I would now like to turn the conference over to Harald Hagenauer, Head of Investor Relations. Please go ahead.
Good afternoon, ladies and gentlemen. Welcome to this conference call for Austrian Post. We would love to discuss the results of the nine months and also the third quarter, this time. Here with me is our CEO, Walter Oblin, and I will directly hand over to Walter to kick off, sir.
Good afternoon, ladies and gentlemen. It's a pleasure to have the opportunity to present to you our Q3 results. I think as a summary up front, we've seen very good momentum across our business portfolio over the last three quarters, and accordingly year-to-date, in a position to present to you good results. Let me start on page three. Page three provides the well-known summary of how we report as a group in three segments. Our Austrian core incumbent mail business, our parcel and logistics business, encompassing an international portfolio of parcel networks, including, of course, our Austrian business and our Turkish business, Aras Kargo, the 3rd segment, retail and bank.
I think I would like to direct your attention to the revenue distribution graph on the right side, which shows a very balanced revenue distribution more balanced than ever. About a third of our revenue coming from addressed letter mail business, 17% from direct mail and Mediapost, 30% from our Austrian parcel business, and roughly 20% from our international parcel business. Page four, as a result of the acquisition of Aras Kargo and the strong growth that we've seen in our parcel portfolio over the last 12 months, we are now standing on two strong feet.
Despite the shrinking, of course, a strong and resilient mail business, on the one hand, and a strong profitable parcel business, which for the first time in the history of Austrian Post has generated more revenue than our mail business. Page five summarizes the highlights of the first three quarters. The first three quarters have, as I already said, been characterized by a strong business momentum, a strong recovery, in particular in our mail business, and strong growth, however declining growth, on the parcel side. Accordingly, as a result, group revenues are up substantially for the first three quarters together.
Group revenues are up 22.2%, almost 9% organic growth in the first three quarters. In the third quarter, standalone, group revenue is up 10.5%. Please remember we consolidated, we started to consolidate Aras Kargo in our group revenues August 25 last year, so Q3 still included two months of almost two months of inorganic growth. You see here also with the +2.4 organic growth that the organic growth has come down over the last three months as a combination of the pandemic development over the last three quarters and over all the last three quarters last year, but also as a result of a little bit declining business momentum on the parcel side.
Earnings as based on the strong group revenue growth up substantially, EBITDA up 48.1% year to date and EBIT up 77%. Also in Q3 comparing us to a relatively normal Q3 last year, as opposed to Q2, was compared to a very weak, very turbulent Q2 last year. Still in Q3, EBITDA and EBIT up above 20%. We have not only confirmed our outlook, but slightly upgraded our outlook. We expect revenue growth of about 16% and have upgraded our EBIT guidance with an increase of around 25% for the full year. Moving to page six, which shows you the revenue development for the first three quarters.
Group revenue, as I said, up 22.2%. The majority of growth coming from our parcel and logistics business, which was up 57.1%. Very strong business momentum, as I said, across the portfolio and of course, the impact of eight months revenues of Aras Kargo, which hadn't been there last year. Mail revenues also up 1.1%, which is based on a combination of recovery, in particular in the direct mail side, in Q2. A smaller tariff impact compared to last year resulting from the first quarter. The small revenues in our retail and bank segment also up 7%.
This strong revenue growth was the basis for a strong, EBIT development, of course, also, including a recovery from, in particular, the weak, Q2 last year. EBIT for the whole group up 77% to a total of EUR 144 million. We're pleased to see that all segments improved compared to last year. Mail from a strong basis up 4.1%. Parcel & Logistics up a huge improvement of 48.7%. Retail and Bank also up, improved, declined smaller losses, up 3.4%. Our Corporate segment also improved by 6.5%. Let me continue now with an update on our strategy implementation. Page nine, summarizes our strategy framework, which also provides the structure of the following presentation.
Priority number one, to defend our market leadership and profitability in our core Austrian mail and parcel business. Priority number two, profitable growth in near markets, geographically near markets, but also markets adjacent in value chain. Priority number three, to develop our retail and digital offering for private customers and SMEs. This includes our retail network and even more importantly, our bank99. Priority four, the green arrow in the middle, sustainability, diversity and customer focus as a guideline for all our activities. Page 10, starting now with the core Austrian letter and parcel business. Page 10 summarizes the development in our letter mail business. Historically, an e-substitution decline rate of around 5%, last year, given the pandemic, 6.8%. You see on the right side the quarterly development.
I think that the summary is with the volatility given the development of the pandemic last year and this year, if we look back two years, we are pretty much down 12% over two years, so, 6% per year, including all the impact of the pandemic. 6% is 6%. At the same time, this is up 1% decline compared to the historical decline rate, which I would say, given that we've seen the biggest digitization boost over the last decades, I would tend to look at our mail business as quite resilient. Page 11, similar, but even more pronounced development on the Direct Mail side.
Here, the pandemic hit most immediately and most negative, with 25% decline in Q2 last year. We have seen some recovery. You saw in Q2 +12%. In Q3, where we compare a relatively normal quarter with a relatively normal quarter last year, we are still down -4% compared to -3% last year. We still see subdued Direct Mail activity in a variety of business sector, in particular in, among SMEs, in retail and tourism, given that the pandemic hasn't yet gone away. And of course, there is some uncertainty going forward. I think we're aware that we are in a very strong fourth wave, which is developing on a daily basis, and rumors of an upcoming lockdown continue to come up.
We'll see how things develop. Direct Mail continues to be under pressure, I would say. Page 12, coming to the growing part of our business portfolio, the parcel business in particular now here. The Austrian parcel business, after a growth of 30% last year, volumes continued to grow very strongly in the Q1, up 36%, also with a strong lockdown for several weeks in Austria. Things normalized, shops opened up. Still, compared to very strong volumes last year, volume growth of 7% in Q2 and Q3. Q4 now, last year's Q4 provides a very strong comparison base. We do not expect to grow compared to last year.
As I said, it depends on what will happen over the next weeks in Austria. Moving to page 13, we continue to upgrade our capacity. We are in very good progress or have brought new sorting centers online in a number of big projects. I think the next page provides an overview. As a result, our CapEx this year will be above last year. We do expect to spend around EUR 70-80 million on maintenance CapEx in Austria, around EUR 20-30 million on CapEx international.
Given the strong growth we see in CE and in Turkey, of course, we see also opportunities and need for investment there. Around or above EUR 80 will be spent on growth CapEx in Austria, in particular on the expansion of very large sorting centers in Austria. This program will continue for roughly another two years, and then we will have upgraded pretty much all of our sorting centers quite substantially. Page 14 shows you this growth map. We have brought online our new logistics center in the very west of Austria, Vorarlberg. Our new logistics center in Tyrol is about to come online.
We have smaller expansion projects ongoing in Lower Austria and Styria, a big one in Upper Austria, and we will, next year, start an expansion program in our oldest and still very important Vienna South sorting center, which will then last for the next two years. Page 15 provides an overview on the development of the staff structure in Austria. I think two messages. Message one is, given the strong parcel volumes, total staff numbers have gone up a little bit. We continue to hire despite a very tight labor market in Austria. Message number two is that transformation from expensive civil servants and all collective wage agreements to new collective wage agreement new employees continues.
Compared to last year, we have around 800 more employees in the new collective wage agreement. Around 50% of our whole staff now in this new collective wage agreement. This transformation will continue over the next years. Coming to strategy pillar two, our growth in our growth portfolio outside Austria. Here, we have seen continued good business momentum in our parcel portfolio east of Austria from Slovakia to Turkey, and we'll elaborate on this little bit later. We've also seen good development in a number of businesses where we try to add value to the pure distribution of mail and parcel, particularly in e-commerce based businesses such as ACL, Advanced Commerce Labs, which provides e-commerce software solutions.
Our Systemlogistik, our fulfillment business in Austria, has benefited a lot. We've been able to capture opportunities which have emerged out of the pandemic, distribution of masks, test logistics, and a few other services we're providing here. Overall, I would say good development. Of course, some smaller businesses have also been harmed by the pandemic. I would say the highlight of the last 15 months definitely has been the acquisition and development of our Turkish subsidiary, Aras Kargo. I think you're aware we acquired the majority of Aras Kargo last year, stepped up from 25% to 80%. Started to consolidate, to fully consolidate Aras Kargo as of August 25 last year.
Turkey has shown a very strong growing parcel market, and our management there has also executed a strong price discipline in a market characterized by high inflation. As a result, not only have volumes grown substantially compared to a very strong growth last year in the first three quarters, 14%, but also revenues, which we will see them on the next page. Also in Eastern Europe, we have seen volume growth of 17% compared to an already strong growth last year. Page 18 shows you more details on Aras Kargo. First nine months revenue of TRY 2.2 billion. In EUR terms, EUR 230 million. We operate a strong balance sheet there.
Also, the company is highly cash generative, and revenues have been up 40% for the first nine months, and volumes up 14%. You see there has also been a substantial price contribution. Page 19, moving to strategy pillar number three and to our bank business. Of course, the major event of the last month was the acquisition of the retail business of ING in Austria. We signed this transaction mid-July, and we do expect a closing over the next weeks still in 2021. The Austrian ING retail business will be highly complementary to bank99 from a regional and demographic perspective.
It will add more than 100,000 customers. In a relatively young urban segment to the existing customers of bank99 who are less urban and more advanced in their age. It is highly complementary in product structure. It brings to the table a well-functioning loan business with a very well-functioning digital sales engine and around EUR 1.4 billion of loans, which will balance out our balance sheet. As a result, we will have a bank with a complete simple product portfolio with more than 200,000 customers. A well-balanced, much better balanced balance sheet of around EUR 2.5 billion. Based on this, we see a good future for bank99.
Page 20, our self-service facilities continue to grow. We continue to invest in them. We see this as a source of competitive advantage in a competitive Austrian parcel market. You see here that we have installed, if you compare these numbers with prior years and prior months, we continue to add pickup boxes, pickup stations and drop-off boxes. Our consumers increasingly accept these solutions and increasingly use them as opposed to queuing up in our branch network. Now, let me spend a few sentences and pages on our sustainability efforts. Page 22 reminds you of the targets that we committed to last year. A growth of a total revenue of around EUR 3 billion by 2030.
Substantial ambitious commitment in the area of decarbonization. 40% reduction in absolute CO2 emissions, 70% in specific CO2 emissions, and most specifically, 100% CO2-free delivery in Austria by 2030. Also ambitious targets on the people and social dimension. To achieve those targets, we have a very comprehensive sustainability master plan in place, page 23. With multiple projects and dimensions in the governance area, in the decarbonization area, and on the employee and leadership side. Most tangible project is page 24, our e-mobility initiative. Already today we operate by far the largest electric fleet in Austria. We celebrated 10 years of CO2 neutral delivery this year and have now implemented a flagship project called Green Graz. Graz is the second-largest city in Austria.
As of October, we have eliminated all combustion-driven cars and vans out of our delivery fleet in the city. We are delivering 100% either by pedestrians, e-bikes, e-mopeds or electric vans and parcel transporters. I think a real flagship project, increasing not only our reputation in Austria but also proving that this concept of combustion-free delivery is possible already today. We will continue now to roll out this concept across Austria with the target to have eliminated all combustion engines out of our delivery fleet by the end of this decade. Also a new project in the area of sustainability. Moving to the next page, green packaging.
We have started a pilot with five operating large Austrian retailers around reusable packaging solutions for parcel shipping. We are very interested in seeing the results of this pilot project. Let me now close the presentation with more details on the numbers and then of course finalizing it with the outlook for 2021. Page 27 gives you an update on the most important financial indicators. Revenue, as I said, up 22.2% to a revenue of EUR 1.83 billion. EBITDA and EBIT margins up substantially from last year. I think overall on quite decent levels for our industry. Earnings per share for the first three quarters at 1.57.
With EUR 196 million operating free cash flow before growth CapEx is strong. Strong, robust cash flow for this, the first nine months. Page 28 provides you more details on our profit and loss statement. Of course, Aras has been added in all lines of the P&L, so I think it doesn't make a lot of sense to now comment on individual lines. Of course, the growth in revenue has also triggered growth in a number of cost lines, in particular, materials and services used, but also staff costs, EBITDA at EUR 266.3 million in absolute terms, EBIT EUR 144 million, and profit for the period at EUR 110 million. Now, a few more details on the financials of our three segments.
Mail division, I would say, of course, summary of course, impacted negatively by the pandemic, but compared to last year, some recovery and you see at least stability on a decent level. Letter mail revenue's up 0.7%. Of course, small tariff impact in Q1 resulting from the tariff increase in April, on April 1, 2020. Q2 recovery and Q3, comparing to relatively normal quarters, the impact of e-substitution, absence of any tariff impact. On the direct mail side for the first three quarters, a revenue increase of plus 2.0%. Of course, this is more recovery from the pandemic than real growth.
We continue to be substantially below pre-pandemic levels and continue to be under pressure here in this field. For the Mail division, total revenue close to EUR 900 million for the first three quarters. Our Mail division continues to be a strong profitable pillar of the group. Of course, this is also the cash generating part of our business portfolio. Parcel and Logistics, page 31, revenue up 57.1%.
Of course, a lot of this coming from Turkey, almost EUR 200 million coming from the full consolidation, but also organic, some organic growth coming from Turkey, and then strong organic growth in Austria, +EUR 110 million in absolute terms of 24.5%, and also in Eastern Europe, good growth of 15%. As a result, also a good profitability of the Parcel division, EUR 81.3 million. With the 110 from Mail business and 81 from Parcel business, we are, as I said, standing on two strong feet. A balanced portfolio which we've never had at this level in the past.
I think it's really a clear indication that our strategy is working. Moving to page 33, Retail and Bank division, revenue up 6.7%, which is a combination from growth of the bank, which is the financial services part of this, of these columns, and a small decline on the branch services side. There is still some revenues of the former cooperation with other BAWAG P.S.K. BAWAG P.S.K has been included in 2020, and we have seen a little bit weak telecoms business, also giving supply chain disruptions, which have caused a small decline in revenues. EBIT-wise, we have seen some improvement and expect further improvement in the quarters to come. Page 35, our balance sheet.
Our balance sheet continues to grow, given the growth of the bank's balance sheet and will of course make a substantial jump in size, when we close the acquisition of ING's retail business. At the same time, our balance sheet continues to be conservative. As of October 30, we have a substantial cash surplus, are free of bank liabilities, have a low level of intangibles, a high level of provisions and a strong and stable equity position. Cash flow, page 36, as I said, our business has been highly cash generative. There is still some higher investment volume to come in Q4.
We are lagging a little bit behind our cash plans, our CapEx plans in the first three quarters, also given some delays, and some supply chain bottlenecks. I think also the full year will show a good cash generation. Let me close with the outlook for 2021. We do expect a fourth quarter where the major trends continue. However, where compared to last year, we compare ourselves with a very strong Q4 last year, where several factors fueled very strong parcel volumes, in particular a longer lockdown prior to Christmas, which had a very strong impact on parcel figures. All that said, we expect a revenue growth of around 15% for the full year.
We already, I think, commented on the CapEx level, and earnings-wise, we upgraded our guidance, where we, on the EBIT side, now expect an EBIT increase of around 25% based on last year's EBIT of around EUR 161 million. The business visibility is still low, so we do not yet provide guidance for full year 2020. I think in terms of mega trends, we see stability. We do expect our mail business to decline further with the decline rates that we've seen over the last two years. We do expect stability in parcel and logistics, of course, some market growth, but also some factors where we compare ourselves against strong quarters this year.
We do expect, of course, an increase in retail and bank top line wise, but also an improvement bottom line wise. With that said, I think we have a general, a confident look into the future. Of course, the strong tailwinds that we've seen have weakened over the last months, but I think we are in general up to a very good full year, of course, also with all the ingredients in place for an attractive dividend. With that, let me now take your questions. Thank you.
Ladies and gentlemen, at this time we will begin the question 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, may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selection. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question comes from Ivar Billfalk-Kelly from UBS. Please go ahead.
Good afternoon. Maybe if we start with your outlook for the quarter, it looks to me like it implies a material slowdown relative to Q4 2020 of almost EUR 20 million, if I've done my numbers right. You mentioned that you don't expect parcel volumes to grow, but is that the only factor feeding into this? Or are there other elements that I think or lead to an expectation of slowdown? Alternatively, can we assume that the guidance is actually conservative and there might be scope for upside to the increase of 25%? Secondly, within Turkey it looks like volumes have dropped in Q3 relative to Q3 2020. Can you please tell us a little bit about what's driving this slowdown?
Is it a loss of market share or is the overall market slowing? Linked to that finally, are you still seeing margins well above 10% like you did earlier in the year, or has this started to normalize? Thank you.
Yeah. Let me start with your question on Turkey. I think we continue to see margins substantially above 10%, and still a very good execution, both on the price side as well as on the cost side, of the company. Yes, volumes are coming down. I think that's an observation across the business portfolio. I think the main reason is that we are comparing against the seasonality. Let me put it in those words this way. Against the seasonality last year, where we had a pre-pandemic Q1, where Q1 this year of course was substantially up. A very turbulent, distorted Q2, where also this year volumes have been up.
Last year, in Q3, where everybody was already better capable of handling the pandemic. Volumes were up and where I think the good news is that across the business portfolio we continue to see growth. However, the growth substantially coming down. Now we are entering Q4, where last year across markets, and of course every market was a little bit different in terms of lockdowns and pandemic, but where we are now comparing ourselves against a record Q4, both revenue wise, volume wise and EBIT wise. I think that explains the volume trends which are also seen in Turkey. I think on the outlook, and I already commented I think on the margin question, yeah.
On the outlook for group revenues, I think the +15% translates into a flat Q4. Pretty much, again, visibility for the weeks to come is mediocre. Flat means that we do expect parcel growth that will compensate the decline on the mail side. On the mail side, we do not have any tariff impact left. You know, we do expect the decline rates that we've seen historically 5%-6% over the last two, three years. We do expect parcel growth across the portfolio, which will compensate this decline. That results in a flat Q4 again, compared to record volumes last year.
Thank you very much. Just to follow up on that. I'm sorry I wasn't very clear, but I was referring to what looks like a step down in EBIT actually. That would imply then there's a decline in margins that you're expecting across the domestic portfolio as well. Is that correct?
Yes. I think overall we continue to be on the rather cautious side when we have low visibility. I think just the development on the mail side, volume decline, revenue decline, with no tariff impact means that the domestic business is a little bit under pressure and will also decline a little bit in EBIT compared to the very strong Q4 last year. We also face substantial headwinds on several cost factors, including the labor side, which is very tight in Austria.
Again, I would say it's a quarter which is quite difficult to forecast and we do prefer to be a little bit on the cautious side.
Understood. Thank you very much.
The next question comes from Muneeba Kayani, from Bank of America. Please go ahead.
Hi, thanks for the call. Firstly, just wanted to ask about dividend expectations. Consensus is at around EUR 1.95 for the year. If you could just comment on that. Secondly, following up on the cost comment you just made, your union wage reset would be in mid next year. If you could explain to us what are the cost headwinds you're seeing into peak season, and how are you thinking about that into next year, please? Thank you.
Yeah, thank you for your questions. I think please bear with us that we do not provide dividend guidance, precise dividend guidance at this point in the year. We still have a few weeks to go, and then we'll see what we come up with in terms of profits for the period. But I think, you know, do expect something between the prior pandemic dividend and last year's pandemic. So I think the bandwidth here is between EUR 1.60 and EUR 2.08. Sorry for not being more precise in our answer. I think we continue to, of course, be committed to an attractive dividend policy.
Our formal dividend policy is that we pay out at least 75% of net earnings. Let's see what net earnings we'll come up with and then we'll have a decision on the dividend. On the cost side, I think you're right. We see or we still have six months to go for the next negotiation on wage increases. At the same time, we have in certain areas quite tough labor markets where, you know, we might in a very focused way have to pay a little bit extra to get labor, direct labor or indirect labor.
Across the business portfolio, we also have subcontracted labor where we might see some more immediate increase in factor costs. It's all not very immediate, but it's clear that inflation is also coming to Austrian Post. You know, that has of course an implication on the cost side, but also creates degrees of freedom on the price side. Given that in some contracts we also have index clauses and our regulator historically uses the consumer price inflation as a ceiling for our price increases on the USO side. When inflation increases, of course, that creates a little bit more degrees of freedom. Cost side will come probably a little bit earlier than the opportunities on the revenue side.
I think, I hope that answers a little bit your question.
Thank you.
The next question comes from Marco Limite, from Barclays. Please go ahead.
Hi, good afternoon. Just to follow up to your last answer on cost. When do you expect the next price increase for letter to come through? I think the last one was in April 2020. When do you expect the next one? This is my first question. The second question is about your early outlook for 2022, where you expect stability in earnings for parcel and logistics. I was just wondering what are the underlying assumptions for the stability in that division. What do you expect broadly for volume? Do you still expect volumes to grow at, I don't know, mid-single digit? And therefore what do you expect also for margins compared to the 2021 performance?
Still on the outlook, what do you expect in terms of the banking division post the ING acquisitions? When do you expect the division to get to breakeven? Thank you.
Thank you for your questions. First on the price increase on the USO side, I understood the question in this direction. I think we do not yet have precise plans. We just have implemented a price increase on the retail parcel prices in, I think, September. Which basically has used our degrees of freedom on the regulatory side, but with every month of higher inflation. Currently in Austria, we typically 3.something[guess] inflation. Of course, degrees of freedom are created for further price increases.
I think we will have to observe how what inflation does over the next months and then decide whether something in 2022 is possible or whether this will rather happen in 2023. Of course, this is on our table. When I'm talking about price increases, I talk about kind of an increase in the published price increases. There are, of course, also certain contracts in our mail business, in particular on the direct mail side, where we do have index clauses and where we have an impact on prices also absent of larger price increases.
Outlook for 2022 on the parcel side, we do expect single-digit growth across the portfolio, probably rather in lower- to mid-single-digit numbers. I think we are optimistic that we can at least for the foreseeable future maintain the order of magnitude of margins that we have shown for the first three quarters of this year. On the banking division, our target is to break even by 2024. Next year and in 2023, make good progress towards that direction.
That's, I guess, before the ING acquisition. Is that right?
That's including ING acquisition, yes.
Okay. Thank you very much.
The next question comes from Bernd Maurer from Raiffeisen Bank International. Please go ahead.
Good afternoon. First a follow-up on the recent price increase you mentioned for the retail parcel segment. On average, can you share a number, what over the portfolio, the magnitude of the price increase? My second question would refer to the staff costs, which are considerably lower, looking at Q3 versus the previous quarters, some EUR 15 million-EUR 25 million lower scheduled staff costs in Q3 versus Q1 and Q2 this year. I think the devaluation of the Turkish lira has some impact, but I also calculate some 500, more than 500 less FTEs on average in Q3 versus Q2 and Q1. You have plotted the Austrian staff there, those increase.
Did you lay off people in Turkey or is it for other reasons that the staff base is lower over the group? Just some explanations for the relatively quite reasonably lower scheduled staff costs in Q3, I would be interested in.
Well, I'm not sure I fully understood your question. You said Q3 staff costs were below Q1 and Q2.
Yes.
We have not had any major restructuring efforts in the group, at least not that I'm aware of. My first guess is that we have this you know seasonal impact of Q3 just being a vacation season where.
Mm-hmm.
With the way you account for it, you end up with lower staff costs and yeah, you have some seasonality. We had very strong volumes in Q1 and Q2, and maybe there has been some dip in staff numbers on a Q.
Yeah.
Q-on-Q basis[guess], but no major discontinuities. Yeah.
Okay.
Help me again with your first and second question. The parcel price, I think. We're talking about the retail parcel prices in Austria.
Mm-hmm.
Of course, this is a small share of total Austrian revenues. As far as I remember, this has been in mid single-digit percentage areas on the retail volume. Yeah. Of course, you know, the.
Yeah.
The big business customers are outside of that.
Mm-hmm. Yeah. Yeah.
The third question.
Yeah. Thank you.
What was your third question?
No.
No. Okay.
No. There was only question number one and two. Thank you.
Thank you.
There are no further questions at this time. I hand back to Harald Hagenauer for closing comments.
Thanks once more, ladies and gentlemen, for being in this call. If you have some further questions today or the next days, just feel free to call us. We are available, and I hope to see you soon the next couple of months. Thanks, and bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.