dbaccess Berlin Conference

Transcription

1 dbaccess Berlin Conference Martin Ziegenbalg, Head of Investor Relations Berlin, June 2017

2 Q HIGHLIGHTS Strong cash flow performance on steady EBIT development Continued growth in Parcel and Express volumes; Forwarding markets further recovering Topline growth accelerating as organic growth gains pace while FX and fuel headwinds weaken PeP EBIT only slightly up as working day effect partly offset by unusually slow start into the year Strong EBIT performance in Express and Supply Chain DGFF EBIT down despite continued productivity improvements industry growth encouraging although short term-burden Strong Cash Flow development supported by earnings performance and WC management 2017 EBIT guidance confirmed, tax rate expectation lowered to ~15% PAGE 2

3 STRATEGY 2020 HALFTIME REPORT PAGE 3

4 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 4

5 SPECIFIC ACCOMPLISHMENTS ON THE WAY TO 2020 Goal Become #1 e-commerce related logistics provider More flexible cost basis for PeP Focus on sustainable profit growth Achieved Expansion of domestic and cross-border parcel activities across Europe and in selected international markets Leverage of B2C growth within TDI Express network without margin dilution New wage agreement and structure provide security and perspective for employees as well as more competitive basis for sustainable growth in Parcel Germany Significant advances made towards more streamlined, efficient and profitable organization in both DGF and DSC We have laid the groundwork for successful execution of Strategy 2020 PAGE 5

6 IMPROVED OCF GENERATION CREATES BASIS FOR BALANCED INVESTMENT INTO GROWTH AND SHAREHOLDER RETURNS EUR, cumulative ) ~9.9bn +1.6% ROCE increase ~5.2bn Increasing dividend: FY16 up +31% vs FY13 ~3.0bn Excess liquidity, basis for first-ever SBB program in 2016/17 ~1.5bn Operating cash flow Net capex spend 1) Adjusted for EUR 1bn pension funding in 2016 Dividend Excess liquidity PAGE 6

7 SUMMARY FREE CASH FLOW DRIVERS Cash Flow Statement Expected trend Main Drivers EBIT Depreciation Chg in provisions WC Income taxes Net capex Net M&A FCF Group EBIT guidance, 2017: EUR ~3,750bn; : >8% CAGR Gradual increase reflecting Capex spend Total provisions still expected to come further down through net utilization. Cash-outs expected to trend flat to slightly down yoy Increasing as business grows but strong focus on working capital management Increase reflecting EBIT growth Plateauing around current levels. Further small yoy increases possible subject to growth opportunities, but no further significant step up expected Remains opportunistic & bolt-on Expect to generate excess liquidity every year (FCF > dividend payment) EBIT increase allows to balance growth investments and rising shareholder returns PAGE 7

8 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 8

9 EBIT GUIDANCE CONFIRMED FOR 2017/20; 2017 TAX RATE LOWERED EBIT, EUR bn 2017 (confirmed) 2020 (confirmed) PeP ~1.5 ~ 3% CAGR 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: ~15% (from ~19%) Gross Capex: ~ EUR 2.3bn PAGE 9

10 WRAP UP Q puts us on track to deliver on 2017 targets Organic growth accelerating as we leverage opportunities through disciplined and targeted investments, notably across the full e-commerce logistics value chain EBIT performance confirms positive Divisional operational momentum although Forwarding markets remain in a turnaround phase Strong cash flow driven by good operating performance and focused WC management while generating attractive cash flow and investing significantly into the execution of our long-term strategic agenda We are in a strong position to deliver on Strategy 2020 PAGE 10

11 STRATEGY 2020 IS DESIGNED TO CONTRIBUTE TO BOTH, GLOBALIZATION AND DIGITIZATION GLOBALIZATION Increased emerging markets footprint Growth in e-commerce boom market DIGITALIZATION Accelerating impact of automation New business models emerging Global growth trends well addressed Technologic development offers huge opportunities to exploit and explore In addition: Zero-emission logistics by 2050 PAGE 11

12 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 12

13 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 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 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) 11.0% 4.1% 8.1% 4.4% 8.6% 2.7% 2.1% 1.8% Q PeP Express Q Q DSC DGFF Q ) Rolling 12 month EBIT margins, DGFF adjusted for NFE write-off in Q Group margin of 6.1% is up +250bp since 2010; +110bp since 2013 PAGE 16

17 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 Outlook AFR / OFR 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 17

18 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 18

19 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 19

20 Focus. Connect. Grow. POST, E-COMMERCE & PARCEL PAGE 20

21 PeP: GROWTH REMAINS DRIVEN BY PARCEL ACTIVITIES Mail Communication revenue Dialogue Marketing revenue Business Highlights m EUR -2.0% Q Parcel Germany volumes m units +9.4% Q Q % Q Parcel Germany revenue 1, % 1,204 Parcel Europe revenue 1) DHL ecommerce revenue 2) m EUR % 315 m EUR m EUR Q Q Q Q m EUR % Q Q Q Q ) Parcel Europe excl. Germany; Q restated for Iberia shift from Express (EUR 71m) 2) Parcel outside Europe 381 After unusually slow start into the year, volume development normalizing towards the end of the quarter - Mail Communication: -4.4% (-8.9% / WD) - Dialogue Marketing: +1.6 % (-3.1% / WD) Sustained growth in Parcel Germany. Positive yield development in business and private customer segments offset by product mix changes Parcel Europe now includes UK Mail. Adjusted revenue growth of 18.6% as well as continued strong growth at DHL ecommerce shows that we successfully build out & fill our international Parcel networks PAGE 21

22 PeP DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 4,272 4, % EBIT PeP % German and international Parcel activities drive organic growth of 3.2%, adjusted for UK Mail acquisition Small EBIT increase as German and international Parcel revenue growth was offset by slow start into the year in Germany t/o Germany % t/o International ecommerce - Parcel German EBIT stable as higher number of working days was offset by lower activity at start of year 4 13 >100% Including first-time contribution from UK Mail Operating Cash Flow >100% Mainly reflecting balanced year-end cash management in Q4 16 Capex % Continued growth investment into domestic and international Parcel, including electric vehicle fleet (Streetscooter) PAGE 22

23 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 23

24 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 24

25 DHL PARCEL EUROPE: ONE PARCEL NETWORK FOR EUROPE 22 countries One network Own presence With partners DHL Parcel Connect One product PAGE 25

26 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 26

27 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 27

28 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 DHL Parcel Germany Average Volume Growth Online-shop usage of Shipping Provider 2) in percent (multiple answers possible) 70 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 28

29 GERMAN MARKET LEADERSHIP BASED ON A BROAD CUSTOMER PORTFOLIO Business Customers (B2X) Revenue growth 2015 Revenue 2015 DHL Parcel (in EUR bn) Revenue growth (in %) % 2.6 Top accounts ( 300 companies) % Medium accounts ( 16,000 customers) 1.5 9% B2X Market DHL Parcel Small accounts ( 63,000 customers) % 8.7% B2X Market B2X revenue grew 2015 above the market in all segments, esp. with small customers PAGE 29

30 LONG TERM WAGE AGREEMENT Tariff agreement until Jan 31, October 2015: one-time payment October 2016: +2.0% 1 October 2017: +1.7% No change to 38.5 working hours Extension of no redundancy agreement until 2019 No more outsourcing limit for parcel delivery, but job commitment for current DP parcel delivery staff; no outsourcing of letter or joint delivery until end 2018 DHL Delivery entities remain in place: expect further hiring of dedicated Parcel delivery employees to support dynamic Parcel growth Comprehensive package for all stakeholders safeguarding PeP competitiveness and facilitating further profitable growth PAGE 30

31 HISTORICAL WAGE COMPARISON Average wages, in EUR/h as of * Legal minimum wage until Dec 31, * 8.50* 8.50* DHL Delivery GmbH Deutsche Post AG Degree of outsourcing 100% 100% 95% 33% 0% <5% Wage costs at Deutsche Post AG significantly above competition Launch of new Delivery GmbHs reduces gap to competition given lower average wage level PAGE 31

32 Focus. Connect. Grow. EXPRESS PAGE 32

33 EXPRESS: CONTINUED STRONG VOLUME AND YIELD DEVELOPMENT Time Definite International (TDI) 1) Revenues per day in EUR m 39.4 Q Time Definite International (TDI) Shipments per day 000s 763 Q % +8.0% 43,2 Q Q Business Highlights Unchanged strong growth with TDI shipment/day up +8.0% led by Europe (+12.7%), MEA (+11.5%), and Americas (+8.2%) Asia/Pacific volume growth of +1.7% reflects customer mix effects and yield management: APAC revenue/day actually up 6% excl. FX & fuel Fuel surcharge effect turned positive yoy, driving higher reported sales growth Unchanged strong focus on yield management Growth investments into network and service quality continue in ) Currency translation impacts are eliminated. Data aggregated with same currency rate PAGE 33

34 EXPRESS DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,181 3, % EBIT % Organic growth of +12.3% driven by strong TDI volume growth, yield management as well as positive contribution from fuel turnaround Continued strong EBIT performance. EBIT margin reduction is entirely due to passthrough of fuel price changes Operating Cash Flow % Operating cash flow development reflects strong business performance Capex % Capex decline reflects phasing effects, full-year expectation unchanged PAGE 34

35 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 35

36 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 #2 #3 #4 AP EU EU EU AP MEA AP AP MEA AM AM MEA EU MEA MEA AP AM EU EU EU MEA MEA AM MEA AP AM EU AM MEA AP AP AP AP AP MEA AP AP MEA MEA AM AM MEA AM AM EU MEA EU EU EU AM AM AM AM AM MEA MEA AP EU AM MEA AP EU MEA AM AP 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 Q3 Q4 Q % +8.4% +7.8% +8.7% +7.4% TDI Shipments/ day EU Europe MEA Middle East Africa AM Americas AP Asia Pacific PAGE 36

37 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% 77% TDI TDD DDI DDD ACS / Other 7% 11% 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 37

38 DHL EXPRESS: GLOBAL TDI MARKET SHARES Continued TDI leadership across all regions outside the Americas Americas [EUR 6.8bn ] 1% 3% +1% 18% 46% 32% Europe [EUR 6.0bn] 12% 10% 41% 12% +1% 25% Asia Pacific [EUR 6.8bn] 21% 4% 44% 11% +2% 20% Global [EUR 20.1bn] +x% Change vs 2012 MI study DHL TNT UPS FedEx Others 6% 12% 34% Source: MI study 2014 EU : AT, DE, DK, ES, FR, IT, NL, RU, TR, UK AM : BR, CA, CL, CO, CR, GT, MX, PA, PE, US AP : CN, HK, IN, JP, KR, SG GLOBAL : EU + AM + AP + (AE + SA + ZA) 22% 26% +1% PAGE 38

39 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 39

40 Focus. Connect. Grow. FORWARDING, FREIGHT PAGE 40

41 GLOBAL FORWARDING, FREIGHT: STRONG VOLUMES AT WEAK GP AS MARKETS FURTHER RECOVER Air freight 000s Tons Air freight gross profit Business Highlights +13.9% -1.4% m EUR Q Q Q Q Ocean freight 000s TEU 1) Ocean freight gross profit +6.4% -0.6% m EUR Q Q Q Q Market recovery confirmed with significant growth in AFR and OFR volumes and DGF participating strongly Industry-wide GP pressure continued as a result of capacity constraints and price hikes during market turnaround: AFR GP/ton % and OFR GP/TEU -6.6% Internal productivity improvement making further progress with increase in units and files per FTE however not enough to offset temporary higher purchasing rate pressure IT renewal further advancing according to plan 1) Twenty Foot Equivalent Unit PAGE 41

42 GLOBAL FORWARDING, FREIGHT DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,327 3, % Organic growth acceleration to +5.7%, reflecting strong volume development Gross Profit % Stable total GP as volume increase offset by lower GP/unit due to higher buying rates EBIT % EBIT down despite continued operational productivity improvement as additional costs to transact volume growth are not covered by GP development Operating Cash Flow % Strong improvement driven by WC movements, despite significantly higher volumes, a.o. reflecting less pronounced year-end cash management Capex % Usual low asset intensity PAGE 42

43 DGFF: PERFORMANCE RECAP Revitalize core business and re-empower our people In progress Initiation of recovery of GP + Conversion Ratio and EBIT Margin + Gradual & modular IT improvements In progress Absolute DGF GP and % GP-to-EBIT Conversion DGFF Operating EBIT and Rolling EBIT Margin EUR m ,1% 16,9% ,3% 9,7% 5,1% EUR m % % ) 1) 2015 EBIT adjusted for EUR -353m one-offs Operating improvement to continue as we recover former levels of profitability in a normalizing market environment PAGE 43

44 CUSTOMER SATISFACTION AND EMPLOYEE SURVEY SCORES ARE PROOF POINTS OF SUCCESSFUL TURNAROUND MOMENTUM Revitalize core business and re-empower our people DGF customer satisfaction score DGF, Employee Opinion Survey 1) 2) Active leadership Employee engagement ) No survey held in 2013 We have re-established our service quality, with customer scores improving in all regions ) Overlap of previous and updated Group-wide questionnaire in 2015 Key indicators confirm reinforced commitment PAGE 44

45 DGF IT RENEWAL: IMPORTANT RE-ORIENTATION INITIATED WITH STRATEGY 2020 October 2015: Decision taken to stop NFE and launch alternative plan Best-of-breed, step-wise approach adopted under IRR (IT Roadmap and Renewal) Multiple initiatives underway focusing both on short- and long-term benefits involving both business process and IT enhancements Focus on leveraging proven, commercially available solutions; combined with selected existing applications In Jan 2016: Selection of Cargowise One (CW1) as preferred option for new TMS; pilots starting in 2017 IT renewal roadmap clearly defined PAGE 45

46 DGF: IT RENEWAL ROADMAP APPROACH LEGACY SYSTEMS CRM Tool Maintain/Upgrade CRM SALES Legacy Quote tool 1 Legacy Quote tool 2 Legacy Quote tool 3 Legacy System Legacy System Legacy System Harmonized Quotation Tool Online Quotation Tool OPERATIONS Legacy Transport Management System LOGIS Legacy EDM (US) Legacy EDM Global Roll-out Transport Mgmt System (proof of concept) Operational Irregularities Management Pilot Roll Out Maximize scope of use, integration, automation Legacy Legacy Shipment Visibility Tools A lower-risk approach to a more streamlined and integrated future PAGE 46

47 Focus. Connect. Grow. SUPPLY CHAIN PAGE 47

48 SUPPLY CHAIN: UNCHANGED SELECTIVE APPROACH PAYING OFF New signings, EUR m 1) Business Highlights 1) Annualized revenue 276 Revenue by sector Q Q Q Others Financial Services Engineering & Manufacturing 5% 3%6% Technology Automotive 12% 14% 11% 24% 25% Retail Consumer Slower start to the year in terms of order intake after strong series of contract signatures before year-end Organic growth accelerating reflecting new business start-ups as well as overall business improvement Dynamic business development in all regions with highest growth rate in Asia Strongest sector growth contributions from Life Sciences & Healthcare and Technology Life Sciences & Healthcare PAGE 48

49 SUPPLY CHAIN DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,393 3, % Organic growth accelerated to +4.1% reflecting new business start-ups as well as dynamic business activity in all regions. FX remains slight headwind EBIT % EBIT up 11.2% adjusted for net effects of Q asset sale (EUR 63m) and restructuring (EUR -25m). Strong quarterly performance driven by restructuring benefits and business growth Operating Cash Flow % Improvement in line with good operating performance, supported by WC management Capex % Low asset intensity, yoy changes impacted by project timing PAGE 49

50 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 Fast and Flexible Shipping Broad range of shipping services (domestic + international) Late cut-off times 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 50

51 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 51

52 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 52

53 Appendix PAGE 53

54 GROUP P&L Q EUR m Q Q Chg. Management comments Revenue 13,872 14, % Organic revenue growth accelerating to +6%; FX and fuel effects subside EBIT % t/o PeP % Increase of 6% excl. DSC one-offs in previous year - perfectly on track to deliver on full-year targets Continued growth in German and international Parcel drives topline and EBIT growth working day effect partly offset by unusually slow start into the year t/o DHL % Strong performance in Express and Supply Chain balanced by DGF Financial result % Overall in line with last year Taxes % Tax rate of 15% reflecting new full year expectation Cons. net profit 1) % EBIT increase offset by slightly higher tax and minority charges EPS (in EUR) % 1) Attributable to Deutsche Post AG shareholders PAGE 54

55 FREE CASH FLOW Q Strong cash flow performance: Seasonal factors still in play, but OCF turns positive, limiting usual Q1 FCF outflow EUR m Q Q Cash from operating activities before changes in Working Capital Q1 cash generation as every year affected by annual civil servant pension scheme contribution Changes in Working Capital -1, Strong OCF driven by good operating performance and lower Net cash from operating activities after changes in Working Capital changes in Working Capital reflecting balanced year-end 2016 cash management Net Capex Net M&A Net Interest -5-9 OCF improvement flows through to FCF as yoy slightly lower capex spend is balanced by lower contribution from net M&A reflecting asset sale (King s Cross) in Q Free Cash Flow FFO/Debt at 30.0% (year-end 2016: 30.6%) PAGE 55

56 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 56

57 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 57

58 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 590 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 Supply Chain FY 2017 guidance ~2.3bn FY projection Slight increase vs PAGE 58

59 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 59

60 CREATING VALUE FOR STAKEHOLDERS BY INVESTING FOR GROWTH ROCE vs WACC 20,0% 17,9% 17,9% 17,2% 19,5% 16,0% 12,0% 8,0% 13,4% Spread of ROCE vs WACC widening 4,0% ROCE (adj. for 1-offs) ROCE WACC (Internal View) ROCE = LTM EBIT / (Average LTM Business Operating Assets + Goodwill) We create value for all stakeholders through targeted growth investments PAGE 60

61 NET DEBT (-)/LIQUIDITY (+) Net debt increase less pronounced than previous years although seasonal factors still valid (Annual contribution to civil servant pension for FY17: EUR 493m) in EUR m , Net debt (Dec 31, 2016) OCF after change in W/C Net capex Other effects Net debt (Mar 31, 2017) PAGE 61

62 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 Q1 17, net pension provision declined minimally. Plan asset performance partially compensated for slight decline 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 17,723 17, Dec 31, 2016 Mar 31, 2017 Discount Rate Germany UK Other Total Total DBO Net Pension Provison Plan Assets Dec 31, % 2.75% 2.19% 2.39% Mar 31, % 2.50% 2.19% 2.32% in EUR m PAGE 62

63 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 63

64 INVESTOR RELATIONS CONTACTS Martin Ziegenbalg, Head of Investor Relations Robert Schneider Sebastian Slania Sarah Bowman Christian Rottler PAGE 64