Management Roadshow Frankfurt. 12 November 2015 Lawrence Rosen, CFO

Transcription

1 Management Roadshow Frankfurt 12 November 2015 Lawrence Rosen, CFO

2 AGENDA 1 Q3 Highlights & Strategy 2020 update 2 Q3 Financial results & Guidance update MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 2

3 Q HIGHLIGHTS EBIT performance continues to reflect investments in our long-term strategic agenda Important foundations for Strategy 2020 laid, with corresponding effects in 2015 results: IT renewal in Forwarding led to EUR -345m one-off costs in Q3 Further EUR -200m one-off charges recognized in 2015 guidance, mainly for legal/regulatory exposures PeP EBIT down reflecting one-time payment, strike effects, oneoff charge and global expansion of Parcel / ecommerce businesses DSC restructuring and related spend in line with accelerated plan Increased investment in Express ground and air network to enhance capacity and quality 2015 guidance adjusted for DGF & other one-off effects, 2016/20 guidance confirmed MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 3

4 PUTTING 2015 PERFORMANCE IN PERSPECTIVE in EUR m 4,000 3,000 2,000 Min. 2, : >8% CAGR** 3,700 3, offered a series of challenges & opportunities to lay fundamental groundwork for Strategy 2020 Create sustainable basis for long term growth at Parcel Germany through more competitive wage structure Continue build-out of infrastructure to support strong growth in Parcel and Express Assess NFE program and determine future course of Forwarding transformation Provide funding to DSC for restructuring phase of their Strategy 2020 agenda 1,000 08* 09* 10* 11* *underlying EBIT; **as per base year 2013 Against a backdrop of continued weak global GDP growth Important foundations for transition towards Strategy 2020 laid so far this year, with corresponding impact on 2015 EBIT MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 4

5 GLOBAL FORWARDING, FREIGHT: BUSINESS TURNAROUND INITIATED Air freight 000s Tons GP/Ton Export Business Highlights -13.2% Ocean freight 000s TEU 1) Q Q Q Q Q % 1) Twenty Foot Equivalent Unit Q GP/TEU Q % +2.1% Q MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 Air Freight and Ocean Freight volumes down reflecting weak demand as well as active yield management in competitive markets Division GP stable reflecting selective approach to volumes as well as currency effects Assessment of DGF IT renewal for potential alternative approach, triggering EUR 345m of one-off costs on DGFF Q3 EBIT Turnaround measures implemented as of Q2 helped to start stabilising business as operating performance in Q3 improved from low H1 run rate Recent Employee Opinion Survey (EOS) confirms active leadership (76, +1) and employee engagement (70, +/-0) remain at high levels PAGE 5

6 GLOBAL FORWARDING: BUSINESS CENTRIC RENEWAL Our main objectives remain valid Significant improvement in GP/EBIT conversion Increased differentiation through improved customer service and enhanced capabilities As significant productivity enhancements remain accessible based on our legacy shortfalls New technology enables better functionality, e.g., shipment visibility, document management Optimization potential by harmonizing processes, reducing double work etc. Efficiency opportunity through global convergence Alternative approach to enhance and renew our IT landscape and thereby to enable gradually unlocking efficiency gains to improve GP/EBIT conversion considered MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 6

7 GLOBAL FORWARDING: BUSINESS CENTRIC RENEWAL Flexible architecture Flexible, service-oriented architecture with best of breed applications Enable adaptation to changing business environment Proven industry solutions Focus on applications already proven in the forwarding industry Limit customization; rather custom-build auxiliary applications Digestible change Step-wise change Ability to leverage, enhance and converge existing systems Forwardercentric Focus on customer and front line needs Intense involvement of forwarders in countries/ regions Management Roadshow Lawrence Rosen Frankfurt, 12 NOV 2015 Page 7

8 GLOBAL FORWARDING: COST OF ALTERNATIVE IT RENEWAL APPROACH Costs of alternative IT renewal approach expected to be significantly lower than for NFE Average Average 2016e e ~-60 ~-100 In EUR m OPEX: Direct NFE costs NFE-related one-off costs, Q3 (EUR 345m) Expected IT renewal costs CAPEX: NFE: ~80m/year ( ) Alternative: ~10m/year (2016e-19e) Run rate for IT renewal in about similar to direct NFE costs in 2015 Cost for alternative IT renewal approach not expected to prevent yoy EBIT improvement Stepwise EBIT improvement to be driven by business turnaround and incremental IT renewal benefits in 2016 and beyond MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 8

9 EXPRESS: STRONG VOLUME GROWTH CONTINUES Time Definite International (TDI) 1) - Revenues per day in EUR m +4.7% 34,3 35,9 Q Q Time Definite International (TDI) - Shipments per day 000s +9.4% Business Highlights TDI volume continues to grow strongly by +9.4% Strongest TDI volume growth again in Europe (+14.9%) followed by MEA (+9.5%) and Asia/Pacific (+6.9%) As in Q2, Americas volumes down (-0.7%) due to customer mix changes; solid growth in base revenue/day Revenue increase lower than volume growth due to lower fuel surcharge, as in Q1 and Q2 Positive revaluation of Cincinnati hub partly offset by FX headwind DHL Express continues to grow above market based on diversified geographical footprint and intense focus on quality and customer service 2) Q Q ) excluding fuel surcharge and FX effects rate 1) Currency translation impacts are eliminated. Data aggregated with same currency rate MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 9

10 EXPRESS GROWTH SUPPORTED BY BALANCED GLOBAL FOOTPRINT Quarterly growth ranking, TDI volume growth #1 EU EU EU EU AM AP AP AP EU EU MEA AM AP AP MEA EU MEA EU EU #2 #3 #4 AP AM AM AM AP EU EU EU AP MEA AP AP MEA AM AM MEA EU MEA MEA AM AP AP AP EU MEA MEA AM MEA AP AM EU AM MEA AP AP AP AP AP MEA MEA MEA MEA MEA AM AM MEA AM AM EU MEA EU EU EU AM AM AM AM Consistent strong volume growth in global TDI network Constant variation in regional patterns reflects movements in global trade flows Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q % +9.4% +8.4% +7.8% +8.5% TDI Shipments/ day EU Europe MEA Middle East Africa AM Americas AP Asia Pacific MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 10

11 SUPPLY CHAIN: GOOD UNDERLYING BUSINESS PERFORMANCE New signings, EUR m 1) Business Highlights Q Q ) Annualized revenue Revenue by sector Q Others 9% 5% Retail Williams Lea Energy 23% 3% New business wins of EUR 262m in Q3 especially in Retail, Consumer and Automotive. On track for another year of EUR >1bn signings Solid business development in all regions Restructuring program and related spend advancing according to accelerated plan, with no detriment to normal business performance NHS contract renewal underscores strength in Life Science & Healthcare sector Automotive 11% Technology 10% 20% 19% Consumer Life Sciences & Healthcare MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 11

12 SUPPLY CHAIN: RESTRUCTURING AND RELATED SPEND ON PLAN 2015 restructuring budget offers opportunity to rebase cost structure and portfolio While also initiating structural improvement measures according to DSC s 2020 Strategy New management structure with reduced layers Addressing underperforming contracts Related restructuring costs in line with accelerated plan: m EUR ~ 150 * ~ 40 Q1 Q2 Q3 Q4e 2015e e.g. Global Operating Excellence agenda for standardisation of site operations Identified and scoped Shared Service Centre opportunities Launch of CSCS* program with 14k employees certified YTD Lifesciences & Healthcare agenda progressing well based on dedicated global team Supply Chain will be a strong contributor to DHL s 10% EBIT CAGR target of Strategy 2020 * Partly offset by EUR 53m positive Q2 effect from real estate gains * CSCS = Certified Supply Chain Specialist MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 12

13 PeP: RESULTS STILL IMPACTED BY STRIKE FOLLOW-UP EFFECTS Mail Communication revenue Dialogue Marketing revenue Business Highlights m EUR -2.4% m EUR +0.4% Q Q Q Q Parcel Germany revenue Parcel Germany volumes m EUR +7.0% m units +6.2% Q Q Q Q Parcel Europe revenue 1) DHL ecommerce revenue 2) m EUR m EUR +8.4% +20.9% Remaining strike effects on Q3 volumes in Mail Communication (-4.7%) and Dialogue Marketing (-2.4%); revenue impact partly offset by price increases New draft proposal from Bundesnetzagentur for price regulation formula: price cap = Inflation* + 5.8% ( ) Ongoing solid volume and revenue growth in Parcel Germany fueled by e-commerce growth, albeit also with some strike overhang Continued growth in international Parcel activities in and outside of Europe driven by structural ecommerce trend as well as currency effects Overall, revenue growth in ecommerce - Parcel continued to outweigh Post revenue decline as PeP revenue increased 2.0% Q Q Q Q ) Parcel Europe ex Germany; 2) Parcel outside Europe * cumulative: 1.7% (estimated) MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 13

14 PeP: PARCEL GERMANY CURRENTLY THE KEY GROWTH DRIVER Volume change, Parcel Germany* 9,8% 9,8% 7,4% 7,0% 8,4% 4,1% m15 volume growth of ~8% over last five years Driven a.o. by strong focus on % individualizing parcel delivery for the last mile *yoy, as reported Supported by continued innovation Latest pilot: parcel lockers for apartment buildings Completes portfolio of parcel boxes all kind of household types can be equipped with individual solutions Enables secure door step convenience 4 compartment sizes, flexible set up Opening technology via NFC / Smartphone /courier handheld MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 14

15 PeP: EXPANSION OF PARCEL ACTIVITIES IN EUROPE Establishing own parcel network in Austria Tailored to B2C ecommerce market Significant investment for infrastructure and setting up recipient services such as parcel shops and Packstations Evening and Saturday delivery Targets Clear number 2 player in the market Largest parcel shop network by 2016 Next day delivery out of Germany One product across the network 2015 September Tuesday Launch DHL PARCEL CONNECT Common network product in all core countries Same name Same features Same launch date Sale & Delivery in 7 countries Also delivered into Germany, where domestic brand name remains DHL Paket MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 15

16 CONTINUED EXECUTION OF STRATEGY 2020 Significant strategic foundations for Strategy 2020 laid in PeP EBIT stabilisation Min. EUR 1 bn p.a. Union agreement New price formula Expansion of ecommerce - Parcel activities 3% EBIT CAGR ( ) Express Domestic Express exits (US, UK, F) FOCUS Strategy 10% EBIT margin by 2015 Volume growth and margin increase Invest in network and quality Continued focus on TDI with network, efficiency, scale and quality effects DGFF EBIT margin gap analysis New Forwarding Environment Design & (NFE) Development Initiate turnaround Define IT renewal and roadmap Re-Empower & Turn Around Business Centric Renewal Improved EBIT conversion DSC Turnaround 5-to-Thrive Steady improvement Growth Through Excellence Execution of restructuring Standardisation program initiated Standardization, overhead leverage, portfolio enhancement EBIT margin 4-5% by 2020 MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 16

17 AGENDA 1 2 Q3 Highlights & Strategy update Financial results Q & Guidance update MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 17

18 GROUP P&L Q EUR m Q Q Chg. Management comments Revenue 14,001 14, % Revenue growth supported by positive currency effects. Organic revenue decreased by 0.5% driven by lower revenue at DGFF and lower fuel surcharges EBIT % t/o PeP % Including a.o. one-off effects as shown on p. 19 t/o DHL % Financial result % Negative currency effects Taxes % 9M tax rate at 16.5% Cons. net profit 1) % Net profit and EPS decline mainly due to EBIT decrease EPS (in EUR) 2) % 1) Attributable to Deutsche Post AG shareholders; 2) Undiluted; 3) out of EUR ~200m expected in H2 2015, o.w. EUR ~100m in PeP and EUR ~100m in DHL MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 18

19 OVERVIEW OF ONE-OFF EFFECTS ANNOUNCED ON OCT 28 TH In EURm Forwarding EUR 200m, mainly legal/regulatory aspects EUR 345m charge related to NFE: PeP, EUR 42 m DGFF, EUR 39 m Q EUR 308m write-down EUR 37m provision for expenses during potential roll back in pilot countries Increase in expected payment to federal administration of civil servant pensions One-off effects related primarily to a legal dispute with a JV partner Q4e 2015 PeP, EUR ~60 m EXP, EUR ~60 m MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 19

20 FREE CASH FLOW Q EBIT decline and capex increase are main factors influencing FCF EUR m Q Q Cash from operating activities before changes in Working Capital Changes in Working Capital Net cash from operating activities after changes in Working Capital Sound Operating Cash Flow performance as good working capital management partially compensates for decline in EBIT and one-off effects in EBIT are mainly non-cash Net Capex Capex spend increasing in line with full-year expectation Net M&A 1 3 Net Interest -6-8 Free Cash Flow FFO/Debt at 26.8% (June 30: 26.3%) MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 20

21 NET DEBT (-)/LIQUIDITY (+) Net debt decreased by EUR 169m versus end of Q2 1, in EUR m -1, ,110-2,820 Net debt (Dec 31, 2014) OCF before change in W/C Changes in W/C Net capex Net interest Net Other effects incl. M&A Dividends Paid Net debt (Sep 30, 2015) N.B: Net pension provision at EUR 6.1bn (from EUR 5.9bn at end of Q2) as discount rates were similar per quarter ends MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 21

22 PeP DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,731 3, % EBIT % Growing ecommerce Parcel business and price increases in Post products are offsetting above average postal volume decline due to strike follow-up effects EBIT decline due to civil servant pensions related charge, higher staff costs resulting from wage increase 2014 and one-off payment accrual from new wage agreement, remaining strike effects as well as costs for Parcel infrastructure buildout 1) Operating Cash Flow % OCF decline reflects decrease in EBIT Capex % Planned investment for Parcel infrastructure in Germany and Europe results in higher capex 1) Included in charge of EUR ~200m announced on Oct 28, o.w. EUR ~100m in PeP and EUR ~100m in DHL (see p. 19) MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 22

23 EXPRESS DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,112 3, % EBIT % TDI volume growth and positive FX effects. Organic revenue growing +2.2% reflecting lower fuel surcharge revenue Asset write-up partly offset by FX effects, excl. both effects: solid EBIT increase ahead of revenue growth Operating Cash Flow % Strong OCF in line with operating performance Capex % Timing effects on ongoing hub and gateway infrastructure upgrade drive exceptionally strong quarterly capex increase MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 23

24 EXPRESS - DECOUPLING OF USD VS ASIAN CURRENCIES 140 Movement of major Asian currencies and USD ( ) vs. Euro, rebased to Historical Strong strong historical relationship relationship between between USD & USD Asian currency and Asian basketcurrency basket DHL Express revenue exposure to nominally USD pegged Asian currencies approximately equal to USD cost base Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 USD & Asian currencies decoupled progressively over 2015 In EUR terms, USD costs rising more strongly than absolute increase in Asian revenue USD to EUR Renminbi/EUR IndianRupee/EUR KoreanWon/EUR ThaiBaht/EUR TaiwanDollar/EUR No significant FX EBIT effect from Asian currency basket through H1 15 Decoupling in Q3 resulted in negative FX effect on Express EBIT MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 24

25 GLOBAL FORWARDING, FREIGHT DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,803 3, % Revenue decrease driven by weak markets combined with greater selectivity Gross Profit % GP stable supported by selective approach on new volumes EBIT <-100% EBIT significantly impacted by Q3 one-off costs (EUR -384m). Operating performance still down y-o-y but improving sequentially driven by initiated turnaround measures Operating Cash Flow >100% Cash flow improved due to better working capital management, especially good performance in receivables Capex % Lower capex as NFE investments decline MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 25

26 SUPPLY CHAIN DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,660 4, % Revenue growth driven by new business and higher volumes in developed markets. FX continues to support revenue growth. Organic revenue growth was 3.2% EBIT % EBIT decline due to on-going restructuring spending, but largely offset by a strong overall performance Operating Cash Flow % Largely due to one-off in context of the NHS contract extension Capex % Capex increase driven by new projects in developed markets MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 26

27 DSC: EXTENDING LANDMARK HEALTHCARE CONTRACT WITH NHS Contract extended until 2018 Same operating scope with new cost savings targets Contract changed from closed book / principal to open book / agent Financial implications Annual revenue reduced by EUR 1.7bn, but expected increase of +20bps for divisional EBIT margin Impact on cash flow due to transition of procurement-related funds back to NHS Focus on savings delivery for the NHS but reduced trading/inventory risk for DP DHL MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 27

28 EBIT GUIDANCE SUMMARY 2015 guidance has been adjusted for additional one-off effects, 2016 and 2020 guidance confirmed EUR bn PeP At least 1.1 > 1.3 ~ 3% CAGR DHL At least ~ 10% CAGR CC/Other ~ ~ < 0.5% of group revenue Group At least > 8% CAGR FY 2015: Free Cash Flow to exceed 2014 dividend Tax rate around 16.5% Gross Capex of around EUR 2.0bn MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 28

29 BUILDING A BRIDGE TO 2016 Step up in 2016 EBIT driven by operating performance and non-recurrence of 2015 effects in EUR m 3,400-3,700 ~380m ~ -240m m Min. 2, m ~200m + NFE write down + NFE roll back + H2 one-offs + DSC restructuring + PeP Strike effect + DGFF restructuring - DGFF, Sinotrans stake sale - EXP write up - DSC real estate (King s Cross) PeP: Stamp price Next wage increase in Q4 Exp: TDI growth FX countermeasures DGFF: Turnaround effect Restructuring benefits DSC: Restructuring benefits Revenue growth 2015e As announced on OCT 28 Major 2015 one time investments Major positive 2015 one time effects 2016 operating improvement 2016e MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 29

30 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. MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 30

31 INVESTOR RELATIONS CONTACTS Martin Ziegenbalg, Head of Investor Relations Robert Schneider Sebastian Slania Sarah Bowman Christian Rottler MANAGEMENT ROADSHOW LAWRENCE ROSEN FRANKFURT, 12 NOV 2015 PAGE 31