I would now like to turn the conference over to Harald Hagenauer, Head of Investor Relations. Please go ahead.
Good afternoon, ladies and gentlemen, to this conference call of Österreichische Post, where we would like to discuss the fourth quarter and full year figures of our group. Here with me is Walter Oblin, our CFO, and I would like directly to hand over to you, Walter. Please start the presentation.
Good afternoon, ladies and gentlemen. It's a pleasure to have the opportunity to present to you our full year results for 2021. As a summary upfront, 2021 was one of the best years in the more recent history of Österreichische Post, with record growth and strong earnings. At the same time, our outlook into 2021, 2022 into the current year is significantly more clouded and uncertain given the current macroeconomic environment.
Let me start the presentation on page three, which provides a summary of our group. We operate in three segments. Total group revenue last year, EUR 2.5 billion revenues. Our revenue mix has been more balanced last year than it has ever been, both across product groups as well as across geographies.
This is the result, page 4, of an accelerated transformation over the last 10 years, where over the last decade, we transformed Österreichische Post from a company which was dominated by mail revenues to a company which last year and today stands on two strong feet. A resilient mail business with revenues of about EUR 1.2 billion and with Parcel & Logistics as a second strong foot with almost revenues of similar size last year, slightly overtaking our mail business. Page 5 provides an overview of the highlights of 2021. 2021 was another challenging year where the pandemic was the dominant driver of what happened in our different markets.
Total group revenues were up for the full year around 15%, 5.7% of that organic. In Q4, you see that the dynamics behind this growth were declining over the year, and in Q4, group revenue was slightly negative. The decline of the Turkish lira was a significant driver of that. Earnings for the full year up 27.5% on an EBIT level. Also here, Q4, there was a slight decline compared to a very strong Q4 in 2020. To summarize the outlook, which we will be more detailed at the end of this presentation, the summary is it is significantly more clouded and uncertain given the current environment.
Both the war in Ukraine adds a lot of uncertainty and clouds, but also some elements of the macroeconomic environment before Ukraine drive a more challenging outlook and a more challenging environment for the full year. We have an ambition to achieve as stable revenues as possible, and we do have an ambition to come close to previous years' EBIT with also in 2022. Page six provides you more details and an overview about our revenue development.
As I said, growth, total group revenue up 14.9%, roughly EUR 200 million of the absolute growth of EUR 325 million came from still the first full-time consolidation of Aras Kargo, which we started September 2020, so eight months of first full consolidation effect still in there. The base for the 15% growth was a stable mail business, which was plus 0.1%, slight positive revenue development despite continued structural decline. We saw some recovery effects given the difficult year 2020.
Of course, Parcel and Logistics was the growth driver with a growth of 36.4% from EUR 913 million revenues 2020 to more than EUR 1.2 billion. In addition to the inorganic Aras effect, we saw very strong organic growth across the portfolio both in Austria with a revenue growth of 18.5%, but also in our international business, in particular also in CEE, was a growth of 13.6%. EBIT, moving to page seven, was up 27.5% and was EUR 204.7 million.
We came back to pre-pandemic profit levels. The 160.6 from 2020, of course, was significantly negatively influenced by the pandemic. The recovery to 204.7 was substantially driven by the growth in Parcel & Logistics, where also on an EBIT level, we saw a +EUR 44.5 million EBIT growth. Mail slightly negative on a high absolute level. The other two segments, Retail & Bank and Corporate, providing small positive changes compared to 2020. With that successful year, we added another pillar in a successful long-term development of Austrian Post.
Over the last 13 years, we proved that Österreichische Post operates a resilient business model, which proved to be stable in two big crises, the financial crisis of 2009 and 2010, and the pandemic of 2020 and 2021. We, throughout this period, showed stable, slightly expanding margins, strong reliability. We continue to be committed to an attractive dividend policy, also with our dividend proposal to the AGM of EUR 1.90 for 2021. Over this period, we also made good progress in decarbonizing our logistics. We'll later provide more detail on our ambitious targets and initiatives in that area.
Let me now give you an update on our strategy and the progress in implementing the strategy, which then reminds you of the three core strategic priorities, defending our market leadership and profitability in the core Austrian mail and parcel business, number one. number two, growing profitable in near markets, both geographically near as well as adjacent to the value chain. Priority 3, developing retail and digital offerings for private customers and SMEs.
This is about our retail network, our bank, and a few other initiatives. In the middle, as an overarching priority, a strong focus, a strong ambition in the areas of sustainability, diversity, and customer orientation. Let me start this update on strategy and development in our four business lines with our Austrian Letter Mail business.
You see here that Österreichische Post continues to operate a relatively resilient Letter Mail business. However, in structural decline compared to other geographies, still a relatively moderate decline. The pandemic provided some acceleration of this decline, roughly one percentage point, but with 5.6%, given the strong acceleration in the digitization of our economy, we think this is a reflection of a resilient mail business.
On the right side, you see the quarterly development, Q4, with -3%, a relatively moderate decline. Page 12 reminds you of the still very attractive price proposition of Österreichische Post in the mail market. We continue to be one of the cheapest European mail markets.
On the one hand, we think this is one of the reasons for why mail decline has been moderate in Austria. We offer high quality at moderate prices. At the same time, of course, this also shows some headroom to increase prices and to forward cost increases, which we currently face, forward to our customers.
Page 13 gives an update on the development in our Direct Mail and MEDIAPOST business, still a significant business. Here, of course, the pandemic hit most immediately and most severely over the last two years, an average decline of 6.2% per annum, with most of that happening in the first year of the pandemic. Last year, volumes were still depressed.
Still a number of lockdowns in Austria put brakes on Direct Mail volumes. We saw some recovery, in particular in Q2, against the very depressed volumes of 2020. While we do expect some recovery, of course, the structural drivers of decline in physical Direct Mail continue to be present, in particular, an acceleration of digital marketing and the weakness of the traditional stationary retail.
In particular, in the current environment, high paper prices provide additional risks for volume developments in that segment. Page 14, moving to our growing business, parcels in Austria. The last two years, record growth. Of course, with this a lot of tailwind from the pandemic. On average, 20.4% growth.
The chart on the right side, at the same time, shows that the growth dynamics were declining and since Q2, we are back to single digit growth and in Q4 comparison, comparing ourselves, of course, against a very strong Q4 2020. We only had +1% volume growth. For the current year, we do not expect a further tailwind from the pandemic.
We also have to expect further shifts in market share. Moving to page 15, which shows you the current market share distribution in the current Austrian parcel market. In the Austrian parcel market, Austrian Post continues to be the clear market leader with more than 50% of share in the total market and roughly with 60% in the B2C segment.
However, our biggest customer, Amazon, continues to build out its own delivery network. It is already number two in the B2C market and will add further market share given this expansion of its own delivery network. Page 16, our investment program continues. We think it is the right decision to expand our capacity in the parcel network. This expansion program was vital for the growth that we achieved in the last two years. We spent around EUR 160 million, primarily for investment into parcel growth in Austria, but some elements also, of course, in CEE and in Turkey.
In our transformation, our sustainable logistics investments into electric mobility and other elements of this sustainability transformation, and also investments in IT. The expansion program will continue to drive CapEx spending, in particular in 2023 and to some decline already in, or still in, 2024. After that, we do expect CapEx volumes to come down significantly. Page 17 provides you more detail. Basically, we are building new or substantially expanding existing sites at pretty much every major sorting center in Austria. I think we, as a rough summary, we are two-thirds through this investment program.
Current big projects include a new or significant expansion in our large logistics center in Upper Austria, as well as an expansion in our first and historically biggest sorting center in Vienna. Page 18 provides you an update on our staff transformation. The shift from civil servant labor contracts and old collective wage agreement employees towards the new collective wage agreement employees continues at pretty much constant speed.
At the same time, the strong growth in parcel was the driver for the absolute headcount to slightly increase +222 FTEs last year. This transformation continues to provide cost relief and both in 2021, but also in the years ahead. Moving to strategy pillar 2, profitable growth in near markets. I already summarized that this is about two priorities. One is parcel growth in geographical near markets, in particular in South and Eastern Europe. You see here our portfolio and in Turkey.
Growth in value-added steps close to our core delivery products in parcel and mail. It's about business outsourcing, business process outsourcing services around document management and around our mail products. It's about e-commerce logistics services around our parcel core business. Talking a little bit about our geographic expansion, page 20, our international parcel business is volume-wise already substantially bigger than our Austrian parcel business. 269 million parcels delivered last year. Majority of that in Turkey, 217 million.
There was still good growth after the record growth in 2020. Also eastern European business with EUR 52 million ongoing gaining size every year and growing at double-digit levels over the last two, three years. Page 21 provides more details about the development of Aras Kargo. A real highlight in 2022, both record revenue and strong growth development over the last two years at strong margins.
Of course, the downside was the development of the Turkish lira, in particular in the last four months of 2021. Of course, we start into the full year with a substantially depreciated Turkish lira, which will weigh on our euro financials, in particular in the first eight months. Page 22, an update on bank99.
We successfully closed the transaction to acquire the retail business of ING in Austria on December 1 last year. We now operate a bank with critical mass in terms of customers, more than 200,000 customers, 240 employees, a balance sheet of EUR 2.7 billion, a balanced balance sheet with both substantial credit volume with EUR 1.4 billion, as well as a substantial deposit position, and a combination of a strong and at the same time a cost-effective branch network, where basically the bank can use the branch offices of Österreichische Post, and at the same time, strong digital channels that we took over from ING.
Page 23 gives you an update on the development of our self-service solutions, which continue to be well accepted by customers, where we continue to invest and which provide significant positive impact also customer convenience as well as efficient processes.
Let me spend a few words on sustainability, diversity, and our initiatives in those areas. Let me maybe move right away to page 27, where we find our targets in alignment with the Paris Agreement based on the Science Based Targets initiative. We do have an ambition to reduce our CO2 footprint by almost 40% until 2030 in scope 1 and 2, and 23% in scope 3.
The next page 28, shows you the roadmap towards achieving those targets and also beyond that, the roadmap on the way to zero emissions by 2040. Basically, it's about three areas, each contributing a good third of our CO2 footprint. One is the building area. We operate alone in Austria, one million sq m here. We already made strong progress through a number of efficiency measures and procurement of green electricity in the area of delivery of letters and parcels for the last mile. Our e-mobility efforts is the key driver to get to an emission-free last mile network by 2030.
The more long-term way is probably the transport logistics, the trucks connecting our sorting centers and our customers with sorting centers. Here we do have pilots with hydrogen and LNG, but of course we are still missing proven industrial solutions. Page 29 shows you the progress on the way towards a carbon-free delivery network in Austria, fully relying on electric mobility. In the recent weeks, we decided to stop procuring combustion engine driven vehicles for the last mile. We will pretty much only procure electric vehicles. As of now, we already today operate more than 2,500 electric vehicles, by far the largest electric fleet in Austria, I think in relative terms also in our industry.
Page 31, not only of course the reducing our CO2 footprint is a priority, but also the diverse social elements of sustainability management. We already a few years ago started a very comprehensive diversity management initiatives, as a result of which we have already today a substantial female leadership group, and we have a number of initiatives running to further implement and benefit from diversity in our group. Last element on sustainability is our non-financial reporting. Page 32 shows you the first run through in implementing the EU taxonomy.
We come out here with 95% of our revenues eligible under the EU taxonomy, almost 80% of our CapEx and 58% of our OpEx. Then of course, next year we have to report our compliance share of that. At the same time, we continue to serve various international non-financial reporting guidelines with the Austrian legal frameworks, the GRI initiative, TCFD, Science Based Targets initiative, and others. The rating results page on page 34, resulting from all this reporting, continue to show that Austrian Post is a leader in our industry in the various aspects of sustainability. Let me now move to our more details of our group results for 2021.
Page 36 provides the summary of the core financial KPIs. I already commented on group revenue, EBITDA and EBIT margins was almost 15 and 8%, I think, on very respectable levels. Earnings per share figure 25, and 2021 showed a strong cash flow generation of the group in a positive macro environment.
Let me skip the P&L, which I think is a little bit hard to read as it is characterized by the inorganic effects of 8 months first full-time consolidation of Aras Kargo. Let me step right away to commenting the development of the individual product groups on page 38. Starting with our Letter Mail division. The core addressed Letter Mail business almost stable, minus 1.3%.
You also see here the development over the quarters. In the first quarter, we still benefited from a tariff increase implemented in Q2, 2020. Q2 was then the recovery quarter, as I would call it, and then we came back to the more steady structural decline. On Direct Mail, I would say, again, a little bit volatility on the quarters given the developments in 2020, in Q2. In 2021, recovery similar in the Q4, with lockdowns both in 2020 as well as in 2021. Driving this volatility overall was +2.7%. We have seen a slight recovery, but volumes were still depressed, as I already said.
Segment P&L on page 39 shows a resilient and profitable main business with EUR 1.2 billion revenues and an absolute EBIT contribution of EUR 155 million. EBIT margin double digits. Moving to Parcels, page 40. Our Parcel & Logistics business, as already commented, strong growth 36.4%. Organic growth was 14.2%. Growth was strong and double digit across our portfolio. Austria +18.5%. CEE +14%. This resulted, page 41, in I think a strong profitability. Also comparing this year against the past was 9.5% EBIT margin. Here our Turkish business contributed substantially.
Page 42 shows you the revenue development of our Retail and Bank division. Smaller absolute numbers of course. Here also the growth resulting from the organic growth of bank99, plus small effects of the takeover of ING's retail business in Austria. P&L on page 43 is still characterized by ramp-up losses. Here also some provisioning effects from our postal retail network, minus EUR 39 million. Small improvement from 2020, but still some way to go towards breakeven here, of course. Page 44 shows you the development of our balance sheet.
Of course, a substantial expansion of our balance sheet given the expansion of bank99 and the takeover of ING's retail business with EUR 1.7 billion balance sheet that we took over. At the same time, we continue to operate a conservative balance sheet with a strong equity position for former equity ratio, excluding bank99 of roughly 31%, including the bank, 14%.
However, this is the combination of a, of course, our bank balance sheet with the industrial balance sheet of Österreichische Post. Low level of intangible assets, and goodwill. A high level of provisioning, and a good balance of liquid financial resources with very small financial debt. Page 45 shows you that 2021 has been highly cash generative.
Our business has been highly cash generative. Again, here the bank makes it hard to read our cash flow statement. I would like to focus your attention on the pillar in the middle, EUR 217.9 million. Operating free cash flow, this is kind of the operating free cash flow from our core logistics business, net of the maintenance CapEx, which, given its character, is repetitive.
This is the cash flow number where we aspire to cover our dividend, and last year it has provided this. This number of course provides a strong coverage for our proposed dividend payment. Growth CapEx after that, paid out of this operating free cash flow of EUR 80 million, and I think overall a strong and robust cash flow.
Page 46, this strong cash flow or strong earnings was the basis for another attractive dividend that we proposed for 2021, was EUR 1.90. We are making a significant step back to the pre-pandemic dividend levels with a little bit reduced payout ratio. We continue to be committed to our dividend policy of paying out at least 75% of net earnings.
At the same time, our business has a higher share of more CapEx-heavy parcel business and, as a result of that, we think it's appropriate to be a little bit more cautious in our payout ratio. Let me conclude with the outlook for 2022. I think already Q4 showed an increasingly challenging macro environment with much slower growth.
The Turkish lira depreciating heavily, Amazon building out its retail network and this challenging business environment continues to be present, and new challenges arise from, of course, the Ukraine crisis. Inflation has reached Österreichische Post AG in recent months, later than many other businesses, given that we have a very strong direct and indirect staff cost share in our P&L.
Of course, as inflation is the basis for most wage agreements, also in staff costs, inflation is starting to increase our cost base and weigh on our results. The tailwinds that the pandemic provided over the last 18 months, in particular for our parcel business, we do not expect to be around in 2022.
As a result, our outlook in general is significantly more cloudy and uncertain than it has been over the previous quarters. In terms of the revenue side, we do target a revenue as stable as possible compared to 2021. We do expect our Letter Mail business to decline at the rates that we've seen over the last 2, 3 years, on average, around 5%. We do see some risks on the Direct Mail side, as I said, from increasing paper prices. At the same time, there is some recovery, assuming there will be no further lockdowns.
On the parcel side, we do expect increasing volatility and in particular in the first half of this year, a reduction in volumes compared to last year, given the absence of tailwinds from the pandemic and the build out of Amazon networks in Austria and of course, the impact of the Turkish lira, which in particular in the first eight months, will weigh heavily on the comparison versus last year for our Turkish revenues. On the earnings side, we have an ambition to come as close as possible to previous years' EBIT levels.
However, this is a challenging ambition, and over the last two weeks, significant additional risks have come to the table and it's still of course very uncertain how long and how severe the Ukraine crisis will continue. With that said, let me close my presentation and I'm now looking forward to your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Marco Limite from Barclays. Please go ahead.
Hello. Good afternoon, and thanks for the presentation. My first question is on letter price increase. I think you will not be able to have any price increase in letters in 2022. If you might add some color on how discussions with the regulator are going on, and when we can expect some price increase in the letter products, and also if you can remind us how much of your letter revenues are regulated and how much are not, and therefore you are free to increase prices as you want.
My second question is on wage increase. When we can expect the next wage increase and wage negotiation with unions. My third question is actually on your ESG target. You are targeting last-mile carbon-free delivery by 2030 and carbon-free at group level by 2040. Can you please clarify how much of your CapEx in your CapEx plan is coming from investments in ESG? From the cost side, whether you expect cost savings, maybe from a lower cost of the energy versus fuel, or if you expect OpEx increase from other variables. Thank you.
Okay. Thank you for your questions. Let me maybe start on the ESG target side. On CapEx investments, I think the major CapEx investment goes into renewing and transforming our fleet. Here we're talking about roughly EUR 30-40 million annual CapEx resulting of these loading stations and a few other equipments. We also continue to invest in PV. However, there is probably a smaller single-digit million figure per year over the next years. So I think that is the predominant CapEx side. Outside Austria, we rely heavily on subcontracted last mile.
Here the CapEx will not. It will not be us who will have to make this investment, but we will have to work with our subcontractors. On cost savings in Austria already before this energy cost inflation hit us, total cost of ownership of electric last mile delivery vehicles were more favorable than for combustion engine-driven vehicles.
This, over the next years, will of course, all other things unchanged, be, I would say, small source also of cost savings, also in maintenance, for example. How this plays out on energy costs, I think, will very much depend on how the current strong volatility and the strong increases on the energy side play out over time.
On your second question on wage increases, we typically negotiate in the second quarter for our wage increase to be effective July first. Last year was still, I would say, normal wage increase in the area of around 2%. This year, of course, the inflation that we typically base our negotiations upon will be substantially higher. We're talking about order of magnitude 3.5%. This will be the starting point for our wage negotiations compared to inflation, probably two percentage points lower in the past. On price increases, we're talking about roughly 50/50, USO versus non-USO, in our Letter Mail business.
On the non-USO side, we are of course constantly implementing smaller price increases that are not as visible as the tariff changes on the addressed letter mail side. I'm talking about direct mail, media distribution, etc. On the addressed letter mail, we of course, given the current inflation, are working on ways to forward this inflation also to our customers, also in the USO. The framework here is that our price increases in the past have been kept by the consumer price inflation and with increasing consumer price inflation, also our headroom for price increases on the addressed regulated mail side to increase.
When can we expect price increases on USO product as well?
I was talking about USO products in the last few.
Okay.
There's nothing we can communicate today as we typically talk about price increases once we have regulatory approval. Given the inflationary environment and the development of consumer price inflation, and given the fact that our latest mail tariff increase is almost two years behind us, of course this question is on the table.
Okay, thank you.
The next question is from the line of Andre Mulder from Kepler Cheuvreux. Please go ahead.
Yeah, good afternoon. First question on the parcels side. Can you give us an indication how the split in parcels in areas looks like? Secondly, looking at Q4, we saw stable volumes in Austria and still some growth in Eastern Europe, but there was a decline of more than 10% in Turkey. Of course, there's quite some economic turmoil there, but how are things progressing so far this year? A question on Germany. I saw that sales in Germany almost tripled last year. Can you give some insight in what's that? And last, on Amazon, any idea of where you think that the market share of Amazon will ultimately land?
Yeah, thank you, Andre, for your questions. I think we do not have full transparency about Amazon's plans. I think it is hard for us to comment on target market share figures for Amazon. They do have a very strong position in the Austrian e-commerce market with a substantial share of all B2C parcels coming from Amazon. Of course, it's a question of how quickly and how far they build out their own distribution network. Again, please bear with me that we do not have inside knowledge about their plans. We do expect further build out and further market share gains by Amazon's own delivery network.
On Germany, to be honest, I'm not 100% sure what you are referring to. Our sales in Germany, maybe you can clarify that for me. Turkey in Q4, we still saw revenue increase in Turkish lira in Q4. The FX rates depreciated from around 10 Turkish lira per euro in August to around 16 today, with strong fluctuations, in particular in December, given central bank interventions. Just from the currency, you basically have a revenue decline in Europe, all other things being equal, of around 30% only resulting from this currency devaluation. Your first question on the split of parcels. Can you clarify what you exactly mean?
I didn't completely get it.
Yeah. With that I mean, can you give us a split, what EBIT is coming from Austria and what from Eastern Europe and what from Turkey?
In Austria we had 184 million parcels on page 20 shows you our volume resulting from our activities in Turkey and Eastern Europe. 217 from Turkey and 52 from Eastern Europe. We're talking about roughly 45% parcel volumes from Austria and more than half or roughly 50% from Turkey, and then some share from Eastern Europe. I'm not sure if I'm 100% answering your questions again. Then please
I was looking for the EBIT contribution. Maybe some indication of the margins that you're making in any of these three areas.
Yeah. Again, please bear with me that we do not provide detailed margin reporting for our geographies. I think what I can say is that Turkey provided above average margins, substantially above average margins last year.
Yep.
And then, uh-
Yeah, the question on Germany, that's in the annual report on page 130.
Andre, let me take that question with me. I'm not 100% sure Whether I know the answer to this question, yeah.
I call you up later, Andre.
Yep.
Okay.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your telephone.
Okay, Karen. There's no more questions.
This concludes our Q&A session, and I would like to hand back to Harald Hagenauer for closing comments.
Thanks, ladies and gentlemen, for being in this call. For some more questions if they will arise, we are available here and of course, you can call me anytime you want. Have a good weekend. Bye-bye.
Ladies and gentlemen, the conference is now concluded. You may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.