Management Roadshow. Martin Ziegenbalg, Head of Investor Relations Zurich, 14 November 2017

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1 Management Roadshow Martin Ziegenbalg, Head of Investor Relations Zurich, 14 November 2017

2 Q HIGHLIGHTS Continued strength in Q3 confirms leverage to structural and economic growth 10% EBIT increase driven by 6% revenue growth and further margin improvements Express: keeping momentum supported by volume, yield and efficiency PeP: contributing steady EBIT growth while driving forward international expansion DGFF: EBIT slightly up as tough market conditions begin to stabilize DSC: FX headwinds currently mask steady EBIT progression Strong YTD cash generation, on track for full-year expectations Sustained momentum towards our financial and strategic targets PAGE 2

3 YTD VIEW ON OUR FINANCIAL KPIS All key indicators pointing in the right direction EUR m 9m 2017 Change, EUR m Change, % yoy Supported by improving top-line growth, EBIT growth is on track for another strong year Revenue 44,335 +2, % EBIT 2, % OCF 1, % FCF % 1) 1) 1) 1) Increase in Operating Cash Flow reflects good EBIT and Working Capital performance FCF generation also strong and on track for full-year target 1) 2016 comparison adjusted for EUR 1bn pension funding in Q DPDHL Group well on track towards 2017 targets PAGE 3

4 PEP: CONTINUOUS INNOVATION ALONG THE WHOLE VALUE CHAIN, DRIVING STRUCTURAL E-COMMERCE GROWTH Production / sorting (e.g. 50k/hour ; MechZB) Network orchestration (e.g. routing, data analytics) Sustainable delivery (e.g. Streetscooter) e-commerce growth Penetration of new business fields (e.g. grocery marketplace & delivery) Recipient solutions (e.g. trunk delivery, DHL4ALL) Last mile automation (e.g. Postbot) PAGE 4

5 DHL EXPRESS: NEW MARKET STUDY CONFIRMS SHARE GAINS IN ALL REGIONS Continued TDI leadership across all regions outside the Americas Americas [EUR 8.2bn ] <1% 4% 20% +2% 43% 33% Europe [EUR 7.1bn] 11% 10% 44% 11% +3% 24% Asia Pacific [EUR 8.0bn] 17% 4% 49% 11% 19% +5% +x% DHL TNT UPS FedEx Others Country base: EU: AM: %pt change vs MI study AT, CZ, DE, ES, FR, IT, NL, PL, RO, RU, SE, TR, UK AR, BR, CA, CL, CO, MX, PA, US; Global [EUR 24.0bn] 22% 11% 5% AP: AU, CN, HK, IN, JP, KR, SG, TW 24% GLOBAL: EU+AM+AP+(AE+SA+ZA) Source: Market Intelligence 2017, annual reports and desk research PAGE 5 38% +4%

6 SIMPLIFY: IMPROVE EXECUTION, OWNERSHIP AND INCENTIVES Challenges Simplify Decision-making and execution takes too long Complex structures and processes Working together as one network No state-of-the-art IT systems yet and new digital players entering 1 Adherence to a set of clear business rules along three areas: Mindset and behavior Roles and responsibilities Steering and incentives 2 Structural cost reductions on all levels 3 IT Renewal Roadmap (IRR) PAGE 6

7 DGFF SUMMARY: AMBITIOUS YET ACHIEVABLE PLAN DGFF: recent EBIT and ROCE history 60% 50% 40% 30% 20% 10% 0% -10% -20% EBIT-Margin ROCE excl. goodwill ROCE incl. goodwill Forwarding is an attractive industry and DGFF has a leading franchise, brand and right people to be a successful industry leader We know our weaknesses and are committed to bringing our practices to best-in-class levels Our plan is ambitious, but the steps to address our short- and medium term challenges are well-described and accepted We remain committed to our goal of benchmark conversion ratios and profitability PAGE 7

8 SUPPLY CHAIN: STRONG Q3 SIGNINGS AND SERVICE INNOVATION New signings, EUR m 1) Resilience Q Q ) Annualized revenue Business Highlights Strong order intake of EUR 415m annualized revenue drives YTD signings above last year at EUR 895m on track for another year of solid, selective business wins DSC continues to be at the forefront of digital innovation not only in automation but also for example with Resilience 360: - our cloud-based risk management platform - using big-data analytics to provide early detection and warning about supply-chain risks - developed by CSI (Customer Solution & Innovation), our key account management for selected large global customers PAGE 8

9 DISRUPTION IS EVERYWHERE: INNOVATION IS THE SOLUTION DHL Trend - Radar In order to stay ahead of the curve, we have to think in a creative way and not be afraid to self-disrupt PAGE 9

10 INVESTING TO CREATE SUSTAINABLE GROWTH AND VALUE We are delivering EBIT and Cash Flow growth We invest significantly to fully utilize our sustainable growth potential whilst generating attractive shareholder returns We continue to innovate and exploit & explore digital opportunities On track to deliver on 2020 strategic targets and guidance PAGE 10

11 WE COMMIT TO OUR UNCHANGED FINANCE POLICY FINANCE POLICY Dividend of EUR 1.05 for FY2016 Target / maintain rating BBB+ Dividend payout ratio to remain between 40 60% of net profit (continuity and Cash Flow performance considered) Excess liquidity will be used for share buybacks and/or extraordinary dividends and/or potential additional pension funding (if not by other means) Underlying Payout Ratio 1) EUR 1.05 EUR 0.85 EUR 0.85 EUR 0.80 EUR 0.65 EUR 0.70 EUR % 58% 53% 49% 50% 46% 48% Dividend payments of EUR ~1.27 bn to DPDHL shareholders on May 04, % 40% 1) Adjusted for Postbank effects as well as non-recurring items when applicable PAGE 11

12 EBIT GUIDANCE CONFIRMED, 2017 TAX RATE EXPECTATION LOWERED EBIT, EUR bn 2017 (confirmed) 2020 (confirmed) PeP ~1.5 ~ 3% CAGR NB: pre IFRS 16 effects DHL ~2.6 ~ 10% CAGR CC/Other ~ < 0.5% of group revenue Group ~3.75 > 8% CAGR FY 2017: Free Cash Flow: > EUR 1.4bn Tax rate: ~13% (from ~15%) Gross Capex: ~ EUR 2.3bn PAGE 12

13 Q WRAP-UP Q3 confirms that we are well on-track to deliver on our 2017 targets We are making continuous progress towards our financial and strategic targets Unique global footprint for e-commerce logistics growth opportunity now supported by the macro environment Divisions are executing on their plans while optimizing growth and cost positioning for the future Clear commitment to continued innovation and investment to provide organic growth - all while generating sustainable shareholder returns Successful long-term strategic planning delivers benefits today and provides growth momentum into the future PAGE 13

14 Divisional Information PAGE 14

15 DPDHL GROUP AT A GLANCE Divisions -EUR m - Post - ecommerce- Parcel Express Global Forwarding Freight Supply Chain 2016 Revenue , Group revenues 57.3bn EBIT Margin 1, % % % % EBIT 3.491bn Market capitalization 39bn per Staff (FTE) Products Geographies USO Provider Germany Letters Parcels Germany Europe Americas Asia Pacific Premium international cross border (TDI) parcels and docs 220 countries and territories Brokerage of transport services in Air, Ocean and Road freight >150 countries and territories Customized, outsourced logistics solutions through full value chain >50 countries and territories Approximately 500,000 employees in more than 220 countries/territories Market Share 61% letter mail Germany 45% parcel Germany 34% global market share No 1 Europe, Middle East / Africa and Asia No 3 US No 1 in air freight No 2 in ocean freight No 1 globally 7.6% market share PAGE 15

16 STRATEGY 2020: PERFORMANCE VERSUS EBIT TARGETS SO FAR EBIT, EUR m 2013 base 1) 2020 targets (CAGR 13 20) CAGR PeP 1,286 ~3% 3.9% DHL 2,002 ~10% 6.3% EXP 1, % DGFF % DSC % CC/Other (% of Group revenue) 0.8% <0.5% 2016: 0.6% Group 2,865 >8% 6.8% 1) As previously communicated: adjusted for 2013 EBIT of ~EUR 60m from transfer of assets from DHL to PeP, effective on Jan 1, 2014 PeP, Express and Supply Chain fully on track, Group so far held back by DGFF PAGE 16

17 WE FOCUS ON WHAT HAS MADE US SUCCESSFUL TO FURTHER EXPAND MARGINS Asset intensive: Express and PeP + Asset light: DGFF and DSC EBIT Margin 1) EBIT margin 1) 11.3% 4.3% 8.1% 4.4% 8.3% 2.7% 1.8% 1.9% Q PeP Express Q Q DSC DGFF Q ) Rolling 12 month EBIT margins, DGFF adjusted for NFE write-off in Q Group margin of 5.7% is up +210bp since 2010; +50bp since 2013 PAGE 17

18 SLOWER GDP GROWTH, DGF ISSUES AND DSC SELECTIVITY HAVE DRIVEN SLOWER GROWTH IN B2B MARKET SEGMENTS SO FAR Market growth assumption Air Freight +2-3% Ocean Freight +4-5% Market vs assumption growth Contract Logistics +5-6% Below Below Below AFR / OFR Outlook Recovering towards more normalized market dynamics DGF further catching up after underperforming in 2014/15 Contract Logistics Market expectation confirmed as outsourcing trend continues DSC to remain selective to keep focus on margin improvement DPDHL vs. market growth Below Below Below Growth contribution from B2B segments so far slower than expected PAGE 18

19 E-COMMERCE DRIVES EVEN STRONGER THAN EXPECTED GROWTH IN B2C MARKET SEGMENTS, ALSO SUPPORTING EXPRESS GROWTH Market growth assumption Parcel Germany +5-7% Parcel Domestic International +8% Market vs assumption growth DPDHL vs. market growth International Express +5-6% Above Above Below Above Above Above Parcel Germany Outlook Market growth expectation confirmed at +5-7% p.a. Parcel Germany aiming to grow at least in line with market International ecommerce - Parcel E-commerce will continue to drive strong growth in domestic and cross-border markets, at least in line with initial assumption Parcel Europe and DHL ecommerce to further leverage e- commerce growth through selective and flexible expansion Express Market growth in B2B driven by global GDP, with B2C as additional growth engine DHL Express will continue to balance TDI volume growth with disciplined yield management E-commerce contributes significantly to our growth momentum PAGE 19

20 DPDHL INVESTMENT PROFILE Global Powerhouse of Logistics Clear Strategic Direction Our roadmap for margin and profit improvement Sustainable Growth Momentum Unique position for e-commerce Increasing margins and returns Divisional self-help agendas Investing For Growth Innovation, quality & customer centricity Delivering attractive returns Committed to FCF growth and improving shareholder returns 20

21 Focus. Connect. Grow. POST, E-COMMERCE & PARCEL PAGE 21

22 PeP: UNABATED PARCEL GROWTH AND UNCHANGED MAIL TREND IN GERMANY Mail Communication revenue EUR m +0.7% 1,521 1,532 Q Q Parcel Germany revenue EUR m +5.5% 1,117 1,178 Dialogue Marketing revenue EUR m +3.8% Q Q Parcel Germany volumes m units +8.8% Business Highlights Confirmation of normalized underlying mail volume trend: - Mail Communication: -2.8% (-1.3% / WD) - Dialogue Marketing: +5.5 % (+7.1% / WD) Mail Communication trajectory and DM volume increase supported by federal election Sustained growth in Parcel Germany (volume +10.5% / WD) - yield development continues to reflect product mix changes Online grocery market gaining traction: delivery contract with major third parties started Q Q Q Q PAGE 22

23 PARCEL INTERNATIONAL: EXPANSION ON PLAN Parcel Europe revenue DHL ecommerce revenue Business Highlights EUR m % 448 Q Q Profit development by country EBIT, schematic (year 0 = 100) _ EUR m 336 Q % 367 Q t (maturity) Parcel Europe: NL, PL, CZE, AUT, SK, SWE, ESP, POR, UK DHL ecommerce: THAI, VIE, CHI, MAL Continued strong volume and revenue development in and outside Europe, based on strong, structural e-commerce growth domestically and even more so cross-border In Q3, DHL Parcel Europe added Ireland, Croatia, Bulgaria and Romania through partnerships with leading local providers, both state-owned and private DHL ecommerce launched greenfield B2C networks in Vietnam, Malaysia and Chile in 2017 Margin improvement to follow network density created through revenue growth: countries with positive and growing EBIT financing expansion of network into new geographies PAGE 23

24 PeP DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 4,024 4, % E-commerce-driven Parcel growth and international expansion lead to 4.4% organic increase EBIT PeP % EBIT growth remains driven by German operations t/o Germany % t/o International ecommerce - Parcel 0-5 <-100% Continued solid EBIT momentum on dynamic Parcel growth and good election-enhanced letter volumes combined with customary cost control Ongoing expansion resulting in strong topline growth (+33.4%, adj. for UK Mail: +12.9%), as expected not yet contributing to bottom line Operating Cash Flow % Operating cash generation lower due to WC movements Capex % Parcel network expansion, mainly in Germany PAGE 24

25 PEP: PERFORMANCE RECAP Parcel growth driving PeP revenue and EBIT growth Revenue, EUR m Parcel Revenue Post Revenue PeP EBIT EBIT, EUR m revenue mix Parcel 42% Post 58% We have reached the inflection point where Parcel growth outstrips Postal decline and we resume absolute EBIT growth while investing in international expansion PAGE 25

26 MINIMIZING IMPACT OF CONTINUOUS MAIL DECLINE: COST FLEXIBILITY IS THE KEY OBJECTIVE Joint Delivery helps to optimize delivery of declining mail volumes ~50% of Parcel deliveries done through joint delivery with mail Joint Delivery of Parcels and Mail Dedicated Mail or Parcel Delivery Population density, increasing order Revenue mix shift also reflected in delivery staff development 93,400 +8,000 +5,400-3, ,700 Delivery workforce Headcount, t/o Dedicated Parcel Joint Delivery Mail Delivery Increase in dedicated Parcel and joint delivery drives net hiring since 2010, as a result of strong Parcel growth New wage structure provides competitive basis for sustainable growth in Parcel Germany Mail volume decline is a given, so our focus is on compensating measures in order to minimize the impact and allow Parcel to drive PeP growth PAGE 26

27 DHL PARCEL EUROPE: ONE PARCEL NETWORK FOR EUROPE 26 countries One network Own presence With partners DHL Parcel Connect One product PAGE 27

28 DHL ecommerce: OUR PRODUCTS AND NETWORKS DHL ecommerce capabilities based on three core pillars Global, multi-site efulfillment Current network: US, Mexico, India, Hong Kong, Australia, Germany Domestic B2C delivery and returns Current network - US, Chile - India, Thailand, Malaysia International day-definite delivery and returns Currently servicing 220 countries from 11 origin countries (US, Canada, Mexico, Hong Kong, Singapore, China, India, Australia, Japan, New Zealand, Malaysia) PAGE 28

29 EXPANDING OUR INTERNATIONAL E-COMMERCE FOOTPRINT Selected domestic assets combined with global cross-border delivery and vendor-neutral efulfillment Parcel Europe One Parcel network for Europe Domestic Delivery & Cross-Border Cross-Border Origin Multi-user, vendor-neutral efulfillment facilities In-bound/Out-bound Sorting Distribution Center/Central Hub DHL ecommerce Selective, expanding footprint in the Americas and Asia-Pacific Quick and selective international expansion of e-commerce logistics in and outside of Europe PAGE 29

30 E-COMMERCE IS THE KEY DRIVER OF OUR SUCCESS STORY OVERALL GROWTH IN GERMANY Revenue of Distance Selling Market 1) in bn EUR Market share DHL Parcel Germany 3) in percent % % +5 pp % CAGR Traditional Distance Selling E-Commerce ENABLED BY A CLEAR MARKET LEADER: DHL PARCEL DHL Parcel Germany vs Market, in percent 6,9 Germany Market Revenue CAGR 8,6 Online-shop usage of Shipping Provider 2) in percent (multiple answers possible) 70 DHL Parcel Germany Average Volume Growth 9,9 DHL Parcel Germany Revenue CAGR 20% Others 3 Source: MRU bevh Studie Source: HDE/bevh Interaktiver Handel in Deutschland Statements of German online-shops, which shipping provider they use for their e-commerce business; Source: Händlerbund 2016 PAGE 30

31 Focus. Connect. Grow. EXPRESS PAGE 31

32 EXPRESS: STRONG GROWTH IN ALL REGIONS CONTINUES Time Definite International (TDI) 1) Revenues per day in EUR m 40.2 Q Time Definite International (TDI) Shipments per day 000s 771 Q % +11.9% 45.7 Q Q Business Highlights Double-digit TDI volume increase fueled by cross-border B2C, good B2B growth and further market share gains Volume growth again supported by all regions: MEA (+31.5%), Americas (+20.4%), Europe (+14.8%) and Asia/Pacific (+4.5%) Higher fuel surcharge and active yield management contribute to stronger growth in revenue/day than volume/day Yearly GRI (General Rate Increase) for 2018 announced with price increases calibrated by country 1) Currency translation impacts are eliminated. Data aggregated with same currency rate PAGE 32

33 EXPRESS DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,358 3, % EBIT % Organic growth of 13.8%, reflecting strong TDI volume growth, higher fuel surcharges and active yield management. FX effects of -5.3% Margin increase of +20bp to 10.2% a result of active yield management and operating leverage driving improved aviation costs per unit Operating Cash Flow % Reflecting strong operating performance, with minor WC build-up Capex % Investments in hub and gateway infrastructure as well as aviation continuing - expected to accelerate in Q4 in line with Group capex guidance PAGE 33

34 EXPRESS: FOR OUR INTERNATIONAL NETWORK, X-BORDER B2C IS A PROFITABLE GROWTH DRIVER Portion of B2C TDI shipments has increased over time We grow B2C profitably because 90% of the KPIs perfectly suit our network >10% 1) 1) >20% SpD WpS Volume growth drives better utilization of existing network Lower weight per shipment Our TDI product is attractive to e-tailers because we offer Unparalleled global door-to-door network Fast customs clearance Flexible delivery options Highest service quality & customer service 1) Indications based on medium to large B2C customers of top 30 countries RpK First mile Hub sort Airlift Last mile Higher RpK related to lower WpS More pieces per stop at pickup Better utilization of existing infrastructure, with high degree of conveyables Better utilization of existing capacity, with lower WpS being advantageous Residential delivery to private households X-Border e-commerce has developed into an important TDI vertical and profitable growth driver PAGE 34

35 EXPRESS GROWTH SUPPORTED BY BALANCED GLOBAL FOOTPRINT Quarterly growth ranking, TDI volume growth #1 AM AP AP AP EU EU MEA AM AP AP MEA EU MEA EU EU EU EU AM AM EU EU MEA MEA #2 #3 #4 AP EU EU EU AP MEA AP AP MEA AM AM MEA EU MEA MEA AP AM EU EU AM MEA EU AM EU MEA MEA AM MEA AP AM EU AM MEA AP AP AP AP AP MEA AP AP MEA MEA AM AM EU MEA AM AM MEA AM AM EU MEA EU EU EU AM AM AM AM AM MEA MEA AP AP AP AP AP Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q % +8.4% +7.8% +8.7% +7.4% +9.5% Consistent strong volume growth in global TDI network Constant variation in regional patterns reflects movements in global trade flows TDI Shipments/ day EU Europe MEA Middle East Africa AM Americas AP Asia Pacific PAGE 35

36 DHL EXPRESS: FOCUS ON TDI Continue successful FOCUS strategy DHL Express Core Product 2009 Revenue distribution 2016 Revenue distribution TDI (Time Definite International) - The premium segment within Express Industry 13% 4% 12% 10% 61% 2% 4% 11% 7% 77% TDI TDD DDI DDD ACS / Other Time Definite = Dedicated delivery at a scheduled time of day International = Cross-Border Shipment (intra- or between continents) TDI: requires dense and broad international network TDD: Time Definite Domestic DDI: Day Definite International DDD: Day Definite Domestic ACS: Air Capacity Sales (re-sale of spare capacity on dedicated fleet to optimize utilization, not sold by core Express sales teams) PAGE 36

37 DHL EXPRESS: VIRTUAL AIRLINE MODEL & AIR CAPACITY SALES Virtual Airline Approx. 500 airports and 22 major hubs connected through 1. Dedicated air: >250 aircraft with 17 partner airlines on >600 daily flights 2. Purchased air: >300 commercial airlines with >1,800 daily flights 52% Capacity Commitment 22% 26% 0-90 Days (incl. Purchased Air) Days Fixed BSA CORE TDI CAPA- CITY FLEX ACS GUAR. Air Capacity Sales Block Space Agreement, guaranteed air cargo product. Express TDI core product, capacity based on average utilization, adjusted on a daily basis CORE Flex & Air Capacity Sales Flex, a set amount of the Total Spare Capacity to be utilised for TDI core volume surge and/or air cargo filler traffic Air cargo guaranteed, a set amount of the Total Spare Capacity guaranteed for priority traffic & key customers PAGE 37

38 Focus. Connect. Grow. FORWARDING, FREIGHT PAGE 38

39 DGF CURRENT STATUS: Q3 HIGHLIGHTS Air freight 000s Tons Air freight gross profit +8.0% EUR m % Q Q Q Q Ocean freight 000s TEU 1) Ocean freight gross profit +8.5% EUR m % Business Highlights DGF continues to participate fully in market recovery with good volume growth in Air and Ocean freight Market conditions improving slowly but pressure on GP margins remained in Q3 (yoy: GP/Export ton -9.8% and GP/TEU -14.9% ) After difficult H1, market discipline continues to gain ground and further stabilization seen towards quarter end Persistent focus on productivity and efficiency helps sustain EBIT margins during challenging transition period for the forwarding industry Q Q Q Q ) Twenty Foot Equivalent Unit PAGE 39

40 DHL FREIGHT: GOOD PERFORMANCE IN ROAD FREIGHT Q3 Revenue Q3 EBIT Business Highlights 1,025 Q % 1,053 Q M Revenue +225% 4 Q M EBIT 13 Q EUR m One of the leading European road freight networks Motivated employees and high customer satisfaction Very good development in 2017 with visible growth perspective EUR m EUR m Improvements in quality and productivity -1.5% +130% Sales effectiveness initiative kicked-off 3,176 3, Saloodo! with good progress as digital platform 9M M M M 2017 PAGE 40

41 DGFF CURRENT STATUS: Q3 FINANCIALS EUR m Q Q Chg. Management comments Revenue 3,362 3, % Growth fueled by strong markets and new business. Organic increase of 8.3% adjusted for FX effects Gross Profit % Decline as a result of continued market-wide GP margin pressure, although improved performance vs Q2 EBIT % Results and margins supported by sustained focus on productivity improvements Operating Cash Flow % Slight improvement in-line with EBIT growth Capex % Stable as a function of low capital intensity of business model PAGE 41

42 3 MOVING TOWARDS STATE-OF-THE-ART IT SYSTEMS: OUR IT RENEWAL ROADMAP (IRR) IS WELL UNDERWAY Current status Global Transport Management System (TMS) rollout is underway with successful implementations for OFR in pilot countries Further global deployment of selected systems in progress, e.g.: - Shipment visibility - Electronic Document Management - Harmonized Quotation tool complemented by online functionality Next steps Continue rollout of Global TMS for OFR at scale Continue step-by-step renewal of IT system and process convergence Offer selective new service features leveraging deployed technology PAGE 42

43 Focus. Connect. Grow. SUPPLY CHAIN PAGE 43

44 SUPPLY CHAIN DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,416 3, % Organic growth of + 6.1% - negative FX effects continue (-4.3%), mainly as a result of GBP and USD weakness EBIT % Increase of 2.1% adjusted for last year s restructuring costs (EUR -8m) as adverse FX partly offset good underlying performance Operating Cash Flow % Mainly reflecting operational growth together with phasing of working capital Capex % Limited spending reflecting asset-light business model PAGE 44

45 TAPPING NEW E-COMMERCE LOGISTICS OPPORTUNITIES: E-FULFILLMENT DHL Vendor-neutral E-fulfillment Seamless Logistics Management End-to-end order and inventory visibility Global order orchestration Plug-n-play expansion into new markets Transactional pricing Pay per use No capital spend required No fixed costs Customer Benefits Quality Fulfillment, Worldwide High quality, secure fulfillment Choice of standard services Consistent SLAs across all locations Broad range of shipping services (domestic + international) Late cut-off times Fast and Flexible Shipping Significant overall cost savings through partnership for fulfillment and shipping Quality improvement, control over branding, packaging and inventory data Decreased shipping time through best-in-class supply chain technology and fulfillment Using the full range of our cross-divisional experience and assets allows us to differentiate in e-fulfillment and provide unique customer benefits PAGE 45

46 DHL SUPPLY CHAIN: SOLUTIONS OVERVIEW Offering Customized Solutions Across the Entire Supply Chain Revenue by Service Area FY 2016 Value Added Services 19% Transportation 33% 48% Warehousing PAGE 46

47 DHL SUPPLY CHAIN HAS 9 INITIATIVES TO DELIVER STRATEGY 2020 Focus Drive standardization and reduce complexity 1 Improvement of underperforming business Connect Create an effective organization globally 4 Efficient and effective functions Grow Shift the portfolio 7 Value added services 2 Operational standardization 5 Consistent and lean organization globally 8 Global sectors and products 3 Commercial standardization 6 Culture and mindset shift 9 Geographical shift to increase efficiency to enable change to address attractive segments PAGE 47

48 Appendix PAGE 48

49 GROUP P&L Q EUR m Q Q Chg. Management comments Revenue 13,862 14, % EBIT % t/o PeP % Organic growth accelerates to +7.8% supported by all divisions; FX effects turning more negative again at -3.3% Clear focus on yield and productivity supports gradual margin improvement; negative divisional FX effects partly offset in CC/Other line Steady growth momentum supported by dynamic Parcel markets and good letter volumes combined with continued cost discipline t/o DHL % All divisions contribute to growth; Express posting another excellent quarter Financial result % Includes write-downs on financial assets Taxes % 9M tax rate of 13%, in line with new full-year expectation (tax rate Q3 2017: 9% vs Q3 2016: 5%) Cons. net profit 1) % Strong EBIT growth partly offset by yoy higher tax rate EPS (in EUR) 2) % 1) Attributable to Deutsche Post AG shareholders; 2) Undiluted PAGE 49

50 FREE CASH FLOW Q FCF generation in line with typical seasonality and full year expectations EUR m Q Q Cash from operating activities before changes in Working Capital Changes in Working Capital Increase in OCF driven by strong EBIT performance as well as higher contribution from working capital Net cash from operating activities after changes in Working Capital Net Capex Net M&A Capex spend increasing as expected and reflected in fullyear guidance seasonally strong capex expected in Q4 Net Interest 4-1 M&A: includes Supply Chain acquisition of Polar Transportes, a Life Science and Healthcare logistics provider in Brazil Free Cash Flow FCF slightly lower as a function of higher cash-out for capex and bolt-on M&A spend in the quarter PAGE 50

51 NET DEBT (-)/LIQUIDITY (+) Usual seasonal pattern, with strong deleveraging expected in Q4 2,437 in EUR m ,261-1, ,387-3,211 Net Debt (Dec 31, 2016) OCF before change in W/C Changes in W/C Net capex Other effects Dividend Net Debt (Sep 30, 2017) N.B: Net pension provision up to EUR 5.0bn (from EUR 4.6bn at end of Q2) reflecting discount rate decrease in Germany and UK by 25 bps (funding ratio at 71%) PAGE 51

52 OVERVIEW IFRS 16 VS IAS 17 IAS 17 (today) Finance Leases Balance Sheet - Asset - Liability Income Statement - Depreciation - Finance cost Notes in AR - Maturities B/S: Operating leases are not reflected on the balance sheet P&L: Operating leases are accounted for as a straight line expense Operating Leases - Lease expense - Maturities - Total amounts Rating agencies already taking P&L charge for operating leases into account New IFRS 16 (DPDHL: as of Jan 2018) Asset Depreciation Leases Liability Finance Cost Maturities 52 The vast majority of all leases will be accounted for on-balance sheet : Companies to recognize assets and liabilities for the majority of leases Exemption for short-term leases ( 12 months) and low-value assets possible No change in consideration by rating agencies IFRS 16 eliminates classification of operating or finance leases PAGE 52

53 IFRS 16: P&L IMPLICATIONS Revenuenue Materials expense EBITDA D&A EBIT Net finance costs Income taxes Consolidated net profit No changes Decrease as lease expenses to be recognized as depreciation and interest costs Increase due to lower materials expenses (elimination of lease expense ) Increase due to new depreciation of capitalized operating-lease-assets EBIT increase as operating lease expense replaced by depreciation and interest Increase due to interest cost component booked in finance cost No material changes Whilst neutral over time, timing effect due to higher interest during first years Main P&L effects: increase in EBITDA and EBIT, long-term neutral to net profit 53

54 IFRS 16: CASH FLOW STATEMENT IMPLICATIONS (1/2) Current DPDHL Group FCF definition does not catch all IFRS 16 related movements EBIT D&A Operating Cash Flow Net Capex Free cash flow (current definition) EBIT increase as operating lease expense replaced by depreciation and interest Increase due to new depreciation of capitalized operating-lease-assets OCF increases in line with EBITDA Former leases treated as right-of-use assets: no cash-relevant capex on first-time recognition Significant increase, but not covering new cash outflow for repayment of lease liabilities Reported FCF would be significantly higher but not show true FCF generation to shareholders anymore 54

55 IFRS 16: CASH FLOW STATEMENT IMPLICATIONS (2/2) IFRS 16 related cash-outs recognized in Financing Cash Flow should also be considered Financing Cash Flow - o.w. change (Repayments) current financial liabilities Significant increase, due to redemption of lease liabilities and additional interest paid NEW: Redemption lease liabilities => to be included in new definition of FCF - o.w. interest paid NEW: interest component on leases Cash & cash equivalents Cash is Cash : IFRS 16 does not change actual cash generation FCF definition to be adapted: OCF - redemption of lease liabilities - net capex - net M&A - net interest Free cash flow (new definition) Remains consistent and comparable through adaptation of its definition For fair comparison: adapted Free Cash Flow definition to be used as of 2018 PAGE 55

56 IFRS 16: EXPECTED IMPLICATIONS FOR DPDHL GROUP Scope at DPDHL Group: >25,000 leasing contracts, covering >35,000 assets Expected major impacts on 2018 numbers: P&L Balance sheet EBIT: expected increase of EUR ~ 150m Net debt: Expected increase of ~ EUR 9bn Current internal estimates: to be further validated FCF Credit Rating FCF: no change based on new definition No impact on rating and related metrics expected No effect on actual cash generation and debt rating PAGE 56

57 OCF: TOTAL CASH OUT FOR PENSION PLANS DECLINING, AS EXPECTED Defined contribution (DC): Cash out = staff costs in EBIT EUR m Civil servants (in GER) Hourly workers and salaried employees mainly outside GER Expected trend Steady decline: 50% cost reduction by 2027 due to civil servants going into retirement Slight increase reflecting business growth and selected shifts from DB to DC plans Defined Benefit (DB): Staff costs + Change in 1) provisions Hourly workers and salaried employees Cash out with declining trend, reflecting demographics and 2012/16 pension funding Change in provisions (Cash out in excess of EBIT) Current service costs (in staff costs) 1) Cash Out = benefit payments + employer contributions = staff costs + change in provisions, excluding one-offs PAGE 57

58 OCF: OTHER PROVISIONS DEVELOPED IN LINE WITH EXPECTATIONS, WITH NO CHANGE IN TRENDS EXPECTED EUR m Trend, as expected 1) OUTLOOK: drivers intact, trends expected to continue Other employee benefits 1, Further down reflecting net utilization Restructuring provisions US restructuring provisions further tailing off Technical reserves Increase with business growth Postage stamps Lower as letter volumes continue to decline Tax provisions No significant change expected Miscellaneous provisions No specific trend expected Total 3,635 2,821 Further decrease, although decelerating 1) IR Tutorial, Pension and Provisions Accounting, April 2013 PAGE 58

59 CAPEX: RECENT HISTORY AND OUTLOOK Increase driven by investments in B2C national/international Capex, EUR m Slight upward trend Low levels 2017 peak, from new business + reflecting minimal plateauing thereafter + + still remains mostly = capital intensity asset light 902 GROUP CAPEX PeP Express Global Forwarding, Freight FY 2013 FY 2014 FY 2015 FY 2016 FY 2017e FY 18e-19e 1) 2016 provision change and OCF adjusted for EUR 1bn pension funding 328 Supply Chain FY 2017 guidance ~2.3bn FY projection Slight increase vs PAGE 59

60 CAPEX BY DIVISION WHERE DOES IT GO? 2016 Capex, EUR m 902 Other 590 Vehicles Other Post Parcel International Parcel Germany Hubs & Gateways Aviation 55 Other Facilities IT 328 Other IT Transportation Warehousing PeP Express DGFF DSC We invest in infrastructure and improving customer service and satisfaction to foster sustainable profit and cash flow growth PAGE 60

61 REMINDER ON PENSIONS: DEFINED BENEFIT PLANS Changes in discount rates have an effect on liability, but no direct effect on cash generation DB pensions in Germany No regulatory funding requirement Pensions paid partially from plan assets and partially from current OCF Impact of change in discount rates on Group Balance sheet: In Q3 17, net pension provision rose slightly as a result of the decrease in discount rates. P&L: Changes made only on annual basis based on prior year end discount rates. Cash flow: Current pension payments and employer contributions to plan assets not affected by fluctuations in applied discount rate levels 17,092 17, Jun 30, 2017 Sep 30, 2017 Discount Rate Germany UK Other Total Total DBO Net Pension Provison Plan Assets Jun 30, % 2.75% 2.29% 2.54% Sep 30, % 2.50% 2.24% 2.33% in EUR m PAGE 61

62 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. PAGE 62

63 INVESTOR RELATIONS CONTACTS Martin Ziegenbalg, Head of Investor Relations Robert Schneider Sebastian Slania Sarah Bowman Christian Rottler PAGE 63