SUPPLY CHAIN

Changes in reporting

As part of the new brand architecture, we renamed the SUPPLY CHAIN/CORPORATE INFORMATION SOLUTIONS Division. It is now called the SUPPLY CHAIN Division and houses the Supply Chain and Williams Lea (previously Corporate Information Solutions) business units.

Supply Chain generates lower revenue

In the first quarter of 2009, the division generated revenue of €3,145 million (previous year: €3,347 million), representing a 6% decline. Adjusted for adverse currency effects of €117 million, organic revenue fell by 2.4%. This was caused by declining business in the Supply Chain Business Unit, primarily in the Americas and continental Europe. Williams Lea increased organic revenue by 6% on account of the positive development in service centre and courier logistics in Germany as well as additional business in document solutions and marketing solutions in the UK.

Contract renewal rate exceeds 90%

In the Supply Chain Business Unit, we gained new contracts worth around €300 million in annualised revenue with new and existing customers in the first quarter, slightly ahead of the prior year. The contract renewal rate continues to exceed 90%.

EBIT before non-recurring items improved

Profit from operating activities (EBIT) was €34 million in the period under review (previous year: €34 million). The prior-year figure was adjusted because we no longer report the return on plan assets in connection with pension obligations as part of EBIT. It is now reported under the Group’s net finance costs/net financial income. Projects aimed at increasing efficiency as well as restructuring efforts led to overhead savings that helped to offset the modest decline in revenue and keep reported EBIT in line with the first quarter of 2008. The return on sales was 1.1% (previous year: 1.0%). Adjusted for restructuring costs of €8 million, EBIT before non-recurring items in the first quarter improved by 23.5%, which reflects a 1.3% return on sales.

Operating cash flow was €35 million (previous year: €8 million). Working capital was reduced by making a beneficial change to average debtor and creditor days. This led to improved cash flow.