In fiscal year 2002, Deutsche Post World Net increased its consolidated revenue by 17.6% to €39,255 million (previous year: €33,379 million). Excluding the first-time consolidation of DHL, revenue fell by 1.0% to €33,056 million. By contrast, in local currency, revenue rose by 0.6% to €33,592 million. Changes in euro exchange rates resulted in negative currency effects for the Group of €536 million. The decrease in the Group’s adjusted revenue was due to slight drops in revenue in the MAIL Corporate Division and in the Express Europe Business Division of the EXPRESS Corporate Division. In addition to these factors, a decline in freight rates in the LOGISTICS Corporate Division as well as the sustained low level of interest rates on the money and capital markets in the FINANCIAL SERVICES Corporate Division depressed revenue slightly. In the “Postbank at equity” scenario, adjusted revenue fell by 1.0% to €26,144 million (previous year: €26,408 million).

Despite the unfavorable economic conditions, Deutsche Post World Net recorded a slight increase in revenue of 3.0% to €23,068 million (previous year: €22,398 million) in Germany. With the takeover of DHL, we further expanded our position on the international markets. In Europe (excluding Germany), revenue was up 25.5% to €10,276 million (previous year: €8,188 million).We generated above-average growth in North, Central and South America with an increase of 109.6% to €3,522 million (previous year: €1,680 million). In the Asia/Pacific region, we leveraged additional potential and more than doubled our revenue to €2,047 million (previous year: €915 million). The other regions recorded growth of 72.7% to €342 million (previous year: €198 million).

Other operating income rose by 90.8% to €3,007 million. This increase is primarily due to income from the reversal of negative goodwill for Postbank in the amount of €1,499 million, as well as from the transfer of real estate in the amount of €221 million to the Pension Trust. Total operating income increased by 20.9%.

At the same time, operating expenses before goodwill amortization rose by 22.9% to €39,841 million. The clear increase in operating expenses is primarily due to the first-time full consolidation of DHL. Higher materials expense in the MAIL Corporate Division as well as higher other operating expenses adversely affected total operating expenses. In addition, other operating expenses contain a restructuring provision for the STAR project of €1,077 million. Overall, other operating expenses rose by 71.1% to €6,946 million.

The profit from operating activities (EBITA) decreased by 4.9% to €2,421 million (previous year: €2,547 million). The main reason for this was the decline in earnings in the MAIL Corporate Division. The other Corporate Divisions developed positively, with the EXPRESS and LOGISTICS Corporate Divisions increasing their respective profits from operating activities (EBITA) by 38.1% to €243 million and 40.9% to €224 million.

The FINANCIAL SERVICES Corporate Division generated growth of 19.0% for a profit of €621 million. Overall, the profit from operating activities developed more positively than our projections during the year.

The return on sales based on EBITA fell to 6.2% (previous year: 7.6%). This decrease is directly related to the decline in the return on sales in the MAIL Corporate Division. Some of the other Corporate Divisions significantly improved their return on sales. Currency effects lowered the profit from operating activities (EBITA) by €26 million. In the “Postbank at equity” scenario, the return on sales experienced an even sharper decline to 1.7% (previous year: 7.8%). While the reversal of negative goodwill at Postbank was disclosed under other operating income in the Group’s income statement, this transaction was reflected in net financial income in the “Postbank at equity” scenario. As a result, the profit from operating activities (EBITA) in the “Postbank at equity” scenario was lower than the Group’s EBITA (see also the Postbank at equity income statement). For this reason, the return on sales in the “Postbank at equity” scenario fell more sharply than did the figure for the Group.

Goodwill amortization increased to €449 million (previous year: €171 million) due to an impairment loss of €205 million and the first-time consolidation of DHL.

Net finance costs improved to €116 million (previous year: €229 million). This is due particularly to the increase in net income from associates, which was still burdened by DHL’s negative result in fiscal year 2001. The Group managed to generate a profit from ordinary activities that, at €1,856 million, was 13.6% below the prior-year level (€2,147 million).

The return on equity based on net profit before taxes declined from 45.9% to 35.5%. In the “Postbank at equity” scenario, this figure fell by 12.6 percentage points to 30.4%.

The low tax expense ratio is primarily the result of a decreased reduction in tax loss carryforwards, largely due to the decline in Deutsche Post AG’s taxable profit.

At €1,590 million, our net profit for the period before minority interest and extraordinary expense remained at the prior-year level (€1,587 million). Consolidated net profit was impacted by the provision of €907 million that we recognized as an extraordinary expense as a result of the European Commission’s state aid ruling. This meant that consolidated net profit including minority interest fell by €918 million yearon- year to €659 million. At the same time, earnings per share decreased from €1.42 to €0.59. Earnings per share before extraordinary expense – adjusted for the effect of the state aid ruling – amounted to €1.41 and were thus at the prior-year level (€1.42).

MAIL achieves expected return on sales
In an overall troubled economic environment, Deutsche Post World Net’s MAIL Corporate Division generated revenue of €11,666 million, which corresponded to only a slight year-on-year decrease of 0.4%. This included a 1.2% decline in revenue in the Mail Communication Business Division to €7,280 million (previous year: €7,367 million). By intensifying our focus on the needs of our business customers, we generated higher sales in this segment despite the economic headwind. In contrast, revenue from private customers declined. In connection with the changeover to the euro, customers initially used up their supplies of stamps denominated in DM in the first half of 2002. However, they did not build up new reserves to a corresponding extent in H2/2002 because of the price cuts announced for January 1, 2003.

The Direct Marketing Business Division recorded a slight decrease in sales in 2002. This decline was planned in the area of unaddressed advertising mailings in order to increase the average price. Overall, the Business Division recorded revenue of €2,066 million and thus largely maintained the prior-year level (€2,072 million). The continuation of the difficult situation at many newspaper and magazine publishers caused a 3.9% drop in sales in the Press Distribution Business Division to 2.2 billion mailings (previous year: 2.3 billion mailings). As a result, the Business Division’s revenue decreased by 2.1% to €823 million (previous year: €841 million).

At €1,658 million, the MAIL Corporate Division’s profit from operating activities (EBITA) was below the prior-year level (€1,960 million). The return on sales of 14.2% was in line with our expectations.

We reduced our staff count by 6,100 employees in the year under review as a result of rationalization and the outsourcing of transport services, among other things. However, the resulting outsourcing costs led to an increase in materials expense for transport and a subsequent rise in other operating expenses, which was compounded by a rise in both fuel costs and maintenance costs. In addition, we intensified our marketing and sales activities in the business customers segment and expanded our IT infrastructure.

DHL moves into positive territory
In the EXPRESS Corporate Division, we increased revenue by 94.5% to €12,489 million in the year under review (previous year: €6,421 million). This rise is primarily due to the first-time consolidation of DHL. On a like-for-like basis, revenue underwent a slight year-on-year decrease in fiscal year 2002. At €2,796 million, revenue in the Express Germany Business Division remained at almost exactly the prior-year level (€2,795 million). The Express Europe Business Division recorded a 5.5% decrease in revenue to €1,941 million (previous year: €2,054 million). This reflects a one-time effect that arose in 2001 due to a change in the Securicor group’s fiscal year. In 2001, the end of the group’s fiscal year was changed from September 30 to December 31, which meant that the results for 2001 contained revenue generated over 15 months instead of 12. The Guipuzcoana group was fully consolidated for the first time in fiscal year 2002.

The 5.8% decline in revenue to €1,239 million (previous year: €1,315 million) in the Global Mail Business Division is primarily due to a decline in the area of crossborder mail services to Germany. The was only partially offset by the positive development at Infopost (addressed advertising mailings) from international customers as well as the expansion of the product range with DHL’s former “World Mail” product. The Worldwide Express Business Division, which is represented by DHL, contributed €6,162 million to the Group’s revenue in the year under review.

The profit from operating activities (EBITA) of the EXPRESS Corporate Division amounted to €243 million in the year under review. The corresponding return on sales of 1.9% was slightly above our expectations. A meaningful year-on-year comparison of the profit from operating activities (EBITA) is only possible for the three Business Divisions Express Germany, Express Europe and Global Mail. These Business Divisions generated a profit from operating activities (EBITA) of €224 million in the year under review after €176 million in the previous year. This growth was the result of positive one-time effects as well as the performance of the Express Europe Business Division, which recorded strong development due to its market leadership in certain countries as well as cost savings in France and the Benelux states in particular.

In fiscal year 2001, we began restructuring DHL in the US in order to return this company to profitability. We successfully drove forward this extensive program in fiscal year 2002, with the result that DHL reached the break-even point as planned. Strong earnings in the remaining regions offset the losses in the US.

LOGISTICS records a sharp jump in earnings
In the LOGISTICS Corporate Division, we generated revenue of €9,152 million and thus, on the whole, succeeded in maintaining the prior-year level (€9,153 million). Reduced air and ocean freight prices as well as weaker foreign currencies, particularly the US dollar, impacted revenue development in the Intercontinental Business Unit; revenue here fell by 3.6% to €4,233 million (previous year: €4,390 million). This decline was only partially offset by an increase in freight volumes in the second half of the year. By contrast, we increased revenue in the Solutions Business Unit by 1.6% to €1,492 million (previous year: €1,468 million) thanks to growing demand for services within the framework of outsourcing. Due to the full consolidation of Kelpo Kuljetus and the first-time consolidation of the Cargoplan/Cargoline group, as well as the takeover of a number of smaller units from the EXPRESS Corporate Division, revenue in the Eurocargo Business Unit grew by 4.0% to €3,427 million (previous year: €3,295 million).

The profit from operating activities (EBITA) increased substantially in fiscal year 2002, rising 40.9% to €224 million (previous year: €159 million). The return on sales of 2.4% was in line with our expectations. The increase in the profit from operating activities (EBITA) is primarily due to the earnings contributions of companies acquired in 2001, as well as to our cost-cutting measures, where we reduced our overheads, discontinued business activities that were not sufficiently profitable, optimized internal processes and consolidated our purchasing activities.

Postbank increases earnings once again
The FINANCIAL SERVICES Corporate Division, which primarily consists of Postbank and also includes the retail outlet network and the Pension Service, generated income in the amount of €8,872 million (previous year: €8,876 million) in the year under review. Income from banking transactions comprises gross income from interest, fees and commissions and trading transactions; it is equivalent to an industrial company’s revenue. The €103 million decline in Postbank’s income is largely due to the sustained low level of interest rates on the money and capital markets in 2002.

Bucking the market trend, the Corporate Division again succeeded in increasing its profit from operating activities (EBITA), which rose by 19.0% to €621 million (previous year: €522 million). This is primarily the result of the successful expansion of the customer deposit volume and total credit extended and the related increase in net interest income. Income from banking transactions rose by a total of 11.9%. Net interest income climbed 13.0% to €1,852 million (previous year: €1,639 million). Net fee and commission income, net trading income and net income from investment securities totaled €571 million, an 8.3% increase on the prior-year figure of €527 million.

Postbank’s other expenses, which comprise the allowance for losses on loans and advances, staff costs and other non-staff operating expenses, and net other income and expenses, rose at a slower rate than income, increasing 11.0% to €2,024 million (previous year: €1,823 million). This increase was due to higher other non-staff operating expenses and staff costs, particularly in the area of information technology. In addition, we increased the allowance for losses on loans and advances.

The cost / income ratio improved by 5.9 percentage points to 77.7%, reflecting the faster rise in income than expenses. The return on equity (RoE) rose 1.3 percentage points year-on-year to 10.7%. The RoE was calculated according to a different method in the year under review, with modified average equity being used as the basis. Prioryear amounts and projections were adjusted as necessary.

Investments secure competitive edge
Overall, the Group’s segment investments increased by 216% to €4,832 million (previous year: €1,527 million) in fiscal year 2002. Of this amount, €2,878 million (previous year: €1,106 million) was invested in property, plant and equipment.

The investments were focused on replacing our vehicle fleet as well as DHL’s aircraft fleet. In the MAIL Corporate Division, we invested in operating assets and technical equipment for our mail sorting centers. In the EXPRESS Corporate Division, the spotlight was on infrastructure investments. We also began replacing our aircraft fleet by purchasing 34 Boeing 757 aircraft that will be retrofitted as freight aircraft. With the development of specific IT systems, we secured our substantial competitive advantage in the LOGISTICS Corporate Division.Within the framework of our cost and quality management, we also focused our investments on IT structures in the FINANCIAL SERVICES Corporate Division.

Investments in companies, as recorded in the cash flow statement, amounted to €1,256 million (previous year: €1,240 million) in the year under review. Of this total, almost €1 billion was used to increase our interest in DHL to 100% as of the end of 2002. The remaining amount was distributed over a number of smaller acquisitions, company formations and increases in equity interests.

Organization geared towards future challenges
After we acquired a majority interest of 50.64% in DHL in January 2002 and were granted approval by the European Commission to increase this interest to over 75% in October, the stage was set for the implementation of our Group-wide value creation program, STAR. Organizationally, this comprehensive program will be directed from the new Corporate Services Board Department that we established as of November 1, 2002. This Department also oversees the following central service functions for the Group: Corporate Development, Legal Services, Corporate Purchasing, Corporate Information Management and IT Infrastructure. Finally, on December 2, 2002, we increased our interest in DHL to 100%.

In light of the increasing deregulation of the European mail markets, we have repositioned the MAIL Corporate Division: with the acquisition of Interlanden B.V. and the formation of a joint venture with its parent company,Wegener N.V., we expanded our business activities in the Netherlands in the year under review. In addition, we were awarded a license for the British mail market. These activities will be organized in two new Business Divisions: Foreign Domestic International is home to our distribution activities on the European mail markets. The Solutions International Business Division bundles our national and international activities in the area of value added services.

In the EXPRESS Corporate Division, we boosted sales for our parcel business in the B-to-B- and B-to-C segments with the formation of the marketing and sales company Deutsche Post Euro Express Deutschland GmbH & Co. OHG (DPEED) as of January 1, 2002. Likewise, Deutsche Post Global Mail and DHL Worldmail Express merged their activities in the international mail sector as of January 1, 2002. As a result, our international mail business is well equipped to master the challenges of the next few years.

In addition, we further concentrated and intensified our portfolio and asset management activities in the FINANCIAL SERVICES Corporate Division with the commencement of business activities at Postbank Financial Services GmbH in Frankfurt am Main.