Deutsche Post DHL UBS Best of Germany Conference. Sarah Bowman New York, September 2013

Transcription

1 Deutsche Post DHL UBS Best of Germany Conference Sarah Bowman New York, September 2013

2 Agenda On track towards 2013 & mid-term targets Structural trends sustain growth towards 2015 targets Mail: Parcel growth counters mail decline DHL: Exploiting strength in global growth markets 2

3 Q Highlights Growth drivers Parcel and DHL Express intact Key growth trends DHL emerging markets sales growth organic yoy change revenue, organic yoy Parcel Germany volume / day +6.9% Asia Pacific +4.3% Express TDI volumes / day +7.8% Latin America +1.3% Forwarding, Freight revenue -4.3% Africa / Middle East -0.6% Supply Chain revenue +5.6% DHL, Q2 EBIT margin by Division Express Forwarding, Freight Supply Chain 8.3% 7.8% 6.9% 1) 2) 9.1% 2.7% 3.0% 3.5% 3.5% 2.9% 4) 2.9% 2.1% 3) 2.5% 5) 2.2% ) Excl. non-recurring items of EUR -228m 2) Excl. EUR -30m VAT Effect, 99m release restr.prov., EUR 44m disposal gain 3) Excl. non-recurring items of EUR -17m 4) Excl. EUR 23m disposal gain 5) Excl. EUR -11m disposal loss 3

4 Group P&L Q Q2 comparison impacted by one-time effects in both years EUR m Revenue Q ,732 Q ,649 Change -0.6% Revenue flat, held back by disposal and adverse currency effects, as well as weak Forwarding markets. Organic growth of 1.9% EBIT comparison impacted by several onetime effects: Postage stamp provision EUR +50m EBIT t/o Mail t/o DHL Financial result Taxes Consolidated net profit 2) EPS (in EUR) % >100% -16.8% 84.3% -60.8% >100% >100% Net loss on disposals (SC) EUR -11m VAT settlement (Q2 12) EUR -181m Express one-offs 1) (Q2 12) EUR +143m Financial result improvement related to positive one-time effect of EUR 42m as well as VAT settlement in Q (EUR -115m) while also reflecting lower interest costs on pension and other provisions Tax rate at 22% Net income strongly impacted by one-time effects; up around 9% excl. one-offs 1) Net EBIT effect of EUR +113m, incl. EUR -30m from VAT settlement; 2) Attributable to Deutsche Post AG shareholders 4

5 Free Cash Flow Q Strong improvement in cash flow performance continued EUR m Cash from operating activities before changes in Working Capital Changes in Working Capital Net cash from operating activities after changes in Working Capital Net Capex Q VAT effects Q excl. VAT Q Continued good operating performance and working capital improvement are main drivers of OCF increase, reflecting increased management focus and incentives VAT settlement only had net effect of EUR -21m in Q2 12 Net M&A Net Interest Capex below last year s level, mainly reflecting phasing of planned projects Free Cash Flow FFO/Debt at 30.1% (year-end 2012: 30.5%) 5

6 Improving Trend in Operating Cash Flow Generation Operating Cash Flow, in EUR m 1,400 1,200 1,262 1,357 3) 1, ) ) Q1 Q2 Q3 Q ) Q2 2012: excl. EUR -21m effect from VAT settlement; 2) Q3 2012: excl. EUR -300m effect from VAT settlement; 3) Q4 2012: excl. EUR -1,986m Pension funding; 6

7 Full-year 2013 Guidance adjusted upwards 2013 Guidance adjusted for positive one-off effect in Mail EBIT Group prev. EUR bn EUR bn Mail prev. EUR bn EUR bn DHL divisions EUR bn Corp. Center/ Other Free Cash Flow ~ EUR -400m Free Cash Flow To at least cover 2012 dividend Gross Capex of up to EUR 1.8bn Net income growth to exceed operating profit growth 7

8 2015 Targets confirmed: MAIL EBIT stabilization, 13 15% growth in DHL EBIT to EUR bn Group EBIT of EUR 3.35 bn to 3.55 bn in 2015 MAIL EBIT stable at a minimum of EUR 1bn DHL DHL EBIT, in EUR bn CAGR 13-15% 2.0 ~2.1 2) ) Corporate Centre/Other Improvement to EUR -350m by ) Underlying EBIT 2) 2013 Guidance of EUR bn 8

9 Agenda On track towards 2013 & mid-term targets Structural trends sustain growth towards 2015 targets Mail: Parcel growth counters mail decline DHL: Exploiting strength in global growth markets 9

10 Structural trend Emerging Markets : DHL building on global footprint and leadership Emerging Markets drive growth across DHL Divisions Express Forwarding Supply Chain Revenue 1) : EUR bn 9.6 CAGR +9% 12.4 Revenue 1) : EUR bn 7.8 CAGR +14% 11.4 Revenue 1) : EUR bn 12.0 CAGR +6% % 24% +13% +20% 15% 32% % 26% +23% +14% 15% 26% % 7% 6% 11% 8% +21% Global TDI leadership with key strengths in growth markets Global No. 1 in air freight, No. 2 in ocean freight Market leader in contract logistics in Asia and Latin America Asia Pacific LATAM, MEA 1) Based on external 3rd party revenue, region according to customer invoice 10

11 Mid-term EBIT Targets: EUR bn Group EBIT in 2015 Confirmed and on track MAIL: EBIT stabilization at min. EUR 1bn Fully delivered in DHL: EBIT CAGR of 13 15% CAGR of 15.3% 1) in DHL margin improvements on track EXPRESS Ongoing capacity and service quality investments weight on 2012 margins as expected Margin acceleration expected in % 7.8% 8.7% 7.8% 2) FORWARDING, FREIGHT SUPPLY CHAIN Excl. NFE implementation costs, EBIT margin expansion would have been even greater NFE implementation to intensify in 2013: high double digit EUR million yoy increase in NFE costs expected Focus on Contract Lifecycle Management and more integrated solutions delivered steady margin improvement 2.8% 2.1% ) 2.9% % 2.7% 2.9% 1) 2012 EBIT excl. EUR 113m one-off items from VAT, restructuring provision release and disposal gain in Q2 2012; CAGR of 18.6% based on reported 2012 EBIT 2) EXPRESS FY2012 margin excl. EUR 113m one-off items from VAT, restructuring provision release and disposal gain in Q ) FY2010 margins excl. non-recurring items (restructuring)

12 Free Cash Flow Outlook Multiple levers to drive FCF improvement over the next years Major drivers EBIT Changes in provisions Changes in W/C Income taxes paid Net Capex Net M&A Expected Trend from 2013 onwards In line with 2015 guidance: Group EBIT up to EUR bn Utilization of restructuring provisions tailing off, pension payments declining slowly Increasing as business grows but strong focus on working capital management To increase driven by EBIT growth Normalization from current expected gross levels of EUR up to 1.8bn in 2013 No need or ambition for major M&A Free Cash Flow EBIT increase to drive strong FCF performance 12

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

14 Agenda On track towards 2013 & mid-term targets Structural trends sustain growth towards 2015 targets Mail: Parcel growth counters mail decline DHL: Exploiting strength in global growth markets 14

15 Highlights Mail Q Stable operating performance based on expected trends in Mail & Parcel Mail Communication volumes m Q Q Chg. m units 2,024 1,780 1, % 1,984 2,053 1,818 Revenue 3,288 3, % EBIT >100% Milestones Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Parcel growth (+6.9% per working day) remains strong driven by continuously increasing e-commerce penetration Mail Communication volumes (+0.4% per wd) supported by shift effects from discontinuation of product Infobrief (Dialogue Marketing). Underlying decline in line with mid-term trend and expectations Parcel volumes m units % Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q

16 MAIL: Parcel growth counters letter mail decline Limited Mail volume decline as expected potential future decline is also limited vs. other markets as German addressed mail items per capita are already low 1) GER FR NL UK US Sustained growth in Parcel compensates for structural decline in German letter revenues. FY ) H Combined revenue development of letter businesses (Mail Communication, Dialogue Marketing, Press Services) Revenue increase in Parcel 1) UPU postal statistics database, regulatory authorities, Ofcom analysis 2) As reported 16

17 Parcel service enhancements boost B2C penetration and further cement our service leadership Investments in the network New Sorting Facility Obertshausen Foundation stone laid for 40,000 m² greenfield sorting facility Sorting capacity of 50,000 packages per hour Start of operations planned for 2015 PackStation expanding the network By year-end 2013, 2,650 PackStations (up from 2,500) and 250,000 individual compartments, up from 230,000 an increase of nearly 9% FMCG 1) delivery expanding same-day pilots into new regions allyouneed.com same-day delivery extended from Cologne to urban locations of Ruhr region Berlin roll-out planned for autumn 2013 Partner development collaborative approach, similar to partner retail outlets and sales points 20,000 new Parcel Shops announced Further increases flexible drop-off options New partners to be in operation by end 2014 Brings total drop-off locations to 50,000 1) Fast Moving Consumer Goods 17

18 Agenda On track towards 2013 & mid-term targets Structural trends sustain growth towards 2015 targets Mail: Parcel growth counters mail decline DHL: Exploiting strength in global growth markets 18

19 Highlights Express Q Strong performance of global TDI network continues Time Definite International (TDI) Revenues per day 1) in EUR m m Q Q Chg. +5.7% Revenue EBIT 3, , % -19.3% Milestones Strong TDI volume growth once more supported by daily volume growth in all regions: Europe +8.6%; Americas +6.3%; APAC +7.7%; MEA +8.5% Revenue increase currently slower than volume growth due to weight-customer-mix effects Network utilization improving, contributing to margin improvement Q1 12 Q1 12 Q2 12 Q2 12 Q3 12 Q3 12 Q4 12 Time Definite International (TDI) Shipments per day 000s +7.8% Q4 12 Q1 13 Q1 13 Q2 13 Q2 13 1) Currency translation impacts are eliminated. Hence, 2012 and 2013 data are aggregated with the same currency rate 19

20 Express margin improvement on track towards 2015 target DHL Express EBIT margin, in % ) ) Q1 Q2 Q3 Q ) Excludes Q EUR +113m net positive effect from VAT settlement, disposal gain and release of restructuring provision; 2) Excludes Q EUR +12m positive effect from disposal gain 20

21 Keep executing our successful strategy Motivated People Great Service Quality Loyal Customers Profitable Network QCC 10% margin by 2015 CIS program is a key success factor enabling our employees to deliver the best performance for our customers Focus on the best service for our TDI customers driving industry-leading volume growth Insanely customer centric, supported by strengthening brand awareness Strict discipline on pricing tools / principles Virtual airline balances service quality, planning flexibility and operating costs Focus on costs and cash generation On track towards 2015 targets driven by organic growth, operating leverage as well as direct and indirect cost management 21

22 sed Financial Management Topline / Revenue Management 1. Profitable Growth Revenue per Day (RpD) Shipment per Day (SpD) Revenue per Shipment (RpS) Weight per Shipment (WpS) Revenue per Kilo (RpK) 5. Cash Management Gross Profit Triangle 2. Leverage Aviation Network Reduce Cost per Kilo (CpK) by 1.5% yoy in Efficiency in Ground Operations Reduce Operations Cost per Move (OCPM) by 2.5% yoy in Reduce Indirect Cost Share of Revenue 22

23 Highlights Global Forwarding, Freight Q Volume development impacted by continued weakness of global trade Air freight 000s Tons m Q Q Chg ,046 1, % 1, Revenue 3,973 3, % EBIT % Milestones Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Volume development impacted by weak overall demand, in particular Engineering & Manufacturing and Technology sectors, modal shifts as well as ongoing trend to lower weight per shipment GP margins supported by selective strategy NFE implementation on plan. Costs flat yoy, increase expected in H2 Ocean freight 000s TEU 1) -1.0% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 1) Twenty Foot Equivalent Unit; Q TEUs adjusted 23

24 Highlights Supply Chain Q Good organic revenue growth and record Q2 new contracts wins Revenue by sector Q Milestones EBIT m Revenue Q , Q ,550 Automotive and Airline Business Services were main drivers of Q2 revenue growth Strongest regional growth was seen in APMEA, closely followed by the Americas. European growth still weak Q2 record new business signings of EUR 350m (Q2 2012: EUR 330m) underpin resilience of outsourcing trend. Highest ever H1 new business signings with annualized revenue of EUR 780m (H1 2012: EUR 520m) 79 Chg. +0.6% -21.8% Williams Lea Energy Automotive Technology 10% 3% 11% 9% Others 18% Life Sciences & Healthcare 5% Retail 24% 20% Consumer 24

25 Continued focus on execution of Strategy 2015 SUMMARY Maintaining strong operational and customer focus: Parcel and Express growth trends intact Express EBIT margin accelerating Profitability focus given weak Forwarding volumes Strong momentum in Supply Chain order intake Cash Flow generation continues to improve 2013 guidance increased to EUR 2.75bn EUR 3.0bn for extraordinary positive effect in Mail 1) Mid-term guidance confirmed 1) previously EUR bn 25

26 Agenda On track towards 2013 & mid-term targets Structural trends sustain growth towards 2015 targets Mail: Parcel growth counters mail decline DHL: Exploiting strength in global growth markets Appendix 26

27 Deutsche Post DHL at a Glance 2012 key figures Group: Sales: EUR 55,512m; EBIT: EUR 2,665m; Employees 1) : 428,287 Domestic German Mail and Parcel International and Domestic Express Global Air, Ocean and Road Freight Global Supply Chain Solutions Sales: EUR 13,972m Sales: EUR 12,778m Sales: EUR 15,666m Sales: EUR 14,340m EBIT: EUR 1,051m EBIT: EUR 1,108m EBIT: EUR 512m EBIT: EUR 416m Empl. 1) : 146,923 Empl. 1) : 84,623 Empl. 1) : 43,590 Empl. 1) : 140,193 The postal service for Germany The logistics company for the world Corporate Center / Other: Sales: EUR 1,203m; EBIT: EUR -422m 1) Average FTEs FY

28 Net Debt (-)/Liquidity (+) Net financial liquidity reduced as usual in Q1 due mainly to civil servants pension payment (EUR 540m) EUR m 698 Includes ca. 75% of annual contribution to civil servant pension fund (EUR -408m) Dec 31, 2012 Operating Cash Flow Changes in Net capex All other March 31, 2013 (before changes in Working effects 1) working capital) Capital 1) o.w. derivatives valuation effects of EUR 71m; net interest paid EUR - 31m 28

29 Cash conversion DPDHL transitioning to high Cash Flow generation EBIT Performance Mail High, but decreasing High, but decreasing Stable Stable DHL Low Improving Strong improvement High Level of Capex Average Low High Average Level of M&A Very high Very low Very low Very low Restr. cash requirement Low Very high Low Very low Special factors State aid ( ) State aid (+) Postbank sale (+) State aid ( ) VAT ( ) State aid (+)? 29

30 Balance sheet impact of IAS 19R implementation IAS 19R implementation as of Jan 1, 2013 in EURm Total Defined Benefit Obligation EUR 14,748m Total Defined Benefit Obligation EUR 14,776m Total Defined Benefit Obligation EUR 15,026m Total Defined Benefit Obligation EUR 14,333m Highlights Restated 2012 balance sheet: Net pension provision increased by EUR 3.1bn Equity reduced by EUR 3.0bn (Difference mainly due to tax effects) Plan assets Unrecognized gains/losses Net Pension Provision 9,758 3,082 1,908 Dec 31, 2012 as reported under IAS 19 unrecognized gains/ losses included within net pension provisions 9,758 5,018 Dec 31, 2012 as restated under IAS 19R 9,757 5,269 Mar 31, 2013 as reported under IAS 19R 9,582 4,751 June 30, 2013 as reported under IAS 19R Q development: Re-measurement of pension provision and decrease of total defined benefit obligation mainly due to higher discount rates Plan assets development reflects investment return, forex effects as well as pension payments No cash impact from accounting change to IAS19R 30

31 DPDHL Pension provision Summary of P&L / Cash Flow effects and expected trend DPDHL Pensions in 2012 Outlook in EURm 2012 P&L effect (EBIT) Total related cash-out Cash-out beyond EBIT Expected P&L trend Trend of cash-out beyond EBIT Defined Contribution (staff costs = cash cost) 0 Slow increase in line with salary trend and mandatory requirements To remain 0 Civil servants (staff costs = cash cost) 0 Halved by 2025 as number of civil servants declines To remain 0 Defined Benefit ) (benefits partly paid out of OCF) 362 Besides impact of assumptions like discount rates, slow gradual decline as entitlements decline Decline by EUR 80m as of 2013 (additional return on plan assets from pension funding) slow decline thereafter as number of entitlements decline 1) excl. EUR 1.986bn employee contribution from pension funding 31

32 DPDHL Pension provision Summary of P&L and cash effects of DPDHL pension plans EBIT 2012 Excl. oneoff Disclosed on funding in EURm Pension expense DBO 204 p. 185 annual report Note Defined contribution 238 p. 157 annual report Civil servant pensions 542 p. 157 annual report Total EBIT effect (in staff costs) 984 Pension expense in finance cost 247 p. 185 annual report, difference between 622m and 375m TOTAL P&L effect 1,231 Cash out Benefit payments DBO 294 p. 184 annual report Note 41.9 Employer contributions DBO 2, p. 184 annual report Note 41.9 Defined contribution 238 p. 157 annual report Civil servant pensions 542 p. 157 annual report Total cash out 3,332 1,346 Total cash out minus EBIT effect 2, Total cash out minus total P&L effect 2, change in provisions (cash flow statement) 61 change in pension assets & Other Outlook: Slow gradual decline in pension costs (P&L and cash) as entitlements decline 32

33 DPDHL Other provisions Summary in EUR m As of 31 Dec 2012 Chg. 12 vs 11 Expected Trend of Provision Explanation Other employee benefits Gradual decline in provision as severance payments and partial retirement should have higher utilization than new additions going forward Restructuring provisions Remaining tail US cash-outs mainly in 2013/14 FCF benefit (vs last years) as cash outflows from historic provisions decline Technical reserves (insurance) Directly related to operational business development Hence provision should see gradual slight increase as business volumes improve, resulting in higher EBIT charge than ongoing utilization Postage stamps Covers obligation from postage stamps sold but still unused by customers Lower letter volumes should lead to small steps of declines over time, i.e. in a that year slightly lower EBIT charge than cash out through utilization Tax provisions Larger VAT case settled, leading to strong decline in 2012 No further major changes of tax provision from current low level expected Miscellaneous provisions Cover items such as litigation, risks from business activities, aircraft maintenance and various smaller positions FCF effects going forward expected to be flat as no specific trends Total Total provisions still expected to come down a bit further, mainly from utilization of restructuring provisions However, expected cash-outs declining from previous year levels 33

34 Mail Divisional Results Q EBIT stable excluding one-time effects EUR m Revenue EBIT Operating Cash Flow Capex Reminder: Q , Q , yoy working days in Germany Q1 Q2 Q3 Q Change 4.4% >100% +20.7% 15.5% Revenue increase driven by growth in Parcel and Global Mail, one additional working day and EUR 50m reversal of postage stamp provision. Reported EBIT up strongly due to VAT settlement charge in Q (EUR -151m) and the stamp provision reversal. Increasing material and staff costs almost offset by robust business development especially in Parcel and Global Mail Strong Operating Cash Flow increase reflects solid operating performance and EUR 21m base effect from VAT settlement in Q2 12 Capex mainly reflects Parcel network expansion and service enhancements 34

35 With DHL Parcel we are shaping a dynamically growing market environment E-commerce is growing strongly... E-commerce sales EUR billions 1) Share of retail spending Percent 2) 8 = 32 bn... and is driving parcel volumes German parcel market: growth of 5-7% p.a. until 2015 B2C growth 11-13% p.a. by e-commerce adoption independent of GDP development % p.a. +11% p.a. 20 = 80 bn B2B growth 3-5% p.a. depending on GDP and export development Convenience as a key driver for e-commerce: 3 out of 4 online shoppers believe e-commerce has improved their quality of life Over 40% claim they save time! We are profiting from a fast growing market 1) Bundesverband des Versandhandels; 2) TNS Infratest und MRSC, Einkaufen 4.0, Gesellschaft für Konsumforschung 35

36 Aim to increase market share and secure growth rates above market average No. of registered customers Millions Simplified services 5.0 Target 2015 Network upgrade Paket 2012 DHL-Fulfillment DHL-checkout will boost our B2C market share Percent Parcel Other will help to grow our B2B market share Percent Parcel Other ! Parcel revenue increase above market growth DHL Germany is a solid growth story 36

37 Parcel Germany: Strategic Focus Parcel Germany is shaping ecommerce as the leading service provider DPDHL only postal organization world-wide to offer nation-wide 24/7 access to all shipping needs 13,500 retail outlets 1,000 Parcel Boxes for 24/7 drop-off 2,500 automatic PACKSTATIONs to drop-off, frank, or use as delivery address Online Franking of all parcel products iphone and Android apps for all services To date 2mn registered Packstation customers 83% check whether vendor ships to Packstation before purchase 36% increase their online spend after registration for Packstation Target group in age segment years with high online affinity Source: Europäisches Handelsinstitut 37

38 Express Divisional Results Q Excluding last year s one-off effects, strong EBIT and margin increase EUR m Revenue EBIT Operating Cash Flow Capex Q , Q , Change -0.2% -19.3% -6.3% -44.9% Revenue increased by organic +3.9% driven by core TDI growth, reported growth held back by disposals of domestic business in Romania, AU and NZ as well as FX effects EBIT up 16.5% yoy excluding Q onetime effects from disposals (EUR +44m), release of restructuring provision (EUR +99m) as well as the VAT settlement (EUR -30m). Excl. these effects, EBIT margin up from 7.8% to 9.1% as a result of cost optimization and network leverage effect Operating cash flow was below LY due to lower contribution from working capital changes and higher US restructuring cash-out Capex decline mainly due to phasing, network upgrade ongoing 38

39 EXPRESS: 2015 EBIT target and key levers % CAGR +13% 15% CAGR EUR 785 m 1) EUR 916 m EUR 1,108 m 1. Leverage strength in fastest growing regions 2. Focus on TDI 3) 3. Further improve customer satisfaction EUR 288 m 4. Continue investments in network and service 5. Leverage cross BU opportunities EUR 497 m 2) 6. Manage cost through operating leverage 7. Increase brand awareness 2010 Business stabilization 2011 Invest for growth 2012 Market share growth 2013 Margin acceleration 2014 Convergence 2015 Renewal 1) Underlying EBIT and before the transfer of Czech domestic business to DHL Freight; 2) Reported EBIT; 3) Time Definite International 39

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

41 DHL Express volumes around the world benefit from leadership in Asian TDI markets Strongest exposure to Asian growth Break-down of DHL Express global shipments by origin/destination: TDI leader (revenue) in all polled APAC markets 1) Inbound Asia Others Intra- Asia Outbound Asia >50% of global DHL TDI shipments touch Asia DHL Express TDI market position Market share data available No market share data available 1 1) Source: MI study 2012, annual reports and desk research; APAC: AU, CN, HK, ID, IN, JP, KR, MY, NZ, SG, TH, TW, VN 41

42 Increasing TDI Revenue Share 100% 80% 60% Other Product Revenue Share (DDI, DDD, ACS etc.) 31% 28% 26% 24% 22% 9% Time Definite Domestic (TDD) Revenue Share 11% 69% 78% TDI+TDD 40% Time Definite International (TDI) Revenue Share 58% 61% 63% 66% 69% 20% 0% H Products TDI Time Definite International TDD Time Definite Domestic DDI Day Definite International (only offered in 5 countries in EU) DDD Day Definite Domestic ACS Air Capacity Sales 42

43 1. Profitable Growth: Active Revenue/Volume Management Different phases of network development and market trends require active volume growth management SpD in Economic Downturn & Business Stabilization Rightsizing network Moderate growth in line with economy Network Expansion Additional capacities require corresponding volume growth Focus on regaining market share Margin Improvement Careful selection of additional volumes (right sized and priced) Pro-active management of existing volumes TDI SpD TDI RpD RpD in m Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

44 1. Profitable Growth: Structural Trends and Active Management WpS RpK Product Mix Much stronger parcel growth compared to moderately growing document volumes changes product and weight mix B2C Focus on TDI (mostly high value, time sensitive and/or to exotic destinations) implies small but increasing portion of B2C; Piloting of advanced delivery options to address delivery cost challenge (i.e. failed delivery attempts and delivery density) Faster growth of larger shippers Customer with larger volumes (>500 shipments/month) grow faster than smaller customers driving average prices down SME Focus Sales focus on SMEs helped to increase growth rate of smaller shippers (<25 shipments/month) significantly yoy Middle Weight Campaign Focus on sweet spot shipment in 30-70kg range where our value proposition is very strong Balanced Volume Growth Despite strong market position in AP and MEA, balanced growth in all regions Intercontinental volume growth slightly stronger than intraregional volumes 44

45 Active Customer Base and Classification Customers (Revenue Share) Revenue Growth Margin Sales Approach Global Customer Multinational Customers 104 (~12%) ~440 (~8%) Global weekly Tender Review Board Sophisticated pricing and margin tools Win the ones we should & correct Walk Away s Avoid RFQ s / competitive bidding benchmarking preferred Only concede on price if more volumes offered Euro 500m under review each quarter Field Sales (incl. Major & Key Accounts) Direct Sales (Telesales, DM, Web, Physical Channels) > (~65%) > (~15%) Culture of sell sell sell Global sales campaigns twice per year Sales process and call rate Leaderboard visibility on country growth rates Much more competitive rates for smaller customers No GPI on full tariff Discounts for Ecom users & retail outlets PR oriented towards small customer value added 45

46 2. Leverage Aviation Network Steering Approach Asset Intensity Capacity Commitment Flexibility Cost Position 1) 1) Commercial Air Linehaul 46

47 Our Dedicated Fleet 30 Intercont Aircraft 138 Regional Aircraft 90 Feeder Aircraft Youngest intercont fleet in the Industry! 7 new aircraft in average aircraft age 3.5% reduction in CO 2 output during aged aircraft replaced; 727, DC8, A300 The only Helicopter express delivery service in the World! Global access to small markets (Africa) Growth enablers! 47

48 Air Capacity Sales (ACS) 4 Different Product Offerings Selling air cargo space purely helps to offset aviation costs and is not a TDI product sold by the core sales team; DHL Global Forwarding (DGF) is the main customer Block Space Agreement, guaranteed air cargo product Express TDI core product, capacity based on average utilization, adjusted on a daily basis Total Spare Capacity (TSC), average capacity not utilised by Block Space or TDI Core on a planned basis. To be sold by air cargo product 3 Air cargo guaranteed, a set amount of the Total Spare Capacity guaranteed for priority traffic & key customers More than ACS 500,000 bookings per year For DGF we improved from no. 8 in 2010 to the no. 3 supplier in 2012 DGF is the biggest customer from DHL Aviation 4 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 48

49 Global Forwarding, Freight Divisional Results Q Stable EBIT margin and strong cash flow despite difficult market conditions EUR m Q Q Change Revenue decline impacted by weak volumes and adverse currency effects. Organic revenue decline of -4.3% Revenue 3,973 3, % EBIT margin supported by strict cost control and selective strategy EBIT Operating Cash Flow Capex % >100% -30.3% Strong Operating Cash Flow driven by positive working capital changes Capex below last year reflects phasing of NFE payments 49

50 GLOBAL FORWARDING, FREIGHT: 2015 EBIT target and key levers % CAGR Volume & Gross Profit Improvement Volume growth due to exposures to emerging markets +13% 15% CAGR EUR 512 m GP 2) margin improvement due to enhanced IT (enhanced buying due to better transparency) EUR 383 m 1) EUR 440 m Cost Improvements Productivity gains due to economies of scale Indirect costs savings due to optimization of regional and country organizational structures Efficiency gains due to new IT (NFE) Road Freight ) EBIT before the transfer of the Czech domestic business from DHL Express to DHL Freight 2) Gross Profit 50

51 New Forwarding Environment (NFE) NFE is our business & IT transformation program, enabling us to achieve our goal of becoming the undisputed industry leader with a customer-centric organization and simplified business processes including state-of-the-art IT capabilities. Improved customer intimacy Improved transparency Increased productivity CUSTOMER RELATIONS Improved Customer Relationship Management including increased efficiency and accuracy in Shipment information Answering quotes Handling orders issue invoices New operational processes enabling more proactive communication with timely and accurate customer solutions PRODUCTS & SERVICES Customized solutions based on consistent, operational services across the globe Modular Product Offering Proactive Event Management INFORMATION TECHNOLOGY Consistent global platform will simplify our IT landscape End-to-End visibility Improved, harmonized and automated reporting Improved customer implementation accountability 51

52 Maximized profitability: GP on product level reflects our size advantage and product portfolio 25,7% 20,7% DGF comparable 1) 21% DGF comparable 1) DGF Gross Profit margin 2012 (in %, Air Freight) 24,6% 22,6% Gross Profit margin 2012 (in %, Ocean Freight) 18.9% 19,2% DGF 20,7% 20,2% 17,6% Performance benchmarking on product level is impacted by differences in accounting key DGF competitors allocate value added services to AFR or OFR DGF has chosen to account for VAS separately under category called Others. This allows to measure true performance on product level When relevant VAS (customs, handling, cartage) are allocated to AFR & OFR to improve comparability, DGF s GP margin is in line with peers GP margin in AFR benefits from DGF s large scale, while OFR reflects its share of uncontrolled volumes What about fuel costs? Fuel costs have not a significant impact on DGF as they are passed through costs 1) Including value-added services; Note: GP margin absolute level not fully comparable due to different revenue recognition principles across competitors Source: Official company publications 52

53 Supply Chain Divisional Results Q Non-recurring charges impact EBIT performance EUR m Revenue EBIT Operating Cash Flow Capex Q , Q , Contracts won Annualized revenue Change +0.6% -21.8% +70.7% -23.8% Revenue growth tempered by disposals of non-core activities and FX. Organic growth excluding these effects was 5.6% EBIT decline due to charges in connection with disposals and restructuring. EBIT about flat excluding these effects Operating cash flow improvement driven by better working capital trend Temporarily lower Capex due to phasing of new projects New gains

54 SUPPLY CHAIN: 2015 EBIT Target and Key Levers % CAGR Contract Lifecycle Management EUR 362m EUR 416m Drive continuous improvement in project selection, design, execution and overall performance Standardization & Replication +13% 15% CAGR EUR 272m 1) Identify, leverage, and grow best practice globally Sector Focus Differentiate with sector-specific solutions Leverage expertise to drive growth, especially in first time outsourcing and Emerging Markets ) EBIT excluding restructuring 54

55 Structural trend Simplifying industry solutions DHL leads the growing Outsourced Contract Logistics market Huge outsourcing market 1) potential Top 3 market shares, 2011 EUR bn Largest providers Other ~12% Outsourced Contract Logistics In house Logistics 88% ~12% 7.7% DSC 1,121 CAGR 2.4% 2.1% CEVA K+N Largest providers % ) DHL Supply Chain projection based on forecasts from IHS Global Insight and Transport Intelligence 55

56 SUPPLY CHAIN: Strategic programs in place delivering margin improvement and further growth Contract Lifecycle Management Standardization & Replication Sector Focus Continuous improvement across the entire contract lifecycle Project selection Design Execution Price / risk discipline Identify, standardize and grow global products and solutions Co-Packing Lead Logistics Provider Technical Service Airline Business Solutions Life Sciences & HC platform Differentiate through sectorspecific solutions Global expert communities Be the competent partner for outsourcing in target sectors Leverage DHL customer contacts and brand 56

57 Contract Lifecycle Management Continuous feedback loops improve project selection, design, execution and overall performance Opportunity Assessment Helps to refine 10,000 potential opportunities into 4,600 defined opportunities Consultative Selling & Solution Design Further refines and defines the win strategy on 3,000 qualified projects Approval & Closure Implementation & Operational Execution Use of standardized methodologies ensures continuous process optimization 7 Contract Renewal Good visibility and best practice account management ensure high customer retention 6 Account Management A.M. Excellence Principles including Joint Business Plans earn customer loyalty 5 Performance Review Post implementation review along 3 bottom lines to ensure that project is fully aligned with our principles 57

58 3 Business Case Approval Well designed terms and conditions need to ensure a balance of risk and reward Commercial Area Customer Credit Risk Asset Protection Volumes Savings Liabilities Example Customer bankruptcy Customer requests early termination of contract Customer changes portfolio to larger products Customer expects significant savings from outsourcing Customer requires liability assurance Options Rigorous credit assessment process Maximize protection through clear terms & conditions Back-to-back contracts with service providers Lease commitments underwritten by customer Redeployment of assets leveraging our scale Balance of open and closed book contracts Minimum & maximum volumes Separate payment terms for fixed and variable costs Gain Share schemes with equitable split of rewards, balanced with risks Incentivizing outsourcing by generating more savings for the customer Liability cap (annual & per incident) linked to size of annualized Gross Profit Coverage of inventory loss or damage but exclusion of consequential loss 58

59 Corporate Center / Other Aiming to reduce cost of Corporate Center / Other activities to -350m by 2015 CC / Other cost structure, 2011 Reduction to -350m by 2015 Investments into growth & crossdiv. initiatives (e.g. Go initiatives, Smart Truck, Cold Chain) 100% = ~400m 1) ~20% ~25% ~25% Corporate bodies (e.g. CB, SVB) and legal obligations/ foundations ) ) ~50% ~55% -400m -350m Core Corporate Center costs, e.g. Group Finance, e.g. Internal Audit, Treasury, Tax Corporate Communications Corporate Development Corporate Executive HR 1) excluding gains/losses from central FX hedging measures 59

60 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. 60

61 Investor Relations Contacts Martin Ziegenbalg, Head of Investor Relations Robert Schneider Sebastian Slania Pls note New addresses from 23 September on: Sarah Bowman Daniel Stengel