- Group EBIT to increase to between EUR3.35 billion and EUR3.55 billion by 2015
- EBIT and margin improvements in all DHL divisions to continue
- Stabilization in MAIL division confirmed
- CEO Frank Appel: “Good reason to be optimistic”
Deutsche Post DHL, the world’s leading postal and logistics group, announced its mid-term profitability targets consistent with the company’s Strategy 2015 and outlined how the targeted earnings improvement is to be realized through profitable growth in the different divisions. By 2015, the Group’s EBIT is to climb to between EUR3.35 billion and EUR3.55 billion, about EUR1 billion more than the EUR2.44 billion generated last year. These were among the key points presented by CEO Frank Appel and CFO Larry Rosen at an investor event held in London today.
The DHL divisions will, in particular, contribute to the ongoing significant improvement with an increase in the operating profit to between EUR2.7 billion and EUR2.9 billion. With this commitment the Group reinforced the stated Strategy 2015 target of the DHL divisions achieving average annual growth of 13 percent to 15 percent between 2010 and 2015. The MAIL division is projected to contribute a minimum of EUR1 billion to Group EBIT in 2015. Furthermore, Deutsche Post DHL anticipates to be able to reduce Corporate Center/Other expenditures from around EUR400 million today to about EUR350 million by 2015.
“In recent years, we succeeded in positioning ourselves exceptionally well in the global growth markets and laid the foundation for continued profitable growth into the future,” Deutsche Post DHL CEO Frank Appel told analysts and investors in London. “We have stabilized earnings in the MAIL division and are now capitalizing on the tremendous growth opportunities at DHL. The outlook ahead gives us good reason to be optimistic.”
MAIL division: stabilization of profitability targeted
In the MAIL division, where, following several years of declining earnings, EBIT has now been stabilized above EUR1 billion, the company is focusing on both continuing to leverage the dynamic market growth in the parcel business and developing further business opportunities with new digital products. In addition, cost efficiency is to be further enhanced through greater flexibility in the use of existing capacities and continued automation in the mail and parcel centers. In order to realize these improvements, the Group will, by the end of 2012, have invested a total of around EUR420 million in mail-sorting equipment over a period of three years.
Against the backdrop of the strong volume increases in the parcel business – in the first quarter alone, the company transported almost 14 percent more parcels than one year ago – the Group will also invest around EUR750 million until 2014 to modernize its Germany-wide parcel network. Taken as a whole, these steps will ensure that the division’s operating profit will be maintained at a minimum level of at least EUR1 billion in 2015.
DHL divisions: leveraging market opportunities
In the DHL divisions, the top priority in coming years is to take even greater advantage of the company’s unique global presence in order to further enhance revenues and profit. Over the past two years, all three logistics divisions have already achieved significant growth in revenues and have considerably boosted their profitability. To continue this positive trend, the Group is placing a special emphasis on taking advantage of targeted growth opportunities in the particularly dynamic growth BRICM-countries – Brazil, Russia, India, China and Mexico.
To be able to serve the individual needs of customers in these and all other regions of the world, a further focus is being placed on the development of new products and services for various industry sectors. In one reflection of this, Deutsche Post DHL is focusing on offering specific logistics solutions for the life sciences and healthcare sector, for technology and automotive companies and for customers from the energy industry. Thanks to increased collaboration between the DHL divisions, customers will increasingly benefit from integrated, value-enhancing solutions.
Multifaceted measures to improve profitability in all DHL divisions
In light of these strategic priorities, the company outlined the measures by which the earnings improvements in the various DHL divisions are to be achieved: In the EXPRESS division, the operating margin will be further enhanced by continued strong volume growth, systematically expanding the express aviation network and continuing to improve efficiency. The business will focus on the transport of time-definite international shipments, as it has in previous years.
In the GLOBAL FORWARDING, FREIGHT division, the global market leader in air freight aims at further improving its strong market position in ocean freight. Besides initiatives targeting growth, the division is planning to implement a transformation program (‘New Forwarding Environment’). Its objectives include increasing efficiency through new IT systems and greater automation and, as a result, boosting productivity and further improving profitability.
The Group considers the SUPPLY CHAIN division, which, in 2011, concluded new contracts with a volume of more than EUR1 billion for the fourth consecutive year, to also be exceptionally well positioned to benefit from key market developments. The continuous trend toward outsourcing, the gradual emergence of true global markets instead of local ones and customers’ growing need for comprehensive solutions from a single source are, along with the development and standardization of global products that have been systematically tailor-made to meet customers’ needs, forecast to further increase the division’s operating profit.
Finance strategy confirmed: dividend payout ratio between 40 and 60 percent
CFO Larry Rosen stressed that the safeguarding of long-term financial stability and flexibility remained the high priorities for the Group while, at the same time, ensuring that financial resources are available to enable full execution of Strategy 2015. Because a suitable balance-sheet structure plays a key role in realizing this objective, it is also the central focal point of the company’s finance strategy, which the Group presented two years ago and then reconfirmed today in London.
In this regard, Rosen also confirmed Deutsche Post DHL’s dividend policy: The company continues to aim at distributing 40 percent to 60 percent of its consolidated net profit to the Group’s shareholders. In the past two years – in which the dividends were raised each year by an average of 8 percent – the dividend payout ratio was at the upper end of the target corridor each time.
“We are well on the way to reaching all of the targets spelled out in our Strategy 2015,” CEO Frank Appel stated. “By taking this approach, we create added value for our shareholders and, at the same time, establish all Group divisions as the partner of choice for our customers and the best employer in our industry.”