Deutsche Post DHL. ESN European Conference. Sebastian Slania - Investor Relations Daniel Stengel - Investor Relations 11 September 2012

Transcription

1 Deutsche Post DHL ESN European Conference Sebastian Slania - Investor Relations Daniel Stengel - Investor Relations 11 September 2012

2 Groundwork laid for profitable growth Legacy homework done Building our track record Profitable growth focus Disposals/closure of underperforming DHL operations (e.g. US Express domestic) Postbank transaction Clean-up of business portfolio Strong operational performance (2011 EBIT of 2.4bn, solid growth momentum in H1 2012) Management focus on improving cash generation 2011 Dividend increased to 0.70 MAIL: stabilization of EBIT at ~EUR 1bn, key driver parcel growth DHL: Further leverage growth and margin potential of our strong global footprint: 13 15% EBIT CAGR in

3 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 3

4 Deutsche Post DHL at a Glance 2011 key figures Group: Sales: EUR 52,829m; EBIT: EUR 2,436m; Employees 1) : 423,348 Domestic German Mail and Parcel International and Domestic Express Global Air, Ocean and Road Freight Global Supply Chain Solutions Sales: EUR 13,973m Sales: EUR 11,766m Sales: EUR 15,044m Sales: EUR 13,223m EBIT: EUR 1,107m EBIT: EUR 927m EBIT: EUR 429m EBIT: EUR 362m Empl. 1) : 147,434 Empl. 1) : 86,100 Empl. 1) : 42,847 Empl. 1) : 133,615 The postal service for Germany The logistics company for the world Corporate Center / Other: Sales: EUR 1,260m; EBIT 1) : EUR -389m 1) Average FTEs FY

5 Full-year 2012 Guidance 2012 EBIT guidance adjusted including all one-time effects Group EUR 2.6bn - EUR 2.7bn prev. EUR bn Mail unchanged EUR bn Capex of ~ EUR 1.8bn Tax rate expected at around 27% DHL divisions prev. ~ EUR 1.9 bn ~ EUR 2.0bn Net profit 1) to improve in line with operating business Corp. Center/ Other unchanged ~ EUR -0.4bn 1) Excluding one-time effects from Postbank, VAT charge and release of restructuring provisions at DHL Express 5

6 2015 Targets confirmed Mail EBIT Stabilization, 13-15% Growth in DHL EBIT to EUR bn Group EBIT of EUR 3,350 to 3,550m in 2015 MAIL EBIT stable at a minimum of EUR 1bn DHL DHL EBIT, in EUR bn CAGR 13-15% 1.7 ~ ) 2) Corporate Centre/Other Improvement to EUR -350m by ) Underlying EBIT 2) 2012 Guidance 6

7 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 7

8 Finance Policy revisited Target / maintain rating BBB+ External cash usage Dividend payout ratio to remain between 40 60% of net profit (continuity and Cash Flow position considered) - 2.4bn 1) paid out since January 2010 with dividend CAGR of 8% Excess liquidity will be used for Stepwise pension funding Share buybacks and/or extraordinary dividends 1) 0,60/ 0,65/ 0,70 per share for the years 2009, 2010,

9 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 (+)? 9

10 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 10

11 Highlights Mail Q Ongoing double-digit Parcel growth drives Mail stabilization Mail Communication volumes m Q Q Chg. m units -3.4% Revenue 3,259 3, % EBIT 1) % Milestones Further confirmation of dynamic growth trend in Parcel Decline in Mail Communication volumes remains in line with expectations (-1.7% per working day) Mail delivers another stable quarter, despite wage increase on April 1st and one less working day Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Parcel volumes m units +12.4% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 1) EBIT up 1.6% excl. one-time effect of -151 from VAT settlement 11

12 Governing hypothesis: Declining mail volumes will be compensated by parcel growth While slow Mail decline is under control Parcel will grow strongly resulting in stable performance EBIT EUR 1 bn 1 Keeping effects of e- substitution under control 4 Shaping and benefiting from e-commerce 2 Exploiting new pricing and regulatory options 5 Upgrading parcel network and services Improving network and labor flexibility/ productivity 3 6! We Boosting parcel market shares compensate Mail decline with growth in Parcel 12

13 Compared to other markets, mail volumes in Germany are stabilizing 1 Addressed mail volume Percent, 2005 = 100% Global economic crisis USA UK Netherlands France Austria Germany Rate of e-substitution in Germany is lower than in other countries High quality: Over 95% D+1 in Germany, (91% in UK and 85% in France) Excellent customer orientation: 95% satisfaction 1) (93% in 2010) Many volumes already substituted Different mail structure: volumes in Germany determined by stable number of households (vs. e.g. mailed checks in the US)! Effects of e-substitution are manageable Source: Regulatory authorities; USPS; Royal Mail; Austria Post, estimate for Austria 2005 (2005 = 2006); figures Germany 2011: internal estimate; 1) Kundenmonitor study 2011: private mail customers 13

14 We are continuously adapting our operations to the development of mail volumes by increasing efficiency We are improving our letter mail operations 3 Sorting Increase automation rate with state-of-the-art sorting technology (up to 95% of mail volumes) Flexible rerouting and reduction of sorting capacity during lowvolume periods Transport & Delivery Ongoing reduction of delivery districts and personnel (17% reduction since 2002) Increase of packed and sequenced mail directly transported to delivery districts (from 70% to over 90%) Preventive healthcare measures, new delivery equipment to significantly reduce sickness rate (currently 4.8%) Flexible workforce: over 4,000 employees on call at short notice; over 9,000 employees on short term contract resulting in ample cost flexibility! We have numerous cost reduction and optimization levers in place 14

15 We have laid the foundation for further increase in labor productivity 3 Labor flexibility and productivity Long-term union agreement Starting wages 1) reduced by 4% Historic Generations pact: Innovative pre-retirement worktime model Over 7,000 applications for worktime accounts since Jan 2012 Continued outsourcing 990 parcel delivery districts 1,000 external transport drivers! We Employee satisfaction New wage agreement Moderate wage increase of 4% after 2 years of pay freeze One-time payment of EUR 400 in December 2011 Commitment to avoid layoffs for business reasons extended until 2015 have considerable flexibility to adjust our factor costs Source: Long-term union agreement (October 6, 2011); wage agreement (January 12, 2012, valid for 15 months); 1) for new employees; 15

16 With DHL Parcel we are shaping a dynamically growing market environment 4 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 16

17 Therefore, we are significantly upgrading our parcel network and business 5 We are simplifying our services... Network upgrade "Paket 2012" Faster, better, more (capacity up by 40%) MeinPaket.de Top 5 shopping portal Convenience logistics and Paket.de Simplified online shopping solutions... and satisfying our customers 79% satisfied B2C customers (75% in 2010) 10 million online shoppers (30%) insist on delivery by DHL Parcel Delivering on customer needs with DHL-Fulfillment & DHL Check-out 14% volume increase (Q1 2012)! We are well positioned to benefit from the growing parcel market and will grow above market average 17

18 ... to increase our market shares and secure growth rates above market averages 6 No. of registered customers Millions will boost our B2C market share Percent 5.0 Parcel Target 2015 Other revenue increase above market growth DHL Simplified services Network upgrade Paket 2012 DHL-Fulfillment DHL-checkout will help to grow our B2B market share Percent Parcel Other ! Parcel Germany is a solid growth story 18

19 Ongoing Transformation of Mail & Parcel Business Revenue decline in letter businesses is being offset by parcel growth EURm Q Revenue increase in Parcel Combined revenue decline of letter businesses Q Mail Communication Dialogue Marketing Press Services FY Positive mix effect to continue Expected Parcel market growth of 5-7% p.a. Market share increase driven by best service and network for B2C and B2B customers 19

20 Conclusion we are well on the way to reaching our strategy 2015 targets Halfway through the Strategy 2015, we are on the right track, despite major challenges! Results Targets Targets EBIT EUR billions Customer satisfaction 93% 93% 95% 95% 95% Employee satisfaction 66% 74% 76% 80%! Homework 90% done we are delivering! 20

21 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 21

22 DHL Asia: A Strong Contributor to the Group Revenue ) : EUR 38.9bn 19% Asia Pacific Others Revenue ) : EUR 11.4bn 30% Asia Pacific Revenue )2) : EUR 10.9bn 26% Asia Pacific Revenue ) : EUR 13.1bn Asia Pacific 9% Others Others Others Clear market leadership in Asian TDI No. 1 in air freight, No. 2 in ocean freight Market leader in contract logistics in Asia 1) External revenue = revenue generated by the divisions from non-group third parties; 2) excl. DHL Freight 22

23 DHL The Leading International Logistics Player in China World s economic growth engine Shift from export- to domestic-driven economy EXPRESS FORWARDING SUPPLY CHAIN Market position Market leader in TDI Market share > 30% Pioneer in the market (since 1980) 50% JV with Sinotrans Disposal of Domestic Express Market Leader in Air freight Top 2 player in Ocean freight, very close to market leader Top 3 international player Very fragmented market With wide variety of business models, service and quality DHL growth TDI shipments/day CAGR Volume CAGR Organic revenue CAGR % +7% 2009 OFR (TEU) +11% 2009 AFR (tons) +28%

24 DHL China Strategy Network expansion Strategic sector focus North Asia Hub Shanghai Support Go West strategy of customers More intercontinental flights e.g. Integrated repair and service parts logistics for technology customers (co-located to logistics hub) Asian heroes Sales initiatives to support fast-growing enterprises Triangles of trade Dedicated trade lane management for Intra- Asia (40% China share), Middle East-Africa- Asia, Latin America-Asia Talent recruitment Build strong talent pipeline in response to business growth 24

25 DHL The Leading International Logistics Player in India Population: 3 times the US population 15 times the GER population 2010 Market Position & Share revenue CAGR Area: 3,287,263 sq km One third of US area 9 times of GER area International 1,551 employees 25,714 locations Domestic 7,108 employees 25,646 locations # 1 > 40% # 1 Air > 40% Ground ~ 9% +22% +25% GDP (nominal) 1) < 10 % of US GDP Half of Germany s GDP ~ 1,100 employees ~ 32 locations # 1 AFR ~ 20 % OFR ~ 4% +20% GDP Growth 1) 3 times US 2.5 times GER ~ 700 employees 360,000 m 2 # 1 ~ 2% +30% Source: DPDHL market intelligence, IHS Global; 1) OECD 2010 GDP data 25

26 DHL India Strategy Sales stimulation Cross-selling by leveraging strong cross-dhl business development Sector development E.g. Competence Centers in key industries like automotive, life sciences & healthcare, retail New products & solutions E.g. Free Trade Zone in Chennai SME growth Dedicated initiatives for upcoming small- and medium-sized local heroes Talent management Attract and retain people in highly competitive labor market 26

27 Continuously expanding in Asia New projects in Asia in ) Mumbai Distribution center for Life Sciences & Healthcare Jun Round-the-world-flight, linking Hong Kong, Los Angeles and Leipzig Mar Jakarta New multi-user warehouse Jun Korea LCL global forwarding hub Aug (planned) EXEMPLARY DHL Door-to-More direct distribution solution from Asia to Europe (Global Forwarding) Jun Hong Kong New International Service Center May 2012 Hong Kong Direct flights from Hong Kong to Chengdu and Ho Chi Minh City June 2012 New openings in China July 2012 Shanghai North Asia Hub Hong Kong Supply Chain MegaHub Shenzhen 2) DHL Integrated Logistics Center December 2012 Shanghai Airfreight bonded facility expansion 1) Multitude of other investment projects ongoing, for example upgrade and enhance capacity & capability of AFR/OFR/RFR/multimodal products/facilities in Mid-West China, furthermore upcoming launch of multi-national LCL gateway in Korea; 2) Shenzhen Qianhaiwan Free Trade Port Area 27

28 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 28

29 Highlights Express Q Strong performance of global TDI network continues m Q Q Chg. Time Definite International (TDI) Revenues per day 2) in EUR m +8.4% Revenue 2,931 3, % EBIT 1) % Milestones TDI volumes further increasing in all major regions, reflecting market share gains driven by network and service excellence New North Asia hub in Shanghai opened on July 12 th, completing our multi-hub structure for South-, Central- and North-Asia Announced follow-up investment into airfleet to further strengthen our leading Asian network Q1 11 Q2 11 Q3 11 Q4 11 Time Definite International (TDI) Shipments per day 000s +9.1% Q1 12 Q Record Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 1) EBIT up 5.0% excl. one-time effects from VAT, disposals and release of restructuring provisions 2) Currency translation impacts are eliminated. Hence, 2011 and 2012 data are aggregated with the same currency rate 29

30 DHL EXPRESS 2015 EBIT target and key levers % CAGR Key growth and margin levers +13%-15% CAGR 785m 288m 497m 1) 2) 927m 1. Be strong in fastest growing regions 2. Focus on TDI 3. Further improve customer satisfaction 4. Continue investments in network and service 5. Leverage cross BU opportunities 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; 2) Reported EBIT 30

31 The most international company in the world Presence in over 220 countries and territories, pioneering Express business in many locations 31

32 Strong presence in fastest growing regions External research underlines DHL EXPRESS TDI leadership across all regions outside the Americas Americas [ 5,387m] Europe [ 5,788m] DHL 13% Others 4% FedEx 11% Others 12% DHL 38% UPS 32% FedEx 51% TNT 16% UPS 23% DHL EXPRESS global market share TDI of 30% EEMEA [ 544m] Others 18% TNT 17% DHL 47% Asia Pacific [ 5,429m] Others 27% TNT 6% DHL 36% UPS 12% FedEx 6% UPS 10% FedEx 21% Source: Market Intelligence 2011 (FY 2010 data, MRSC); Scope: BE, CH, DE, ES, FR, IT, NL, PL, SE, UK, IE; AE, RU, TR, ZA; AU, CN, HK, IN, JP, KR, SG, TW; US, CA, MX, BR 32

33 Focus on TDI Express strategy to focus on TDI is crucial to further drive EBIT and margin development Revenue contribution by product (FY 2011) Other; 26% > Above DHL Express average < At or below DHL Express average Product TDI Margin > Aspiration Comment Focus Strategy Core competence with dedicated scheduled network TDD > Complementary offer TDD; 11% TDI; 63% Other (incl. DDI, DDD, ACS 1) Same Day) < Volume shift to TD platform Opportunistic offer for additional cost recovery Divest over time Positive TDI revenue share development Other, 42% TDI; 58% Other, 39% TDI; 61% Other, 37% TDI; 63% ) ACS: Air Capacity Sales 33

34 Manage cost through operating leverage Our overall network setup as well as concrete programs support the translation of volumes into additional EBIT Overhead cost Save >1% of revenue PuD and handling Save 2.5% per move p.a. One virtual airline Stabilize Reduction of Sales, general and admin expenses as % of revenue IT Convergence E-Com Tools Improved span of control NOEP (Network Optimization and Efficiency Program) to reduce ground handling cost Re-fleeting with shelf vehicles optimize processes and reduce fuel and emissions Capacity management to stabilize CpK (Cost per Kilo) Reduction of commercial air capacity by improved forecasting Flexible leasing arrangements Modernization of fleet to reduce fuel and carbon emissions Fuel price volatility: Industry wide transparent fuel surcharge mechanism FX rate exposure: Global currency portfolio as natural hedge on currency volatility 34

35 New North Asia Hub in Shanghai Opening ceremony: 12 July 2012 Regional Express Hubs in Asia Pacific Central Asia Hub Hongkong Delhi Beijing Bangalore Bangkok Singapore Seoul Hubs Regional Hubs Commercial Air Hubs Taipei Manila North Asia Hub Shanghai Sydney Auckland North Asia Hub Shanghai at Pudong International (PVG) First-class Express hub Part of multi-hub strategy in Asia Pacific Investment of USD 175m New capacity, greater flexibility and reliability for guaranteed time-definite delivery 35

36 Good to Great for our customers Increased sorting capacity from 8,000pph to 40,000pph Improve transit time with more efficient air routing intra North Asia 24/7 Quality Control Center to ensure excellent reliability Leading edge automation for high accuracy and speed Expanded network between North Asia, Global and Regional Hubs First in Shanghai to handle international transshipments 36

37 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 37

38 Highlights Global Forwarding, Freight Q Keeping focus on profitability drives GP and EBIT growth in volatile markets m Q Q Chg. Air freight 000s Tons -5.4% Revenue 3,758 3, % EBIT % 1,087 1,106 1,080 1,105 1, Milestones Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Despite unfavorable market trends in AFR volumes and OFR freight rates, selective strategy delivers yoy GP increase in both segments with Air GP up 7% and Ocean GP up 4% New regional headquarter structure and other efficiency measures support further EBIT margin improvement Ongoing NFE roll-out affects both operational expenses and Capex Ocean freight 000s TEU 1) +4.4% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 1) Twenty Foot Equivalent Unit 38

39 Our Global Forwarding, Freight strategy is designed to improve key levers and therefore have positive impact on EBIT Key levers with impact on EBIT % CAGR Volume & GP Improvement +13%-15% CAGR 383m 429m Volume growth due to exposures to emerging markets GP margin improvement due to enhanced IT (enhanced buying due to better transparency) 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 Road Freight

40 Sustainable growth: clear ambition to further strengthen our leadership Overall, we are well positioned in the industry. However, our aspiration is to be the undisputed market leader! Situation: Good market position Aspiration: Great market position Our growth approach Air Freight No. 1 (2011) 1,149 1, ,447 Ocean Freight No. 2 (2011) 1,763 1,310 (in K tons) 3,274 2,724 (in K TEUs) VS. Air Freight No. 1 DGF has a larger lead over competitors Ocean Freight No. 1 DGF grows faster than competitors to take the lead Focus on profitable business in DGF s core products Emerging markets grow intraregional lanes, BRICM, Next 11 Improved sales force effectiveness More global multinational customers with new sales channel expansion plan More SME customers served by a new telesales channel, targets to reduce churn Improve service quality and increase customer satisfaction Source: Official company publications/ estimates (2011) 40

41 Maximized profitability: direct operating expense is key lever for EBIT conversion improvement DGFF Gross Profit to EBIT conversion 2011 (in m) 3,522 Gross Profit 2,991 65% 5% 30% DOE + SLA 1 Staff Costs Travel & Telecom Other 101 Depr. 429 EBIT Maximizing profit by cost management focus In 2011 Sales Direct Operating Expense (DOE) reduced in reaction to slowdown in market volumes Executed optimization of head offices organizational structures to reduce costs and to better position DGFF for growth Further streamlining through country alignment program under way, which is expected to bring cost benefits Special management focus on turn around of underperforming countries Staff costs represent the largest part of DOE but significant productivity gains without automation will not be possible Therefore, DGFF needs better IT platform to bring productivity on new level and DGFF is investing in a transformational program New Forwarding Environment 1) SLA = Service Level Agreement, DOE = Direct Operating Expense 41

42 New Forwarding Environment (NFE) Thinking today about tomorrow NFE is the business transformation program of DHL Global Forwarding to underpin its market position as industry leader Innovation will drive top-line revenue growth NFE program will underpin profitable growth for DHL Global Forwarding Standardization and industrialization allows significant bottom-line cost reductions Timeline? Forerunner pilots ongoing; full IT pilots Q Roll-out by 2014/

43 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Express Global Forwarding, Freight Supply Chain 43

44 Highlights Supply Chain Q Steady business growth continues Milestones m Revenue EBIT 1) Q , Q , Life Sciences & Healthcare and Retail providing the strongest revenue growth Strong growth has driven Asia Pacific revenue share up to 11% New business of around EUR 330m in annualized revenue won in Q (Q2 2011: EUR 220m). Biggest new gains also in Life Sciences & Healthcare and Retail sectors this quarter Chg. 12.5% -9.0% Revenue by sector Q Williams Lea Energy Automotive Technology 9% 3% 11% 9% Others 6% Life Sciences & Healthcare 18% Retail 25% 19% Consumer 1) EBIT up 14.8% excl. 23m disposal gain in Q

45 What we said in the past... Capital Markets Day 2009 Capital Markets Day 2010 Continued to improve our financial metrics to earn the right to grow ROCE Created a leaner organization EBIT Margin Prepared for increased growth with Growth Through Excellence 1 Asset Efficiency 5 To Thrive Program Sales Effectiveness Operational Excellence Support Function Efficiency Portfolio Management Continuous Improvement Profitable Growth 45

46 ...and where we are today Positive business development Solid growth, particularly in Emerging Markets Margin improvement to 2.7% in th year with new business signings > 1bn Advantage of scale Global sector focus & global products Providing integrated solutions globally Global top customers grew by 11% Change programs on track Sales force efficiency & effectiveness increased Global sector & product organization in place Operations excellence programs on global scale Shaping the market Innovative solutions beyond warehousing and transportation Providing simplicity and higher service levels to customers 46

47 Contract Logistics market fully recovered Contract Logistics market, bn % % 155-8%

48 Strong cash generating business with negative working capital Organic revenue growth EBIT 1), m +230 bp 5.7% 3.4% % % % Revenue 12,183m 13,061m 13,223m Margin % % 2.7% Operating cash flow, m Asset mix % +15% Intangible Assets (mainly customer lists) Operating Assets (mainly fixed assets) Goodwill (100% = 3.1bn) 17% 15% 68% ROCE up 310 bps from 2010 to ) Like for Like EBIT mainly excluding restructuring 48

49 Contract Logistics is a large and growing market with DHL Supply Chain being number 1 by far Total market size, bn Top 3 market shares, 2011 Outsourced Contract Logistics In house Logistics CAGR Largest providers Other ~12% 1, % DSC % ~12% % CEVA % Largest providers K+N %

50 DHL Supply Chain is uniquely positioned to benefit from key market trends 1 Continued outsourcing Increasing trend towards outsourcing with larger players winning bigger deals, especially with first time outsourcing clients 2 Emergence of a global market Transforming from a local business into a global industry, beneficial for truly international providers 3 Broader solutions Customers are demanding broader scope of service provision from fewer providers 50

51 DHL Supply Chain is resilient to economic downturn DHL Supply Chain resilience factors Long term contracts Asset light business Flexible cost base No exposure to fuel price volatility Appropriate share of open book contracts Stable outsourcing trend, also in times of crisis Broad diversification Details following 51

52 Balanced revenue portfolio by geography Revenue 2011, in bn Comments DHL 100% = 40bn 13bn 10% 27% Asia Pacific Americas Leader in all key geographies Presence in 60 countries Other DHL 67% 33% DHL Supply Chain Strong >10% yoy BRICM growth 63% EMEA All regions earning their cost of capital 52

53 Balanced revenue portfolio by customer size Revenue 2011 by account size Comments > 200m < 15m 22% 22% 19% 22% m 15-50m 15% m Broad customer portfolio across all size clusters Double digit growth from global top customers Many of our top customers are distributed across all regions 53

54 Balanced revenue portfolio by service Revenue 2011 by service Comments Warehousing 49% Value Added Services 11% 11% Williams Lea Increasing share of Value Added Services New products and solutions Attractive growth rates 29% Transport Superior margins Increased customer retention 54

55 Balanced revenue portfolio by sector Revenue 2011 by sector Comments Williams Lea Balanced industry sector coverage Energy & Other 9% Auto 7% 9% Retail 26% Dedicated global sector teams Tech 12% 17% Life Sciences & Healthcare (details to follow) 20% Consumer Deep sector expertise including to sub sector level 55

56 Our strategic programs are delivering continuous margin improvement Continuous Improvement Profitable Growth Quarterly EBIT % has increased over the previous year for the last 11 quarters 1) EBIT 1) % CAGR +13%-15% CAGR 272m 362m Contract Lifecycle Management Standardization & Replication Sector Focus ) Like for Like EBIT mainly excluding restructuring 56

57 Contract Lifecycle Management Contract Lifecycle Management Standardization & Replication Continued Sector Focus Profitable Growth Continuous feedback loops improve project selection, design, execution and overall performance Rigorous Opportunity Assessment Project Selection & Solution Design Approval Implementation & Operational Execution ~1,000+ projects per year Contract Renewal Account Management Post Contract Review 57

58 Standardization & Replication of global products Global products development Overview of global products Assess Identify solutions with potential for growth and differentiation Co-Packing Marketing Solutions Develop Define standards and leverage best practice globally Lead Logistics Provider Grow Focus on target customers, enable teams, and grow the product globally Technical Services Airline Business Solutions Life Sciences & Healthcare Platform 58

59 Continued profitable growth through Sector Focus Standardization & Replication Consumer Energy & Chemicals Differentiation through sector specific solutions Automotive Retail Life Sciences & Healthcare Technology Truly global sector expert communities, speaking the language of customers Leverage sector expertise to drive growth, especially in first time outsourcing and in Emerging Markets 59

60 Sector example: Life Sciences & Healthcare DHL offering Standardization & Replication Life Sciences & Healthcare market position Cross DHL customers World-wide number 1 logistics provider Global network of more than 30 dedicated competence centers Over 150 LS&HC facilities worldwide Community of >4,000 dedicated and trained experts in over 40 countries Dedicated industry solutions, leveraging all DHL divisions and transport modes 60

61 Sector example: Life Sciences & Healthcare DSC footprint Standardization & Replication DHL Supply Chain LS&HC footprint 2.2bn revenues 1) >20 countries ~100 sites with ~1m sqm warehouse capacity 3% 7% Other Medical Devices Offering Fully compliant warehouses Distribution and transport management Value added services, e.g. Clinical trials Kitting Direct to pharmacy Reverse logistics 19% Pharmaceuticals Video example 71% Healthcare Services 1) 1) Including procurement business in UK for NHS, the national public health services provider 61

62 Key messages 1 Globally growing market, with DHL Supply Chain benefitting from key market trends 2 Comparatively low risk, asset light business, resilient in crisis, with a well balanced portfolio 3 Strong financial performance in past and future, % EBIT CAGR on 2010 Contract Lifecycle Management Standardization & Replication Sector Focus 62

63 Delivering strong performance across all divisions SUMMARY Focus on organic profitable growth in structurally growing markets Ongoing solid growth momentum in Q Mail EBIT stabilization levers materializing Logistics industry driven by growth in global trade DHL is market leader in Asia and other growth regions Further margin potential due to operating leverage and efficiency improvements Well on track towards Strategy 2015 goals 63

64 Agenda Delivering strong performance across all divisions Mail: strategic levers for EBIT stabilization in place DHL: strong positioning in structural growth markets Appendix 64

65 Investment of Choice Dividend increased to EUR 0.70 Dividend development since introduction of new finance policy Increase of the dividend of 7.7% to EUR % Adjusted for Postbank effects and non-recurring items this reflects a payout ratio of 58% (2010: 59%) 59% 58% In line with our dividend policy: target payout ratio of 40 60% and commitment to dividend continuity Underlying Payout Ratio 1) 1) Adjusted for Postbank effects as well as non-recurring items booked in 2009 and

66 Group P&L Q Ongoing strong operational performance plus several one-time effects in Q2 EUR m Q Q Change Revenue increased 7% with all divisions posting higher revenues yoy. FX effects also contributed. Organic growth of 2.4% Revenue 12,803 13, % EBIT comparison impacted by EUR -61m net negative items from one-time effects: VAT settlement EUR -181m EBIT % Release of restr. prov. EUR +99m t/o Mail % Disposal gain (Express) EUR +44m t/o DHL % Disposal gain 2011 (SC) EUR -23m Financial result Taxes Consolidated net profit 1) EPS (in EUR) % 19.8% -27.7% -26.1% Excl. these effects Group EBIT is +8% with Mail +2% and DHL +11%, reflecting ongoing strong operational performance Financial result includes one-time interest costs from VAT settlement of EUR -115m Net income heavily impacted by one-time effects 1) Attributable to Deutsche Post AG shareholders 66

67 One-time Effects on Q2 EBIT (EUR m) EBIT Q Reported 186 VAT effect Release restr. prov. Disposal gain Excluding one-time 186 Mail Q Change (%) -79.6% 1.6% Q DHL Q Change (%) 29.3% 10.6% Q Express Q Change (%) 51.7% 5.0% Supply Chain Q Q Change (%) % % Q Group Q Change (%) -3.4% 7.8% Note: no one-time effects in DHL Forwarding, Freight Q2 EBIT: +19.1% from EUR 115m to EUR 137m 67

68 Free Cash Flow Q Cash flow statement impacted by VAT settlement, but only minor net effects EUR m Cash from operating activities before changes in Working Capital Q ) 398 Q ) 134 VAT effect flowing through change in provisions and change in working capital, actual net effect on OCF of EUR -21m Changes in Working Capital Net cash used in operating activities after changes in Working Capital Decline in operating Cash Flow and Free Cash Flow primarily due to increased working capital in Global Forwarding, Freight and Supply Chain Net Capex Net M&A Capex slightly below high level of last year due to phasing of investment projects Net Interest FFO/Debt at 28.5% (year-end 2011: 32.3%) Free Cash Flow ) Included restructuring cash out of EUR -61m in Q and EUR -18m in Q

69 Net Debt (-)/Liquidity (+) Net financial position impacted due to usual H1 outflows, working capital requirements and state aid payment. Sound cash generation expected in H ) 938 1) Incl. EUR -298m -563 for state aid payment Jun Dec Net liquidity OCF (before changes in working capital) Changes in working capital Net cash capex Net dividend All other effects Net debt 1) Adjusted for various Postbank transaction accounting effects; 2) Full cash out for civil servant pension payment of EUR -530m, thereof EUR -265m in H1 OCF before changes in working capital and EUR -265m in changes in working capital 69

70 Main investment themes Temporarily high investment levels, but with significant current and future benefits Investments Investment types Revenue growth Benefits Productivity gain Mail Parcel sorting E-initiatives Capex Capex / Opex X X X Express Aviation network AP&P Capex / Opex Opex X X X Training Opex X X Forwarding, Freight NFE Capex / Opex X X Supply Chain Investment in new growth Capex / Opex X 70

71 Postbank Transaction Successfully Completed Focus on core competencies in mail and global logistics businesses Sale of Deutsche Postbank announced September ) EUR P&L effect 1,095m 1,569m -301m 186m 2.5bn Cash effect 4.9bn 4.9bn Transaction completed on 28 February 2012 Expected final P&L effect of EUR 186m to be booked in Q1 12 1) Projected 71

72 Pensions Impact from change in IAS 19 No direct cash impact by accounting change to IAS 19 expected Total Defined Benefit Obligation (DBO): 13,257m No direct cash impact by accounting change Plan assets (rounded) 7,367m 7,367m Plan assets (rounded) Unrecognized gains/losses 1,896m Small positive P&L effects 1) Staff cost reduction Increase of EBIT Increase of interest cost Net pension provision 3,992m 5,890 m Net pension provision Equity will decrease by 1.9 bn 1) Current approach using the corridor method Future approach: OCI method 1) 1) Actual charge to equity has to be seen at date of implementation 72

73 Mail Divisional Results Q EBIT decline only due to VAT settlement, operational performance confirms stabilization trend EUR m Revenue EBIT Operating Cash Flow Capex Q , Q , Change 0.9% -79.6% 30.3% -38.9% Revenue flat despite one less working day, reflecting expected limited decline in Mail Communication and continuous growth in Parcel Reminder: yoy working days in Germany Q1 Q2 Q3 Q EBIT decline due to EUR -151m impact from VAT settlement. EBIT up 1.6% excluding this one-time effect Operating cash flow improvement primarily reflecting reduced usage of provisions. Small net negative effect from VAT (EUR -21m) Capex running below last year s level due to timing effects 73

74 The new price-cap formula offers opportunities for future price increase 2 The new price-cap formula Price-cap = inflation x-factor x-factor reduced from 1.8% to 0.6% Reference period 1) brought forward by 6 months Regulation valid until December 31, 2013 provides opportunities for potential future price increases No price increase for 2012 instead buffer of 1.2% carried over to ) Opportunity to increase prices by 0.6 ppt. above inflation rate in 2013 Example : revenue impact based on 2011 revenue when inflation is 2.2% 3) 3.6 EUR billions 3.5 4) +2.8%! After 15 years, we have the opportunity to compensate volume decreases also by increasing prices 1) For relevant CPI = German Consumer Price Index; 2) 1.2% = 1.8% inflation rate minus 0.6% x-factor; based on arithmetic average of the monthly CPI values from July June 2011; 3) 2,2% inflation rate - 0.6% x-factor + 1.2% carryover = 2.8% price increase; reference period for revenue impact is July June 2012;4) 2011 revenues affected by under price-cap regime 74

75 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 75

76 Ruling by European Commission on State Aid to Deutsche Post EU Commission s decision unjustified Clear contradiction to earlier EU decision and results of similar proceedings Unprecedented reach into national regulation DPDHL to file an appeal with the European Court of Justice Financial treatment Payment to be recorded only in balance sheet for 2012 No effect on company earnings for 2011 and beyond Company liquidity / balance sheet remain solid No further state aid proceedings involving Deutsche Post DHL pending at EU Commission 76

77 Express Divisional Results Q Robust business growth across all regions EUR m Revenue EBIT Operating Cash Flow Capex Q , Q , Change 10.7% 51.7% 77.8% 11.4% Revenue increase supported by TDI volume growth in all regions. FX contribution of 6.6% EBIT contains positive one-time effects from disposals (Australia and New Zealand Domestic Express, EUR 44m) and release of restructuring provision (EUR 99m) as well as a negative effect related to the VAT settlement (EUR -30m). EBIT up 5.0% excl. these effects Ongoing growth investments (network, AP&P, training) temporarily restrain EBITmargin expansion, as anticipated Operating cash flow improvement mainly driven by reduced working capital no impact from one-time effects on OCF Higher Capex reflects ongoing investments in global network 77

78 Leverage cross business unit opportunities Leverage of one DHL helps to manage risks and recover high investments for network expansion Intercon. capacity utilization DGF contribution CAGR +30% 1.5 Weight Load Factor (Core TDI & Non Core (ACS) Volumes) Capacity million Tons WLF: 70% WLF: 79% WLF: 75% DGF contributes continuously around 18% to our overall cargo loads 1) DGF is our no. 1 ACS customer For DGF we improved from no. 8 in 2010 to the no. 3 supplier in Q ) Including regional capacities 78

79 Global Forwarding, Freight Divisional Results Q EBIT conversion improvement in volatile market environment EUR m Q Q Change Revenue growth mainly driven by FX effects. OFR shows volume increase while AFR demand is softening Revenue EBIT Operating Cash Flow 3, , % 19.1% -74.5% Strong EBIT performance reflects good development of gross profit and further improvement in GP/EBIT conversion Weaker Operating Cash Flow due to temporary build-up in working capital Capex % Higher Capex level reflects gradual roll-out of NFE (New Forwarding Environment) 79

80 Maximized profitability: GP on product level reflects our size advantage and product portfolio 24.2% 19.9% DGF comparable 1) DGF 20.7% 18.9% DGF comparable 1) DGF Gross Profit margin 2011 (in %, Air Freight) 23.4% 21.6% Gross Profit margin 2011 (in %, Ocean Freight) 20.6% 21.6% 21.0% 19.0% 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 pass 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 80

81 NFE is a holistic transformation program, game changing for our industry Current limitation/ Industry trend From To Strategy pillar Focus on value added services Heterogeneous and complex pricing and contracting procedures Modular product offering Transparent adaptable product and tariff structure designed to market needs Sustainable Growth Strong network capabilities with higher transparency Local and suboptimal, mostly historically driven, routing Transparent routing decisions IT-supported routing decisions based on global data transparency Customer/ Operational Excellence Boundaries for further DOE efficiency in current IT landscape Manual and reactive processes Active event management Industrialized processes, incident management, and proactive notification Maximized Profitability NFE is being financed almost entirely via P&L Significant costs for NFE booked in 2011 and planned for First benefits of program evident in reduced IT run costs 81

82 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. 82

83 Investor Relations Contacts Martin Ziegenbalg, Head of Investor Relations Robert Schneider Sebastian Slania Florian Bumberger Daniel Stengel