592.8 488.7 -17.6% -104.1
thereof Mail & Branch
Network Division 370.5 372.4 0.5% 1.9
thereof Parcel & Logistics
Division 222.3 116.2 -47.7% -106.1
Parcel & Logistics Division
excl. trans-o-flex 99.2 116.2 17.2% 17.0
thereof Corporate/Cons. 0.0 0.0 -1.4% 0.0
Other operating income 23.5 14.8 -37.2% -8.7
Raw materials, consumables
and services used -183.1 -99.9 45.5% 83.3
Staff costs -286.4 -263.0 8.2% 23.5
Other operating expenses -77.3 -62.3 19.4% 15.0
Results from financial assets
using equity method 0.1 -0.5 <-100.0% -0.6
EBITDA 69.4 77.7 12.0% 8.3
Depreciation, amortisation
and impairment losses -18.4 -23.4 -27.3% -5.0
EBIT 51.1 54.4 6.4% 3.3
thereof Mail & Branch
Network Division 71.6 74.0 3.4% 2.5
thereof Parcel & Logistics
Division 7.8 9.4 21.2% 1.6
thereof Corporate/Cons. -28.3 -29.1 -2.9% -0.8
Other financial result -0.2 -0.1 46.7% 0.1
EBT 50.8 54.2 6.7% 3.4
Income tax -12.2 -13.8 -13.6% -1.7
Profit for the period 38.7 40.4 4.5% 1.7
Earnings per share (EUR)* 0.57 0.60 4.6% 0.0
Cash flow from operating
activities 60.1 61.8 2.9% 1.7
Investments in property,
plant and equipment (CAPEX) -17.1 -14.8 -13.8% 2.4
Operating free cash flow** 52.0 55.2 6.1% 3.2

* Undiluted earnings per share in relation to 67,552,638 shares

** Free cash flow before acquisitions/securities and before new
corporate headquarters

EXCERPTS FROM THE GROUP MANAGEMENT REPORT: REVENUE DEVELOPMENT IN
DETAIL In the first quarter of 2017, Group revenue of Austrian Post
fell by EUR 104.1m from the prior-year level to EUR 488.7m. This
revenue decrease is attributable to the sale of the subsidiary
trans-o-flex in April 2016. Adjusted for the disposed company
trans-o-flex, revenue increased in a year-on-year comparison by 4.0%
or EUR 19.0m. Two seasonal effects positively impacted first-quarter
revenue development. First, the reporting period featured two
additional working days. Moreover, the disproportionately strong
business in the pre-Easter weeks led to substantial volume increases
for parcels and direct mail items in March 2017. As a consequence of
the very late Easter holidays, the somewhat weaker advertising phase
during the Holy Week took place in the second quarter of the current
financial year in contrast to the Holy Week in the first quarter of
2016. 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 positively influenced
revenue development.

Revenue of the Mail & Branch Network Division rose by 0.5% to EUR 372.4m during
the period under review. This increase is mainly due to the aforementioned
positive seasonal effects. The general trend towards electronic substitution of
traditional letter mail is continuing. In the first quarter of 2017, Letter Mail
& Mail Solutions revenue amounted to EUR 206.4m, an increase of 0.7% from the
previous year. The basic trend towards declining letter mail volumes as a result
of the substitution of letters by electronic forms of communication is
continuing, although this development was offset by several positive revenue
effects during the period under review. On one hand, the first quarter of 2017
had two working days more than in the prior-year quarter. However, this positive
effect will be reversed again in the course of the year, with 2017 as a whole
featuring two fewer working days than 2016. In addition, the new product
structure and postal rate adjustments for individual products, for example
letters with confirmed receipt, led to higher revenue in a year-on-year
comparison. 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. Taking into
account these revenue effects and one-time mailings on the part of individual
customers, there continued to be a basic downward trend of minus 5% in the
reporting period with respect to the volume development of traditional letter
mail. In the first three months of 2017, revenue of the Direct Mail business
climbed 2.9% to EUR 105.9m. In addition to the two additional working days in a
year-on-year comparison, revenue growth is mainly attributable to the increased
advertising activities on the part of individual customer groups in the weeks
before Easter. The weaker advertising phase during the Holy Week of 2017 took
place in the second quarter due to the very late Easter holidays. Media Post
revenue fell by 8.2% year-on-year to EUR 31.5m. This drop of EUR 2.8m is
primarily due to the declining subscription business for newspapers and
magazines. Furthermore, revenue development in the Letter Mail, Direct Mail and
Media Post areas are generally strongly impacted by election effects. The
division generated about EUR 19m in additional revenue from elections in the
year 2016, whereas elections should not make any significant contributions to
revenue in the current financial year. No major revenue contributions can be
attributed to elections in the first quarter of both 2016 and 2017. However,
this effect will complicate revenue comparisons in the further course of the
year. Branch Services revenue remained stable at EUR 28.6m, showing a reduction
in financial services and a rise in sales of retail products.

Total revenue of the Parcel & Logistics Division decreased in the first quarter
of 2017 from EUR 222.3m to EUR 116.2m. Divisional revenue was up 17.2% excluding
the deconsolidated company trans-o-flex, which contributed revenue of EUR 123.1m
in the first quarter of 2016. The segment change effective January 1, 2017 of
the Bulgarian subsidiary M&BM Express OOD, which was still assigned to the Mail
& Branch Network Division in the prior-year period, had a positive impact on
revenue development. Revenue of the Parcel & Logistics Division was up 14.5%
when adjusted to take account of M&BM Express OOD. Generally speaking, the
private customer parcel market developed very dynamically due to the ongoing
e-commerce trend. The Austrian parcel market shows a basic trend of 10% annual
growth. Intense competition and high price pressure continue to prevail. In
particular, the disproportionately strong Easter business led to higher parcel
volumes from online orders. Furthermore, two extra working days in a
year-on-year comparison positively impacted the division's revenue development.
Additional revenue was also generated through the launch of a simplified product
structure featuring the new product, the "Packet", a special product offering
designed to fulfil the requirements of online orders. From a regional
perspective, 80.6% of total revenue in the Parcel & Logistics Division was
generated in Austria in the first quarter of the 2017 financial year and 19.4%
by the subsidiaries in South East and Eastern Europe. The business in Austria
and in the CEE markets showed substantial growth. Revenue rose 15.6% in Austria
and 24.5% in the CEE region. However, EUR 2.6m of this increase is due to M&BM
Express OOD, which was assigned to the Parcel & Logistics Division. Revenue in
CEE was up by 9.9% on a like-for-like basis.

EXPENSE AND EARNINGS DEVELOPMENT

Raw materials, consumables and services used fell to EUR 99.9m during
the period under review, down from EUR 183.1m in the previous year.
However, taking account of the sale of trans-o-flex, this expense
item increased, which is due to higher costs for outsourced transport
services to handle parcel volume growth.

Austrian Post's staff costs amounted to EUR 263.0m in the first
quarter of 2017, comprising a drop of 8.2%. On a like-for-like basis
excluding trans-o-flex, staff costs in the reporting period were only
slightly below the previous year. The decisive continuation of
measures to enhance efficiency and improve the staff structure
succeeded in compensating for annual salary increases and biennial
pay rises. In addition to 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. Total non-operational staff costs including changes in
provisions relating to revised discount interest rates totalled EUR
13.5m in the first quarter of 2017, a slight drop from the prior-year
level. The discount interest rates for various staff-related
provisions were increased against the backdrop of the development of
international interest rates, which led to a positive earnings effect
of EUR 4.1m. In contrast, higher expenditures for termination
benefits and social plan models had the opposite effect.

The results of the financial assets accounted for using the equity
method amounted to minus EUR 0.5m compared to EUR 0.1m in the first
quarter of 2016. The prior-year figure included a positive earnings
contribution from the Turkish company Aras Kargo a.s., which has been
recognised as a financial asset since the end of 2016.

On the basis of the good revenue development in Austria and the CEE
region, earnings before interest, tax, depreciation and amortisation
(EBITDA) of Austrian Post rose by 12.0% or EUR 8.3m in the first
quarter of 2017 to EUR 77.7m, corresponding to an EBITDA margin of
15.9%. Total depreciation, amortisation and impairment in the
reporting period amounted to EUR 23.4m, a rise of EUR 5.0m from the
previous year. This development can be attributed to an impairment
loss of EUR 2.7m on goodwill for the Croatian subsidiary Weber Escal
d.o.o. Further impairment losses were recognised at Overseas Trade Co
Ltd d.o.o. amounting to EUR 2.7m. Accordingly, earnings before
interest and tax (EBIT) in the first three months of 2017 were EUR
54.4m, comprising a rise of 6.4% or EUR 3.3m from the previous year.
The EBIT margin equalled 11.1%.

Earnings before tax amounted to EUR 54.2m, compared to the prior-year
figure of EUR 50.8m. The income tax expense equalled EUR 13.8m, up
EUR 1.7m from the first quarter of 2016. After deducting income tax,
the Group's profit for the period (profit after tax) was EUR 40.4m,
up from EUR 38.7m in the previous year. Accordingly, undiluted
earnings per share were EUR 0.60 for the first three months of 2017,
compared to EUR 0.57 per share in the prior-year period.

From a divisional perspective, EBITDA reported by the Mail & Branch
Network Division totalled EUR 82.1m in the first quarter of 2017, a
rise of 3.0%. First-quarter EBIT of the division was EUR 74.0m,
compared to EUR 71.6m in the previous year. Driven by further
efficiency improvements and strict cost discipline along with the
seasonally related revenue increase in the first quarter of the year,
EBIT was up 3.4% or EUR 2.5m.

The Parcel & Logistics Division generated an EBITDA of EUR 14.7m in the first
three months of 2017, compared to the prior-year level of EUR 10.5m. EBIT in the
period under review was EUR 9.4m, representing a year-on-year rise of EUR 1.6m.
EBIT of the first quarter 2016 included a slightly positive accounting effect
related to the disposal of trans-o-flex.

The Corporate Division encompasses all non-allocable expenses for central
departments in the Group as well as staff-related provisions assigned to it. In
addition, the division also encompasses innovation management and the
development of new business models. EBIT of the Corporate Division (incl.
Consolidation) fell by EUR 0.8m to minus EUR 29.1m. The increase in the discount
interest rate for interest-bearing provisions had a positive effect on earnings
in contrast to the negative effect of higher expenses for social plan models.

CASH FLOW AND BALANCE SHEET The cash flow from operating activities
at EUR 61.8m was 2.9% above the prior-year level. In particular, the
reduction of liabilities reduced cash flow in the reporting period.
In addition, tax payments were somewhat below the prior-year level.
Cash outflows for the acquisition of property, plant and equipment
(CAPEX) amounted to EUR 14.8m in the first quarter of 2017, below the
level of EUR 17.1m in the previous year. This development is due to
lower payments for construction of the new corporate headquarters,
which totalled EUR 7.3m in the first quarter of 2017. The operating
free cash flow was EUR 55.2m, up from EUR 52.0m in the first quarter
of 2016.

Austrian Post pursues a conservative balance sheet and financing
structure. This is primarily 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 amounted to EUR 710.8m as at March 31, 2017,
corresponding to an equity ratio of 45.1%. The analysis of the
company's financial positions shows a high level of financial
resources. This includes cash and cash equivalents of EUR 307.9m and
securities of EUR 75.5m. These financial resources are in contrast to
financial liabilities of only EUR 5.5m.

OUTLOOK 2017 Developments in the first quarter of 2017 show that the
basic underlying trends in the mail and parcel businesses are
continuing. Against this backdrop, Austrian Post confirms its
previously published guidance for the 2017 financial year. The trends
prevailing over the last few quarterly periods with respect to volume
flows relevant to the company's business development should continue,
provided that the predicted economic upswing persists. The company
anticipates volume declines of about 5% p.a. in the traditional
addressed letter mail business, although the volume developments in
individual customer segments strongly differ. Volatile volumes can be
expected in the direct mail segment in the course of the year. The
increasing use of online shopping channels should continue to lead to
strong volume growth of private customer parcels. Austrian Post
expects to be able to maintain its leading competitive position and
participate in market growth. The basic upward trend in the Austrian
parcel business is estimated to be about 10% per year.

On the basis of the expected volume development, Austrian Post aims
to generate Group revenue at a stable level in 2017 (comparable
revenue in 2016 excl. trans-o-flex of EUR 1.9bn). Fluctuations in
revenue development over the individual quarterly periods in
comparison to the prior-year figures are to be expected. This is due
to positive revenue effects in the Mail & Branch Network in 2016.
Additional revenue was generated from elections, especially in the
second and fourth quarters of 2016, whereas election-related revenue
of this magnitude is not anticipated in the current financial year.

In order to ensure the successful, long-term positioning of the
company, the focus is on strengthening Austrian Post's quality
leadership in core markets, and further developing postal services to
reflect current customer requirements. In addition, the company is
leveraging opportunities in growth markets such as transnational mail
volumes. It is also essential to tailor the offering of financial
services to customer needs. In this regard, the principle of
entrepreneurial due diligence demands a proactive and timely
evaluation of how financial services can be designed in order to
continue operating this business area as successfully as has been the
case up until now.

At the same time, Austrian Post will continue to strongly focus on
enhancing efficiency and developing new innovative solutions. Against
the backdrop of the strong market growth for private customer
parcels, measures are being taken to expand capacities. On balance,
operational capital expenditure (CAPEX) of EUR 70-80m is planned in
2017, primarily in the fields of sorting technologies, logistics and
customer solutions. Furthermore, construction work on the new
corporate headquarters is moving ahead on schedule, and will be
concluded in the autumn of 2017.

Austrian Post also confirms its existing outlook for 2017 with
respect to its earnings development. The targeted revenue development
combined with cost discipline and efficiently provided services
should result in a stable operating EBIT at the same level as in the
year 2016 (2016 EBIT: EUR 202.3m).

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

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