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Article Excerpt
SILJE SKOGSTAD, HEAD OF MEDIA RELATIONS, DEUTSCHE POST AG: Hello, good morning. This is Silje Skogstad, Deutsche Post Media Relations, together with Martin Ziegenbalg, Deutsche Post Investor Relations, and John Allan, Chief Financial Officer of the Group. Welcome to the call this morning. We would like to tell everyone online that we are having the unusual circumstance that we have both analysts and journalists on this call together, as both (inaudible) are informed about that. Martin.
MARTIN ZIEGENBALG, HEAD OF IR, DEUTSCHE POST AG: Yes. Good morning also from my side. We have here our CFO John Allan, who is going to speak to you for a few minutes right after this. After that, we will have a maximum of 30 minutes for Q&A. And with that, let's start right away with John, please.
JOHN ALLAN, CFO, DEUTSCHE POST AG: Good morning, ladies and gentlemen. And we've got really two announcements which we wanted to comment on this morning and which we thought you might want to raise questions on.
First of all, our trading update for the third quarter which we've announced this morning. I think we've seen in the third quarter quite a significant deterioration in customer demand on a fairly broad basis. Notwithstanding that, we think our results for the third quarter are not bad. Our underlying profits are down about 8%, which is an adverse move compared with the profit growth we saw in the first half but not too bad.
However, I think what customers are telling us about prospects for the fourth quarter, and the evidence that we are seeing from their actions, has led us to feel that we should be very cautious about the fourth quarter, and that in particular we're unlikely to see the normal fourth quarter bounce that we see. The fourth quarter's generally a particularly strong quarter. We think there will be much less of that this year than normally.
And accordingly, we have decided to revise our guidance for the year and to bring it down significantly from where it was before. The principle factor in that takedown is the -- our Express business, particularly the US Express business. But I think we're also anticipating that there will be some small shortfall in each of our other divisions. All of them, without exception, are being impacted to some degree by reduced customer demand.
We don't think we're losing share and I'm happy to talk about that later. I think we've got evidence that we are managing to match and beat market performance just about everywhere. But clearly, the world economy is impacting us as it is impacting others.
We're in a strong position in terms of cash. The actions that we took at the beginning of this year under the roadmap to value, to dispose of surplus assets, mean that we're in a strong cash position. We're of course delighted that we managed to effect a transaction to dispose of our interest in two tranches in Postbank. And we expect that deal, the first part of it, to close in the very early part of 2009.
But today, we have indicated our support for a planned rights issue by Postbank, who've announced their third quarter results this morning, who had been affected by a number of write-downs and we felt it right to support them.
I think, in case it's not clear already, I should say that the EUR1b that we have subscribed, the portion of it that relates to our existing shareholding is fully backed, back to back with Deutsche Bank. It will be reimbursed to us as and when Deutsche Bank acquire our shareholding, so there is no commercial risk on that.
The second EUR500m, of course we do bear some commercial risk, downside probably in the short term but maybe in the longer term upside. And we are completely free agents in terms of how we handle the disposal of whatever additional shares we take on under the second part of the rights issue, the part that we have effectively underwritten.
So we're very conscious, I think, of the changing and deteriorating world economy. In those circumstances, we've decided it's prudent to suspend our guidance for 2009. We will reestablish guidance for 2009 as soon as market conditions are sufficiently clear.
But we are confident that we should see significant profit growth next year, although we're unable to put a precise number to that at the moment, against our now expected outturn for 2008, and very confident that our businesses are in good shape, I think, to continue relatively to perform well through these very difficult circumstances.
I think that's as much as I wanted to say at the beginning. We've only got half an hour for this call, so I think the quicker we hand it over to you to ask questions the better.
MARTIN ZIEGENBALG: Okay. Thank you, John. And with that, operator, we would like to ask you to start the Q&A round.
OPERATOR: Thank you, sir. (Operator Instructions). We shall take our first question from Tobias Sittig from MainFirst. Please go ahead.
TOBIAS SITTIG, ANALYST, MAINFIRST: Yes. Good morning, gentlemen. Three questions, if I may, first one on net debt position and where you see your ability to pay dividends in the coming years. Where do you see it going there? You said you would return EUR6.5b, round about, over the next years. Is that still intact?
Secondly, balance sheet...
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