EANS-Adhoc: Österreichische Post AG / AUSTRIAN POST H1 2014: STABLE REVENUE DEVELOPMENT AND SLIGHT EBIT INCREASE; OUTLOOK CONFIRMED FOR 2014

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Financial Figures/Balance Sheet/6-month report
14.08.2014

- Market environment - Ongoing trend towards e-substitution of mail
but product innovations with stabilising effect - Solid growth of
the Austrian parcel market, tough competition in the international
parcel sector - Revenue - Stable development of Group revenue
(-0.1% in H1; +0.6 in Q2) - H1 revenue higher in the parcel
business (+3.0%), slight decrease in the mail segment (-1.8%) -
Earnings - Rise in both EBITDA and EBIT - Strict efficiency
enhancement and service offensive - Outlook for 2014 confirmed -
Stable revenue development in a challenging market environment -
EBIT improvement aspired for 2014

OVERVIEW OF AUSTRIAN POST Following a strong comparative period at
the same time last year, Austrian Post managed to keep Group revenues
in the first half of 2014 at a constant level. As in previous
periods, the parcel business showed solid revenue growth of 3.0% in a
year-on-year comparison. At the same time, Austrian Post was
successful in counteracting the downward trend in mail volumes caused
by electronic substitution thanks to its product innovations and
sales initiatives. As a result, the revenue decline in the mail
segment was kept quite low at 1.8%. In particular, revenue in the
mail business developed very gratifyingly in the second quarter of
2014, which was partly driven by positive revenue effects such as
growth in the field of Mail Solutions and elections. For example, a
record 15% of votes cast by Austrian voters in the EU elections were
submitted by absentee ballot. Once again, the Austrian parcel market
provided significant growth impetus. In addition, Austrian Post's
parcel subsidiaries in South East and Eastern Europe generated
exceptionally high growth rates. On the basis of a solid revenue
development and strong cost discipline, operating results (EBIT) rose
slightly to EUR 98.8m. The earnings development of the individual
divisions shows the importance of the ongoing cost optimisation
initiative. The revenue decline in the mail business was almost
completely offset by efficiency enhancement measures. Negative
effects related to the trans-o-flex Group, such as write-downs and
structural measures, still burdened the parcel business in the first
quarter of the year, but earnings improved slightly in the second
quarter. "Looking ahead to the entire 2014 financial year, we expect
a stable revenue development. At the same time we are striving to
achieve a further improvement in earnings (EBIT). In addition to
resolute cost optimisation in all processes, focusing our operations
to customer needs is at the heart of our strategic activities. In
order to further cement our market leadership in our core business,
we are continually expanding our self-service solutions and online
services such as the new Post App. However, we will also exploit
opportunities in growth markets and are currently testing the future
field of food logistics", says Austrian Post CEO Georg Pölzl.

REVENUE DEVELOPMENT IN DETAIL Group revenue remained consistently
high for the first half of 2014. On balance, total revenue was down
marginally, by 0.1% in the first half-year to EUR 1,171.9m.
Second-quarter revenue was up slightly by 0.6%, due mainly to
positive revenue effects in the mail business. The largest share, or
63.2%, of total Group revenue accounted the Mail & Branch Network
Division in the first half of 2014. However, divisional revenue in
the reporting period fell by 1.8% to EUR 741.2m. This drop can be
attributed to the ongoing electronic substitution of letters as well
as decreasing direct mail volumes. In the second quarter of 2014, the
revenue decline slowed to 0.4% due to offsetting positive revenue
effects, such as the EU elections. The Parcel & Logistics Division
generated 36.8% of total Group revenue, with revenue in the first
half rising by 3.0% to EUR 431.5m. Divisional revenue was also up by
2.3% in the second quarter of 2014. The Mail & Branch Network
Division generated external revenue of EUR 741.2m in the first half
of 2014. Of this amount, 53.7% can be attributed to the Letter Mail &
Mail Solutions business, whereas Direct Mail accounted for 28.5% of
total divisional revenue and the field of Media Post, including
newspaper and magazines, had a 9.6% share. In addition, Branch
Services accounted for 8.2% of divisional revenue. Letter Mail & Mail
Solutions revenue remained stable, with a slight plus of 0.1% from
the previous year to EUR 397.7m. The substitution of letter mail by
electronic media continues as previously. There were declines in some
areas, such as the small and medium business customer segment. In
contrast, ongoing sales initiatives and product innovations offset
the decline caused by e-substitution. Events such as the Austrian
Chamber of Labour elections in the federal provinces and the EU
elections contributed positively. New services offered in Mail
Solutions also contributed growth. On balance, positive revenue
effects more than offset the decreases during the reporting period.
However, the basic trend of declining letter mail volumes remains
valid. Revenue in the Direct Mail business was down 3.8% in the first
half of 2014 to EUR 211.5m. This field is continually influenced by
customer advertising expenditure volume and, amongst other factors,
by the overall economic environment as well. The pressure exerted by
online business on traditional mail order companies and retail stores
led to reduced advertising spending by several customers. Moreover,
several retail segments were affected by market consolidation. The
unaddressed segment, in particular, was subject to declining direct
mail volumes, especially building supplies stores. Media Post revenue
in the first half of 2014 rose slightly by 0.9% year-on-year to EUR
71.4m. At the same time, Branch Services revenue was down by EUR 6.2m
to EUR 60.6m, due to adjustments to telecommunications service rates
charged to customers by contractual partners resulting in a drop of
revenue from mobile telephony products. Financial services segment
revenue also declined. External revenue of the Parcel & Logistics
Division rose by 3.0% in the first half of 2014 to EUR 431.5m. Most
market share gains can be attributed to the Premium Parcels business
(parcel delivery within 24 hours), which accounts for around 75% of
total divisional revenue. These products are mainly used by business
customers. Premium Parcels generated revenue of EUR 323.4m in the
first half of the year, a rise of 2.9%. This positive development was
a consequence both of revenue growth from existing customers and
Austrian Post's success in attracting new customers. In addition to
the strong development of the business parcel field in Austria,
strong growth was also achieved in the higher value parcels for
private customers. Standard Parcels, which mainly involve shipments
to private customers in Austria, posted first half-year revenue of
EUR 90.6m, an increase of 1.1%. Other Parcel Services, which includes
various additional logistics services such as fulfilment, warehousing
and cash logistics, generated revenue of EUR 17.6m in the first half
of 2014, a rise of EUR 2.5m from the previous year. From a regional
perspective, 57% of total revenue in the Parcel & Logistics Division
was generated in Germany in the first half of 2014, 35% in Austria,
and 8% by the subsidiaries in South East and Eastern Europe. Revenue
in Germany was up by 1.2% in the first half year, although the
challenging competitive environment and the price pressure in this
market continue to have a perceptible impact on the business. At the
same time, revenue growth in Austria reached a level of 4.6%, a
development which is supported by the trend towards online shopping
as well as the higher market share in the B2B business. In total, the
subsidiaries in South East and Eastern Europe posted revenue growth
of 8.5% in the first half of 2014.

EXPENSE AND EARNINGS DEVELOPMENT Raw materials, consumables and
services used declined by 2.6% or EUR 9.6m to EUR 362.8m. This
development is primarily due to the decrease in costs for external
transport services in Germany. The business model of the trans-o-flex
Group was characterised by a high level of external value creation,
which is currently being reduced thanks to the takeover of
distribution companies. Staff costs of Austrian Post remained stable
in the first half of 2014 at EUR 551.7m. The operational staff costs
of salaries and wages, which are included in this total, were higher
in the reporting period compared to the prior-year level as a
consequence of the integration of the distribution companies in
Germany. The continuing strict efficiency enhancement measures and
improvement of the staff structure offset inflation-based cost
increases. Staff costs in the first half of 2014 also included
termination benefits totalling approximately EUR 11m as well as
wage-related contributions from previous periods of about EUR 7m.
Earnings before interest, tax, depreciation and amortisation (EBITDA)
rose by 3.7% to EUR 145.1m on the basis of a solid revenue
development and the consistent implementation of efficiency
enhancement measures. This corresponded to an EBITDA margin of 12.4%.
Depreciation, amortisation and impairment losses totalled EUR 46.3m
in the first half of 2014, an increase of EUR 4.8m from the
prior-year level attributable to an impairment loss of EUR 4.9m for
goodwill at the Polish subsidiary PostMaster Sp. z o.o. As a result,
earnings before interest and tax (EBIT) climbed only marginally by
0.4% from the previous year to EUR 98.8m. The corresponding EBIT
margin was 8.4%. After deducting income tax of EUR 23.4m, the Group
net profit (profit after tax for the period) amounted to EUR 73.6m, a
decline of 3.8% compared to the first half of 2013. This corresponds
to undiluted earnings per share of EUR 1.08 for the first half-year
2014. From a divisional perspective, the Mail & Branch Network
Division generated an EBITDA of EUR 158.9m during the period under
review, a rise of 1.0%, whereas EBIT totalled EUR 138.9m, down 2.1%
from the previous year. The revenue decrease in the mail business was
almost completely offset by strong cost discipline. The previously
mentioned impairment loss on goodwill of Austrian Post's Polish
subsidiary also negatively impacted the division's earnings. EBITDA
of the Parcel & Logistics Division amounted to EUR 22.5m in the first
half of 2014, the same as in the previous year, whereas EBIT totalled
EUR 12.1m compared to the prior-year figure of EUR 12.4m. Divisional
earnings improved in the second quarter, following the first-quarter
negative effects of EUR 2.7m relating to the trans-o-flex Group.
Write-downs on receivables as well as various structural measures
were necessary within the context of the ongoing efficiency
enhancement programme carried out during the reporting period. The
Corporate Division (including Consolidation) basically encompasses
all expenses for central departments in the Group as well as
staff-related and other provisions. The reduced need to allocate
provisions for employee under-utilisation in the first half of 2014
resulted in a slightly improved EBIT of minus EUR 52.2m in this
division.

CASH FLOW AND BALANCE SHEET In the first half of 2014, operating cash
flow amounted to EUR 95.9m, down by EUR 11.4m from the comparable
prior-year figure. In contrast to the previous year, the cash flow
from operating activities in the first half of 2014 includes higher
tax payments as well as payments connected to wage-related
contributions from previous periods. The cash flow from investing
activities of minus EUR 12.6m in the first half of 2014 was lower
than in the prior-year. Not only were there hardly any payments made
in the reporting period in connection with acquisitions, but the cash
outflows for the purchase of property, plant and equipment reported
at EUR 22.2m were below the prior-year period. At the same time,
proceeds from the redemption of financial investments in securities
amounting to EUR 13.0m served to increase the cash flow. Free cash
flow totalled EUR 83.2m in the reporting period. Free cash flow
before acquisitions and securities reached EUR 70.5m, a rise of EUR
11.6m from the previous year. Austrian Post pursues a conservative
balance sheet policy and financing structure. This is demonstrated by
the high equity ratio, low financial liabilities and solid cash and
cash equivalent levels invested with the least possible risk. Equity
of the Austrian Post Group totalled EUR 641.2m as at June 30, 2014,
corresponding to an equity ratio of 41.1%. An analysis of the
financial position of the company shows a high level of current and
non-current financial resources of EUR 241.3m (cash and cash
equivalents of EUR 188.3m as well as financial investments in
securities of EUR 53.1m). These financial resources are in contrast
to financial liabilities of only EUR 19.9m.

EMPLOYEES The average number of employees (full-time equivalents) at
the Austrian Post Group totalled 23,722 people during the period of
review, comprising a decline of 185 employees from the prior-year
period. The staff of the trans-o-flex Group increased by 492
employees due to the integration of various distribution companies in
Germany. Most of Austrian Post's staff or a total of 18,186 employees
(full-time equivalents) is employed by the parent company
Österreichische Post AG.

OUTLOOK 2014 The mail and parcel businesses continued to develop in
line with expectations in the second quarter of 2014. For this
reason, Austrian Post confirms its previously announced outlook for
the entire year 2014, in which the company is striving to achieve a
stable revenue development. Decreases in mail revenue should be
compensated by higher parcel revenue. On a long-term basis, it is
important for the company to counteract the ongoing volume decline
for addressed mail by introducing customer-oriented solutions. The
international baseline scenario consists of a 3-5% annual decrease in
addressed mail volumes as a consequence of electronic substitution.
Up until now, Austrian Post has succeeded in keeping this decline at
the lower end of the anticipated range thanks to a series of
different measures. In order to keep the reduction in Mail revenues
at a moderate level, the company's fundamental goal is to pursue
ongoing sales initiatives and innovation supported by
inflation-related price adjustments. Another structural trend is the
pressure exerted by e-commerce on many retail companies and the
resulting volatile advertising spending on the part of these affected
firms. In contrast, in the Parcel & Logistics Division online
shopping is the driving force behind growth in the private customer
business, expected to amount to 3-6% annually depending on the
region. The development of the business parcel field in the
individual markets depends on the state of the economy and the
current competitive situation. Austrian Post is implementing a
programme of measures to achieve "operational excellence" in order to
further increase the efficiency of the services provided. The new
automation and sorting technologies should enable Austrian Post to
consistently exploit its cost reduction potential. For this reason,
capital expenditure in the year 2014 will once again be in the range
of about EUR 90-100m. Profitability is the top priority in the
company's international business operations, encompassing both a
strict focus on the core business as well as ensuring the steady
increase of efficiency in all processes. With respect to its earnings
development, the Austrian Post Group remains committed to the target
of achieving a sustainable EBITDA margin of 10-12%. The company is
also striving to improve its earnings before interest and tax (EBIT)
in 2014.

OVERVIEW OF KEY INDICATORS

Change
EUR m H1 2013 H1 2014 % EUR m Q2 2013 Q2 2014
Revenue 1,173.1 1,171.9 -0.1% -1.2 570.2 573.5
thereof Mail & Branch Network 754.6 741.2 -1.8% -13.5 363.7 362.3
Division
thereof Parcel & Logistics 419.0 431.5 3.0% 12.5 206.9 211.5
Division
thereof Corporate/ -0.5 -0.8 -58.2% -0.3 -0.3 -0.4
Consolidation
Other operating income 34.0 32.5 -4.5% -1.5 16.8 15.9
Raw materials, consumables and -372.4 -362.8 -2.6% -9.6 -185.2 -179.0
services used
Staff costs -550.6 -551.7 0.2% 1.2 -270.3 -271.1
Other operating expenses -141.0 -143.7 1.9% 2.7 -69.9 -72.2
Results of investments consolidated -3.3 -1.1 67.8% 2.3 -1.6 -0.7
at equity
Earnings before interest, tax,
depreciation and amortisation 139.9 145.1 3.7% 5.2 59.9 66.3
(EBITDA)
Depreciation, amortisation and -41.5 -46.3 11.6% 4.8 -21.3 -25.7
impairment losses
Earnings before interest and tax 98.4 98.8 0.4% 0.4 38.6 40.6
(EBIT)
thereof Mail & Branch Network 141.9 138.9 -2.1% -3.0 62.9 60.9
Division
thereof Parcel & Logistics 12.4 12.1 -2.0% -0.3 5.0 6.6
Division
thereof Corporate/ -55.9 -52.2 6.7% 3.7 -29.3 -27.0
Consolidation
Other financial result -2.0 -1.8 6.8% 0.1 -1.1 -1.1
Earnings before tax (EBT) 96.4 97.0 0.6% 0.6 37.6 39.5
Income tax -20.0 -23.4 17.4% 3.5 -7.8 -9.7
Profit for the period 76.5 73.6 -3.8% -2.9 29.8 29.9
Earnings per share (EUR)1 1.12 1.08 -3.4% -0.04 0.44 0.44

Cash flow from operating activities 107.3 95.9 -10.6% -11.4 57.4 45.3
Investments in property, plant and -49.9 -22.2 -55.5% 27.7 -27.7 -11.1
equipment (CAPEX)
Free cash flow before acquisitions/ 58.8 70.5 19.7% 11.6 30.8 32.5
securities

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

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) 57767-24730
ingeborg.gratzer@post.at

end of announcement euro adhoc
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issuer: 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