Deutsche Post DHL Management Roadshow. Martin Ziegenbalg, Head of Investor Relations Zurich, 15 November 2012

Transcription

1 Deutsche Post DHL Management Roadshow Martin Ziegenbalg, Head of Investor Relations Zurich, 15 November 2012

2 Groundwork laid for profitable growth Legacy homework done Restructuring completed; all businesses strategically well positioned Better risk & profitability discipline on contract, customer and investment decisions Building our track record Strong balance sheet and disciplined capital allocation Institutionalized strong focus on cash generation and working capital management Key trends intact: TDI and parcel volume growth Profitable growth focus MAIL: stabilization of EBIT at ~EUR 1bn, key driver parcel growth DHL: Further leverage growth and margin potential of our strong global footprint: 13 15% EBIT CAGR in guidance confirmed: Group EBIT of EUR bn 2

3 Agenda On track in a volatile environment Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 3

4 Group P&L Q Continued growth in DHL EBIT EUR m Q Q Change Revenue increase driven by DHL divisions as well as FX effects. As Mail revenue declined slightly, organic growth in group revenue was 1.2% Revenue EBIT t/o Mail t/o DHL 13, , % -6.5% -18.2% 5.0% Group EBIT decrease due to Mail EBIT being impacted by one less working day, 4% wage increase and Neckermann charge DHL EBIT continues steady growth despite volatile macro environment and ongoing spending towards growth and efficiency initiatives Financial result Taxes % 34.8% Lower Q3 taxes bring nine-months tax rate in line with new expected full-year rate of 24% Consolidated net profit 1) % EPS (in EUR) % 1) Attributable to Deutsche Post AG shareholders 4

5 Free Cash Flow Q Cash flow performance impacted by VAT payment Excl. VAT EUR m Cash from operating activities before changes in Working Capital Q ) 635 Q ) 632 Q ) 632 VAT payment impacts Q3 FCF through EUR 300m decrease in working capital and EUR 155m interest costs 2) Changes in Working Capital Cash from operating activities after changes in Working Capital Net Capex Net M&A Improvement in Operating Cash Flow excl. one-off effect from VAT Robust FCF excl. VAT, slight decline driven by increased Capex for investments in selective growth markets Net Interest FFO/Debt at 28.2% (year-end 2011: 32.3%) Free Cash Flow ) Included restructuring cash out of EUR -42m in Q and EUR -13m in Q ) Total cash payment related to 2012 VAT settlement of EUR 482m, o.w. EUR 27m paid in Q2 5

6 Net Debt (-)/Liquidity (+) Net financial position impacted by usual H1 outflows, state aid, VAT payment and continued investments in EUR m Incl. EUR -298m for state aid payment and EUR -482m for VAT Sep Dec Net liquidity OCF (before changes in working capital) Changes in working capital Net cash capex Net dividend All other effects Net debt 6

7 EBIT to FCF Conversion Multiple levers to drive FCF improvement over the next years Major drivers EBIT Changes in provisions Changes in W/C Income taxes paid Net Capex Net M&A Free Cash Flow Expected Trend from 2013 onwards In line with 2015 guidance: Group EBIT up to bn Utilization of restructuring prov. tailing off Pension payments declining slowly Institutionalized strong focus on working capital management To increase driven by EBIT growth Normalization from current expected gross levels of 1.8bn in 2012/13 No need or ambition for major M&A 9M 2012 includes VAT effect: strong cash generation in Q4 still to come 7

8 Full-year 2012 Guidance 2012 EBIT guidance, including all one-time effects CONFIRMED Group EUR 2.6bn EUR 2.7bn Mail DHL divisions EUR bn ~ EUR 2.0bn Capex of max. EUR 1.8bn (vs. ~ EUR 1.8bn previously) Expected tax rate lowered to ~24% (from 27%) Net profit 1) to improve in line with operating business Corp. Center/ Other ~ EUR -0.4bn 1) Excluding one-time effects from Postbank, VAT charge and EUR 99m release of restructuring provisions at DHL Express 8

9 2015 Targets confirmed: MAIL EBIT stabilization, 13 15% growth in DHL EBIT to EUR bn Group EBIT of EUR 3.35 to 3.55 bn in 2015 MAIL EBIT stable at a minimum of EUR 1bn DHL DHL EBIT, in EUR bn CAGR 13-15% 1.7 ~ ) 2) Corporate Centre/Other Improvement to EUR -350m by ) Underlying EBIT 2) 2012 Guidance 9

10 Finance Policy revisited Target / maintain rating BBB+ External cash usage Dividend payout ratio to remain between 40 60% of net profit (continuity and Cash Flow position considered) - 2.4bn 1) paid out since January 2010 with dividend CAGR of 8% Excess liquidity will be used for Stepwise pension funding Share buybacks and/or extraordinary dividends 1) 0,60/ 0,65/ 0,70 per share for the years 2009, 2010,

11 Agenda On track in a volatile environment Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 11

12 Highlights MAIL Q Q3 volumes impacted by working day effect EUR m Revenue Q ,341 Q ,276 Chg. -1.9% Mail Communication volumes m units -3.8% EBIT % Milestones Further confirmation of Parcel growth trend even over seasonally lower summer period (+8.5% per working day) Decline in Mail Communication volumes in line with expectations (-2.3% per working day) Neckermann charge of EUR 10m in Q3 EBIT On track for full-year guidance as Q3 EBIT decline is due to combination of several transitional factors Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Parcel volumes m units +6.8% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q

13 MAIL: EBIT stabilization at a minimum of EUR 1bn on track EBIT stabilization: levers delivering despite expected headwinds EBIT Levers delivering Parcel growth: Parcel vol/wd 1) up 11.5% yoy YTD (continued e-commerce boom) Digital services: Mid-term contribution Pricing: Mail price increase as of Jan. 1st, 2013 Ongoing cost optimization: Network & labor flexibility/productivity improvement Stabilization EBIT Headwinds as expected E-substitution: Mail Communication vol/wd 1) down -2.3% yoy YTD Digital services: Short-/medium-term investing phase Factor cost increases FY 2012 moreover impacted by one-off effects: VAT settlement, Neckermann insolvency, less working days 1) Volume per working day 13

14 Investments to capitalize on further growth Parcel E-commerce continues to grow strongly and we keep investing in driving parcel growth E-commerce sales EUR bn 1) 1 Transaction Shopping platforms, convenience logistics, simple and secure payment solutions % p.a. 2 Services e.g. Track & Trace, pre-alerts Driving parcel volumes German parcel market growth: 5-7% p.a. until ) 3 Delivery Packstation, retail outlet of choice, parcel boxes for private households (pilot) Parcel Network Upgrade: > 40% more capacity, faster delivery 1) Source: Bundesverband des Versandhandels; 2) Company estimate 14

15 Conclusion we are well on the way to reaching our strategy 2015 targets Halfway through the Strategy 2015, we are on the right track, despite major challenges! Results Targets Targets EBIT EUR billions Customer satisfaction 93% 93% 95% 95% 95% Employee satisfaction 66% 74% 76% 80%! Homework 90% done we are delivering! 15

16 Agenda On track in a volatile environment Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 16

17 Highlights EXPRESS Q Strong performance of global TDI network continues EUR m Revenue EBIT Q , Q , Chg. 9.0% 6.9% Time Definite International (TDI) Revenues per day 1) in EUR m +6.4% Milestones TDI volumes continue to grow yoy in all regions, reflecting market share gains driven by network upgrades and service excellence EBIT increase reflects volume growth. Ongoing investments in our network and training temporarily restrain EBIT margin expansion, as expected Opening of ground hub in Mexico GPI (General Price Increase) of 5% 2) starting 1st January 2013 announced Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Time Definite International (TDI) Shipments per day 000s +8.7% Q ,0 Q ) Currency translation impacts are eliminated. Hence, 2011 and 2012 data are aggregated with the same currency rate 2) Global average, price increases vary by country/region Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q

18 EXPRESS: 2015 EBIT target and key levers As presented on Capital Markets Day, May % CAGR Key growth and margin levers +13% 15% CAGR EUR 785 m 1) EUR 288 m EUR 497 m 2) 3) EUR 927 m 1. Be strong in fastest growing regions 2. Focus on TDI 4) 3. Further improve customer satisfaction 4. Continue investments in network and service 5. Leverage cross BU opportunities 6. Manage cost through operating leverage 7. Increase brand awareness 2010 Business stabilization 2011 Invest for growth 2012 Market share growth 2013 Margin acceleration 2014 Convergence 2015 Renewal ON TRACK IN FOCUS 1) Underlying EBIT and before the transfer of Czech domestic business to DHL Freight; 2) Reported EBIT; 3) EBIT before the transfer of the Czech domestic business to DHL Freight 4) Time Definite International 18

19 EXPRESS: Clear focus on global network Strong in fastest growing regions: global market share up to 32% with 4% share gain in Asia 1) Focus on TDI: Disposal of smaller Domestic businesses in Australia, New Zealand and Romania Best rated provider: leading global CI ranking in customer satisfaction, loyalty and value for money 2) Continuous investment in service quality: new Australia flight, Shanghai hub, Mexico expansion Cost management: focus on network operations efficiency and indirect costs 1) Market Intelligence Study 2012, figures based on value share ) Customer Interaction Study

20 The most international company in the world Presence in over 220 countries and territories, pioneering Express business in many locations 20

21 Market Position in TDI Value Share ( ) Market share expansion continues across all regions Americas [7,352 m ] DHL 16% TNT Others 1% 3% Europe [6,813 m ] FedEx 10% Others 12% Global [21,983 m ] UPS 30% FedEx 50% TNT 14% UPS 23% DHL 41% TNT 7% Others 13% UPS 21% DHL 32% MEA [330 m ] Others 29% Asia Pacific [7,487 m ] Others 23% FedEx 27% UPS 3% FedEx 9% TNT 10% DHL 49% TNT 6% UPS 10% FedEx 21% DHL 40% 4 ppt increase vs last year Source: MI study 2012, annual reports and desk research AM: AR, BR, CA, CL, CO, CR, MX, PA, VE, US; EU: AT, BE, CH, CZ, DE, DK, ES, FR, IL, IT, NL, NO, PL, RU, SE, TR, UK; MEA: AE, ZA ; AP: AU, CN, HK, ID, IN, JP, KR, MY, NZ, SG, TH, TW, VN 21

22 Agenda On track in a volatile environment Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 22

23 Highlights GLOBAL FORWARDING, FREIGHT Q Volume trends improving slightly EUR m Q Q Chg. Air freight 000s Tons Revenue 3,804 4, % -3.8% EBIT % Milestones Air Freight (AFR) volumes down by -4% in line with market, Ocean Freight (OFR) volumes grew above market, up 6%. No major peak season effects visible in AFR or OFR so far Solid Gross Profit (GP) development, with GP/ton up 11% in AFR and GP/TEU 1) about flat (+0.9%) in OFR EBIT flat despite solid GP growth due to NFE implementation costs 1,087 1,106 1,080 1, , Q1 11 Q2 11 Q3 11 Q4 11 Ocean freight 000s TEU 1) Q % Q2 12 Q Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 1) Twenty Foot Equivalent Unit 23

24 GLOBAL FORWARDING, FREIGHT: 2015 EBIT target and key levers As presented on Capital Markets Day, May 2012 Key levers with impact on EBIT % CAGR EUR 383 m 1) EUR 429 m 1) Volume & Gross Profit Improvement Volume growth due to exposures to emerging markets GP 2) margin improvement due to enhanced IT (enhanced buying due to better transparency) Cost Improvements Productivity gains due to economies of scale Indirect costs savings due to optimization of regional and country organizational structures Efficiency gains due to new IT (NFE) 3) Road Freight +13% 15% CAGR ) EBIT before the transfer of the Czech domestic business from DHL Express to DHL Freight 2) Gross Profit 24

25 FORWARDING, FREIGHT: Program for further growth and profitability improvement in place Sustainable Growth Dedicated sales channels for large and small-/ medium-sized customers Successful sales campaigns in Air Freight ( Fly it in ) and Ocean Freight ( Sea it, sell it ) Maximized Profitability Overhead cost structures continuously optimized Focus on optimal cash collection Transformation and NFE NFE new standard operating model Global Service Centres for selective repetitive, non-customer facing tasks Organizational Blueprint to standardize structure across all countries 25

26 Agenda On track in a volatile environment Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 26

27 Highlights SUPPLY CHAIN Q Steady business growth continues EUR m Q Q Chg. Revenue by sector Q Milestones Revenue EBIT 3, , % 9.0% Williams Lea 10% Others 6% Retail 25% Asia Pacific region once more with highest revenue growth EBIT growth driven by improved contract portfolio management along with continued cost efficiencies New business wins of EUR ~290m annualized revenue confirm attractiveness of outsourcing (Q3 2011: EUR 280m). Biggest gains were in the Consumer and Life Sciences & Healthcare sectors this quarter Automotive Energy 3% 8% Technology 11% 18% Life Sciences & Healthcare 19% Consumer 27

28 SUPPLY CHAIN: 2015 EBIT Target and Key Levers As presented on Capital Markets Day, May 2012 By far No.1 in a large and growing market with still significant outsourcing potential Reminder: Tutorial Workshop on Nov 27, London and Nov 29, Frankfurt % CAGR EUR 272m 1) EUR 362m Contract Lifecycle Management Standardization & Replication +13% 15% CAGR Sector Focus ) EBIT excluding restructuring 28

29 SUPPLY CHAIN: Strategic programs in place delivering margin improvement and further growth Contract Lifecycle Management Standardization & Replication Sector Focus Continuous improvement across the entire contract lifecycle Project selection Design Execution Price / risk discipline Identify, standardize and grow global products and solutions Co-Packing Lead Logistics Provider Technical Service Airline Business Solutions Life Sciences & HC platform Differentiate through sectorspecific solutions Global expert communities Be the competent partner for outsourcing in target sectors Leverage DHL customer contacts and brand 29

30 Conclusion Priorities Continuing to deliver in a volatile environment, supported by ongoing strong Parcel and TDI growth Maintain focus on executing our strategy Focus on cash flow performance Further optimizing cost structures and building in flexibility Confirmation of 2012 and mid-term guidance 2012 guidance confirmed and key trends intact 30

31 Agenda On track in a volatile environment Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Appendix 31

32 Deutsche Post DHL at a Glance 2011 key figures Group: Sales: EUR 52,829m; EBIT: EUR 2,436m; Employees 1) : 423,348 Domestic German Mail and Parcel International and Domestic Express Global Air, Ocean and Road Freight Global Supply Chain Solutions Sales: EUR 13,973m Sales: EUR 11,766m Sales: EUR 15,044m Sales: EUR 13,223m EBIT: EUR 1,107m EBIT: EUR 927m EBIT: EUR 429m EBIT: EUR 362m Empl. 1) : 147,434 Empl. 1) : 86,100 Empl. 1) : 42,847 Empl. 1) : 133,615 The postal service for Germany The logistics company for the world Corporate Center / Other: Sales: EUR 1,260m; EBIT 1) : EUR -389m 1) Average FTEs FY

33 Corporate Center / Other Aiming to reduce cost of Corporate Center / Other activities to -350m by 2015 CC / Other cost structure, 2011 Reduction to -350m by 2015 Investments into growth & crossdiv. initiatives (e.g. Go initiatives, Smart Truck, Cold Chain) 100% = ~400m 1) ~20% ~25% ~25% Corporate bodies (e.g. CB, SVB) and legal obligations/ foundations ) ) ~50% ~55% -400m -350m Core Corporate Center costs, e.g. Group Finance, e.g. Internal Audit, Treasury, Tax Corporate Communications Corporate Development Corporate Executive HR 1) excluding gains/losses from central FX hedging measures 33

34 Investment of Choice Dividend increased to EUR 0.70 Dividend development since introduction of new finance policy Increase of the dividend of 7.7% to EUR % Adjusted for Postbank effects and non-recurring items this reflects a payout ratio of 58% (2010: 59%) 59% 58% In line with our dividend policy: target payout ratio of 40 60% and commitment to dividend continuity Underlying Payout Ratio 1) 1) Adjusted for Postbank effects as well as non-recurring items booked in 2009 and

35 Cash conversion DPDHL transitioning to high Cash Flow generation EBIT Performance Mail High, but decreasing High, but decreasing Stable Stable DHL Low Improving Strong improvement High Level of Capex Average Low High Average Level of M&A Very high Very low Very low Very low Restr. cash requirement Low Very high Low Very low Special factors State aid ( ) State aid (+) Postbank sale (+) State aid ( ) VAT ( ) State aid (+)? 35

36 MAIL Divisional Results Q EBIT decline due to combination of wage increase, less working days and Neckermann write-down in seasonally weakest quarter EUR m Q Q Change Revenue slightly down as working day effect and the expected decline in Mail volumes were only partly compensated by Parcel growth Revenue EBIT Operating Cash Flow Capex 3, , % -18.2% NA 8.9% Reminder: yoy working days in Germany Q1 Q2 Q3 Q EBIT decrease reflects EUR 10m charge for Neckermann insolvency and effect of wage increase on seasonally weakest quarter Operating cash flow includes EUR -269m impact from VAT settlement Capex slightly up yoy due to continued investments into the network, e.g. Parcel 36

37 Compared to other markets, mail volumes in Germany are stabilizing 1 Addressed mail volume Percent, 2005 = 100% Global economic crisis USA UK Netherlands France Austria Germany Rate of e-substitution in Germany is lower than in other countries High quality: Over 95% D+1 in Germany, (91% in UK and 85% in France) Excellent customer orientation: 95% satisfaction 1) (93% in 2010) Many volumes already substituted Different mail structure: volumes in Germany determined by stable number of households (vs. e.g. mailed checks in the US)! Effects of e-substitution are manageable Source: Regulatory authorities; USPS; Royal Mail; Austria Post, estimate for Austria 2005 (2005 = 2006); figures Germany 2011: internal estimate; 1) Kundenmonitor study 2011: private mail customers 37

38 The new price-cap formula offers opportunities for future price increase 2 The new price-cap formula Price-cap = inflation x-factor x-factor reduced from 1.8% to 0.6% Reference period 1) brought forward by 6 months Regulation valid until December 31, 2013 provides opportunities for potential future price increases No price increase for 2012 instead buffer of 1.2% carried over to ) 2.2% inflation in 2013 reference period allows for additional pricing headroom of 1.6% Average price increase of 2.8% 3) on Jan 1, 2013, standard letter stamp increase from 0.55 to 0.58 Indicative example based on 2011 revenue 3.6 EUR billions 3.5 4) +2.8%! After 15 years, we have the opportunity to compensate volume decreases also by increasing prices 1) For relevant CPI = German Consumer Price Index; 2) 1.2% = 1.8% inflation rate minus 0.6% x-factor; based on arithmetic average of the monthly CPI values from July June 2011; 3) 2,2% inflation rate - 0.6% x-factor + 1.2% carryover = 2.8% price increase, based on weighted average across the relevant Mail product portfolio as per price-cap regulation; reference period for 2013 price cap is July June 2012; 4) 2011 revenues affected by under price-cap regime 38

39 We are continuously adapting our operations to the development of mail volumes by increasing efficiency We are improving our letter mail operations 3 Sorting Increase automation rate with state-of-the-art sorting technology (up to 95% of mail volumes) Flexible rerouting and reduction of sorting capacity during lowvolume periods Transport & Delivery Ongoing reduction of delivery districts and personnel (17% reduction since 2002) Increase of packed and sequenced mail directly transported to delivery districts (from 70% to over 90%) Preventive healthcare measures, new delivery equipment to significantly reduce sickness rate (currently 4.8%) Flexible workforce: over 4,000 employees on call at short notice; over 9,000 employees on short term contract resulting in ample cost flexibility! We have numerous cost reduction and optimization levers in place 39

40 We have laid the foundation for further increase in labor productivity 3 Labor flexibility and productivity Long-term union agreement Starting wages 1) reduced by 4% Historic Generations pact: Innovative pre-retirement worktime model Over 7,000 applications for worktime accounts since Jan 2012 Continued outsourcing 990 parcel delivery districts 1,000 external transport drivers! We Employee satisfaction New wage agreement Moderate wage increase of 4% after 2 years of pay freeze One-time payment of EUR 400 in December 2011 Commitment to avoid layoffs for business reasons extended until 2015 have considerable flexibility to adjust our factor costs Source: Long-term union agreement (October 6, 2011); wage agreement (January 12, 2012, valid for 15 months); 1) for new employees; 40

41 With DHL Parcel we are shaping a dynamically growing market environment 4 E-commerce is growing strongly... E-commerce sales EUR billions 1) Share of retail spending Percent 2) 8 = 32 bn... and is driving parcel volumes German parcel market: growth of 5-7% p.a. until 2015 B2C growth 11-13% p.a. by e-commerce adoption independent of GDP development % p.a. +11% p.a. 20 = 80 bn B2B growth 3-5% p.a. depending on GDP and export development Convenience as a key driver for e-commerce: 3 out of 4 online shoppers believe e-commerce has improved their quality of life Over 40% claim they save time! We are profiting from a fast growing market 1) Bundesverband des Versandhandels; 2) TNS Infratest und MRSC, Einkaufen 4.0, Gesellschaft für Konsumforschung 41

42 Aim to increase market share and secure growth rates above market average 6 No. of registered customers Millions will boost our B2C market share Percent 5.0 Parcel Target 2015 Other revenue increase above market growth DHL Simplified services Network upgrade Paket 2012 DHL-Fulfillment DHL-checkout will help to grow our B2B market share Percent Parcel Other ! Parcel Germany is a solid growth story 42

43 Parcel Germany: Strategic Focus Parcel Germany is shaping ecommerce as the leading service provider DPDHL only postal organization world-wide to offer nation-wide 24/7 access to all shipping needs 13,500 retail outlets 1,000 Parcel Boxes for 24/7 drop-off 2,500 automatic PACKSTATIONs to drop-off, frank, or use as delivery address Online Franking of all parcel products iphone and Android apps for all services To date 2mn registered Packstation customers 83% check whether vendor ships to Packstation before purchase 36% increase their online spend after registration for Packstation Target group in age segment years with high online affinity Source: Europäisches Handelsinstitut 43

44 DHL Asia: A Strong Contributor to the Group Revenue ) : EUR 38.9bn 19% Asia Pacific Others Revenue ) : EUR 11.4bn 30% Asia Pacific Revenue )2) : EUR 10.9bn 26% Asia Pacific Revenue ) : EUR 13.1bn Asia Pacific 9% Others Others Others Clear market leadership in Asian TDI No. 1 in air freight, No. 2 in ocean freight Market leader in contract logistics in Asia 1) External revenue = revenue generated by the divisions from non-group third parties; 2) excl. DHL Freight 44

45 Leverage cross business unit opportunities Leverage of one DHL helps to manage risks and recover high investments for network expansion Intercon. capacity utilization DGF contribution CAGR +30% 1.5 Weight Load Factor (Core TDI & Non Core (ACS) Volumes) Capacity million Tons WLF: 70% WLF: 79% WLF: 75% DGF contributes continuously around 18% to our overall cargo loads 1) DGF is our no. 1 ACS customer For DGF we improved from no. 8 in 2010 to the no. 3 supplier in Q ) Including regional capacities 45

46 EXPRESS Divisional Results Q Robust business growth across all regions EUR m Revenue Q ,910 Q ,172 Change 9.0% Revenue increased due to continued strong volume growth in TDI despite volatile economic environment and supported by FX gains. Adjusted for FX gains and disposals of Domestic businesses (Aus, NZ), organic growth was 4.3% EBIT Operating Cash Flow Capex % -9.5% 4.4% EBIT increase reflects international volume growth while ongoing investments in our network and training temporarily restrain EBIT margin expansion, as expected Operating cash flow impacted by cash-out for early termination of the co-operation agreement with ASTAR Air Cargo and VAT payment in Germany High Capex level maintained; reflects ongoing investments in global network 46

47 Focus on TDI Express strategy to focus on TDI is crucial to further drive EBIT and margin development Revenue contribution by product (FY 2011) Other; 26% > Above DHL Express average < At or below DHL Express average Product TDI Margin > Aspiration Comment Focus Strategy Core competence with dedicated scheduled network TDD > Complementary offer TDD; 11% TDI; 63% Other (incl. DDI, DDD, ACS 1) Same Day) < Volume shift to TD platform Opportunistic offer for additional cost recovery Divest over time Positive TDI revenue share development Other, 42% TDI; 58% Other, 39% TDI; 61% Other, 37% TDI; 63% ) ACS: Air Capacity Sales 47

48 Manage cost through operating leverage Our overall network setup as well as concrete programs support the translation of volumes into additional EBIT Overhead cost Save >1% of revenue PuD and handling Save 2.5% per move p.a. One virtual airline Stabilize Reduction of Sales, general and admin expenses as % of revenue IT Convergence E-Com Tools Improved span of control NOEP (Network Optimization and Efficiency Program) to reduce ground handling cost Re-fleeting with shelf vehicles optimize processes and reduce fuel and emissions Capacity management to stabilize CpK (Cost per Kilo) Reduction of commercial air capacity by improved forecasting Flexible leasing arrangements Modernization of fleet to reduce fuel and carbon emissions Fuel price volatility: Industry wide transparent fuel surcharge mechanism FX rate exposure: Global currency portfolio as natural hedge on currency volatility 48

49 Good to Great for our customers Increased sorting capacity from 8,000pph to 40,000pph Improve transit time with more efficient air routing intra North Asia 24/7 Quality Control Center to ensure excellent reliability Leading edge automation for high accuracy and speed Expanded network between North Asia, Global and Regional Hubs First in Shanghai to handle international transshipments 49

50 New North Asia Hub in Shanghai Opening : 12 July 2012 Regional Express Hubs in Asia Pacific Central Asia Hub Hongkong Delhi Beijing Bangalore Bangkok Singapore Seoul Hubs Regional Hubs Commercial Air Hubs Taipei Manila North Asia Hub Shanghai Sydney Auckland North Asia Hub Shanghai at Pudong International (PVG) First-class Express hub Part of multi-hub strategy in Asia Pacific Investment of USD 175m New capacity, greater flexibility and reliability for guaranteed time-definite delivery 50

51 FORWARDING, FREIGHT Divisional Results Q Solid GP development EBIT flat due to NFE implementation cost EUR m Revenue Q ,804 Q ,018 Change 5.6% Revenue growth mainly driven by FX effects. AFR revenue flat while OFR revenue posted double-digit increase driven by volume growth and higher freight rates EBIT Operating Cash Flow % 83.6% EBIT flat despite solid GP growth due to NFE implementation costs Strong Operating Cash Flow driven by higher DPO levels Capex % Lower Capex related to phasing in NFE roll-out (New Forwarding Environment) 51

52 Maximized profitability: GP on product level reflects our size advantage and product portfolio 24.2% 19.9% DGF comparable 1) DGF 20.7% 18.9% DGF comparable 1) DGF Gross Profit margin 2011 (in %, Air Freight) 23.4% 21.6% Gross Profit margin 2011 (in %, Ocean Freight) 20.6% 21.6% 21.0% 19.0% Performance benchmarking on product level is impacted by differences in accounting key DGF competitors allocate value added services to AFR or OFR DGF has chosen to account for VAS separately under category called Others. This allows to measure true performance on product level When relevant VAS (customs, handling, cartage) are allocated to AFR & OFR to improve comparability, DGF s GP margin is in line with peers GP margin in AFR benefits from DGF s large scale, while OFR reflects its share of uncontrolled volumes What about fuel costs? Fuel costs have not a significant impact on DGF as they are passed through costs 1) Including value-added services; Note: GP margin absolute level not fully comparable due to different revenue recognition principles across competitors Source: Official company publications 52

53 Maximized profitability: direct operating expense is key lever for EBIT conversion improvement DGFF Gross Profit to EBIT conversion 2011 (in m) 3,522 Gross Profit 2,991 65% 5% 30% DOE + SLA 1 Staff Costs Travel & Telecom Other 101 Depr. 429 EBIT Maximizing profit by cost management focus In 2011 Sales Direct Operating Expense (DOE) reduced in reaction to slowdown in market volumes Executed optimization of head offices organizational structures to reduce costs and to better position DGFF for growth Further streamlining through country alignment program under way, which is expected to bring cost benefits Special management focus on turn around of underperforming countries Staff costs represent the largest part of DOE but significant productivity gains without automation will not be possible Therefore, DGFF needs better IT platform to bring productivity on new level and DGFF is investing in a transformational program New Forwarding Environment 1) SLA = Service Level Agreement, DOE = Direct Operating Expense 53

54 New Forwarding Environment (NFE) Thinking today about tomorrow NFE is the business transformation program of DHL Global Forwarding to underpin its market position as industry leader Innovation will drive top-line revenue growth NFE program will underpin profitable growth for DHL Global Forwarding Standardization and industrialization allows significant bottom-line cost reductions Timeline? Forerunner pilots ongoing; full IT pilots Q Roll-out by 2014/

55 SUPPLY CHAIN Divisional Results Q Strong operational execution drives sustained EBIT growth EUR m Revenue Q ,323 Q ,670 Change 10.4% Revenue increase reflects growth in existing contracts and new start-ups as well as positive FX effects. Organic revenue growth of 2.7% EBIT Operating Cash Flow % >100% EBIT growth driven by improved contract portfolio management along with continued cost efficiencies Capex % Operating cash flow shows good turnaround driven by tighter working capital management Contracts won Annualized revenue New gains Capex reflects continued investment in new contracts and selective growth infrastructure 55

56 Contract Logistics is a large and growing market with DHL Supply Chain being number 1 by far Total market size, bn Top 3 market shares, 2011 Outsourced Contract Logistics In house Logistics CAGR Largest providers Other ~12% 1, % DSC % ~12% % CEVA % Largest providers K+N %

57 Balanced revenue portfolio by sector Revenue 2011 by sector Comments Energy & Other 9% Auto Tech Williams Lea 7% 12% 9% 17% Life Sciences & Healthcare (details to follow) Retail 26% 20% Consumer Balanced industry sector coverage Dedicated global sector teams Deep sector expertise including to sub sector level 57

58 Standardization & Replication of global products Global products development Overview of global products Assess Identify solutions with potential for growth and differentiation Co-Packing Marketing Solutions Develop Define standards and leverage best practice globally Lead Logistics Provider Grow Focus on target customers, enable teams, and grow the product globally Technical Services Airline Business Solutions Life Sciences & Healthcare Platform 58

59 Disclaimer This presentation contains certain statements that are neither reported results nor other historical information. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Deutsche Post AG s ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and achieve anticipated synergies and the actions of government regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Deutsche Post AG does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation. This presentation does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor shall there be any sale, issuance or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law. Copies of this presentation and any documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from Australia, Canada or Japan or any other jurisdiction where to do so would be unlawful. This document represents the Company s judgment as of date of this presentation. 59

60 Investor Relations Contacts Martin Ziegenbalg, Head of Investor Relations Robert Schneider Sebastian Slania Sarah Bowman Daniel Stengel