DEUTSCHE POST DHL GROUP RESULTS Q Analyst Call Bonn, 12 November 2014

Transcription

1 DEUTSCHE POST DHL GROUP RESULTS Q Analyst Call Bonn, 12 November 2014

2 AGENDA Q3 Highlights: Key trends (Frank Appel) We have set the course for 2020 (Frank Appel) Financial results Q (Larry Rosen) Guidance FY (Larry Rosen) PAGE 2

3 Q HIGHLIGHTS Delivering further solid EBIT increase in a low-growth world Strong Express performance with 23% EBIT growth at 9.8% margin PeP and Supply Chain also contributing to Group EBIT growth NFE transformation program in Forwarding: step-by-step implementation continues Group guidance for confirmed Sustainable EBIT growth through 2020 driven by topline and margin improvement ecommerce and logistics end markets allow to target growth above GDP Further margin improvement attainable across all Divisions We have set the course for 2020 PAGE 3

4 SOLID EBIT INCREASE IN A LOW-GROWTH WORLD 9-months performance on track towards full-year guidance achievement Q Q Change 9M M 2014 Change Revenue 13,454 14, % 40,462 41, % EBIT % 1,975 2, % Consolidated net profit 1) % 1,319 1, % 1) Attributable to Deutsche Post AG shareholders PAGE 4

5 E-COMMERCE AND LOGISTICS END MARKETS TEND TO OUTGROW GDP DPDHL volume growth vs real GDP (1) growth 9m 2014 FY ,7% 7,7% 5,0% 4,3% FY 2013 Parcel AFR OFR TDI SC German GDP 2,3% Global GDP Parcel AFR OFR TDI SC Parcel AFR OFR TDI SC 2) In recent past, global GDP has been below long-term average Parcel growth well above GDP reflecting structural shift towards e-commerce Express and Supply Chain delivering steady growth ahead of GDP Q confirms OFR and AFR volumes continue to recover 1) German real GDP growth: +1.7% (H1 2014); +0.4% (2013), +0.7% (2012) ; Global real GDP growth: +2.2% (H1 2014); +2.2% (2013); +2% (2012); 2) DHL Supply Chain: organic growth PAGE 5

6 STRATEGY 2015 HAS DRIVEN SIGNIFICANT OPERATING IMPROVEMENT PeP: EBIT stabilized at higher level than initially promised DHL EBIT margins (2) : good progress, more to come to contribute to ~10% DHL EBIT CAGR target Strategy 2015 EBIT target: min. EUR 1bn ~ FY 14 Guidance 1) 1) Strategy 2020 target: 3% EBIT CAGR in EUR bn 4.4% 2.7% 1.8% 2010 Q Express: strong improvement Supply Chain: steady progress DGFF: currently affected by NFE and industry margin pressure 10.0% 3.3% 2.4% 1) Reported FY 12 EBIT including EUR -151m one-off effect from VAT settlement; Reported FY13 was restated by EUR ~60m for asset shift from DHL implemented on January 1, ) EBIT margin, last 12 months (rolling) PAGE 6

7 AGENDA Q3 Highlights: Key trends (Frank Appel) We have set the course for 2020 (Frank Appel) Financial results Q (Larry Rosen) Guidance FY (Larry Rosen) PAGE 7

8 WE HAVE SET THE COURSE FOR 2020 Strategy 2020 provides us with a clear framework and targets FOCUS. CONNECT. GROW. EBIT FY base We focus on what has made us successful We connect across the organization We expand in new segments PeP ~3% CAGR EUR 1.286bn 1. Logistics as our core 2. Committed to the needs of our stakeholders & our planet 3. A family of divisions to further expand margins. 1. One global team 2. Certified specialists for everything we do 3. Connected approach in operations, commercial, green solutions and shared services to achieve quality leadership and service excellence. 1. Leader in e-commerce related logistics 2. Accelerate footprint shift towards emerging markets 3. Tap new market opportunities for organic expansion to achieve sustainable above-market growth. DHL ~10% CAGR EUR 1.997bn CC/Other < 0.5% of Group revenue EUR -422m Group >8% CAGR EUR 2.861bn As introduced at our 2014 Capital Markets Day PAGE 8

9 DHL 2020 TARGET: TOPLINE GROWTH AND MARGIN IMPROVEMENT Estimated Market CAGR , in EUR Express +5-6% International Express Forwarding +2-3% +4-5% Air Freight Ocean Freight Supply Chain +5-6% Contract Logistics GDP growth assumptions +2% Mature Regions +5% Emerging Markets Main Margin Drivers Continued focus on TDI with network, efficiency and scale effects NFE driving organizational and process streamlining Standardization, overhead leverage and contract portfolio enhancement Each DHL Division will contribute towards 10% EBIT CAGR PAGE 9

10 DHL EXPRESS: SUCCESSFUL TDI STRATEGY Global TDI Revenue Market Share Development Market growth 1) +8% +3% +3% Key Performance Drivers 12% 12% 12% 12% 7% 6% 6% 6% 29% 29% 27% 26% 23% 22% 22% 22% 29% +14% 31% +9% 33% +6% 34% DHL UPS FedEx TNT Others Steady increase in TDI market share driven by best-in-class global network and service levels Growth accompanied by continuous strong margin increase; further improvement possible from network, efficiency and scale effects Growth enabled by targeted investments into our network Modernizing European air fleet, upgrading capacity and efficiency Continued investment in hub and ground infrastructure across all geographies 1) Source: MI 2014 Study: AT, DE, DK, ES, FR, IT, NL, RU, TR, UK, BR, CA, CO, MX, US, CN, HK, IN, JP, KR, SG, AE, SA, ZA PAGE 10

11 NFE: FUNDAMENTAL TRANSFORMATION OF DHL GLOBAL FORWARDING Goals of NFE Transformation: Pilots prove that NFE provides us with: Reliable & cost effective operating system More accurate & reliable data for better decision making Improved customer service Standardized processes across the entire organization Single customer view with fast and accurate data Optimized end-to-end control and tradelane management Improved shipment visibility and better response time Global standardization and faster processes NFE will reduce costs and provide our customers with superior service quality Ocean Freight roll-out ongoing, Air Freight to follow in 2015 Significant reduction in project cost run rate as well as first benefits expected in 2016 PAGE 11

12 SUPPLY CHAIN: TAKING PERFORMANCE TO THE NEXT LEVEL DHL Supply Chain is a successful member of DPDHL family of divisions Strong and increasing returns based on resilient, asset-light business model ROCE, incl. Goodwill 12% 13% 14% 16% Warehousing 47% 17% 9% Value Added Services Williams Lea M Supply Chain Strategy 2020 set to deliver further performance improvement 27% Transportation EBIT margin 1.8% 2.7% 2.9% 3.1% New 2020 margin target: 4-5% 2020 DPDHL Capital Markets Tutorial Workshop November 13 th, 2014 at 10am GMT London (also available on webcast) PAGE 12

13 PeP 2020 TARGET: SUPPORTED BY MIX SHIFT TOWARDS PARCEL 9M 2010 PeP: Revenue Mix 9M 2014 Strong portfolio in ecommerce Parcel: Parcel Germany: market leadership further strengthened over the last years supported by strong investments to offer best-in-class network and recipient services 81% 19% Mail division excl. Parcel Parcel Germany 65% 35% Post ecommerce & Parcel PeP: German Parcel market share evolution: >42% 41% 40% 39% Parcel Europe: leveraging domestic Parcel assets shifted from DHL in 2014 E-commerce trend to continue to drive mix shift from letter to parcel products ecommerce: international Parcel operations including former Global Mail parcel activities and Blue Dart (India) PAGE 13

14 GERMANY IS TRAILBLAZER FOR EUROPEAN E-COMMERCE AND SERVES AS BENCHMARK FOR FUTURE GROWTH 2012 Parcels per capita, p.a. Growth driver 2018 Parcels per capita, p.a. DE UK CH DK FR NL AT SE BE CZ PL SP IT Extend & upgrade parcel infrastructure Build dense droppoint networks Offer a broad range of recipient services DE UK CH DK FR NL AT SE BE CZ PL SP IT DHL Parcel Europe will boost European e-commerce by building a best-in-class parcel infrastructure across Europe PAGE 14

15 DHL PARCEL EUROPE: EXTENDING EUROPEAN DOMESTIC AND CROSS-BORDER B2C OFFERING Recap asset shifts in Europe: Domestic assets & activities transferred in CZ, BE, NL and PL Examples of our European B2C initiatives Well over 1000 Parcelshops outside of Germany, network expanded by more than 50% YTD First packstations rolled out in NL Six-day delivery started in NL Online marketplace in PL set up E-fulfillment warehouse built in CZ > 8,000 employees Local roll-outs leverage selected success factors from Parcel Germany as well as established customer relationships > 9,000 vehicles > 100 facilities 2013 revenue: EUR ~ 650m 1) New initiatives generate positive reception from customers and employees 1) Total asset shift from DHL to PeP affected 2013 revenue of EUR ~ 900m, also including Blue Dart (India) PAGE 15

16 WE HAVE SET THE COURSE FOR 2020 Strategy 2015 keeps delivering good progress Building base for 2020 strategy with major transformation initiatives in Forwarding and Supply Chain Driving sustainable EBIT growth through 2020 growth in e-commerce and logistics margin improvement in all divisions 2009 today PAGE 16

17 AGENDA Q3 Highlights: Key trends (Frank Appel) We have set the course for 2020 (Frank Appel) Financial results Q (Larry Rosen) Guidance FY (Larry Rosen) PAGE 17

18 GROUP P&L Q EUR m Q Q Chg. Management comments Revenue 13,454 14, % Late quarter weakness in EUR leads to a mild FX tailwind. Organic growth of 3.3% EBIT % Solid operating profit increase in low-growth environment t/o PeP % t/o DHL % EBIT increase mainly driven by ongoing Parcel growth with flat divisional operating margin Increase despite weakness in Forwarding. Sustained strong EBIT growth and margin increase in Express Financial result % Improvement as a result of lower interest rates Taxes % Lower taxes reflect estimated full year tax rate of 16% - related to activation of tax loss carry forwards Consolidated net profit 1) % Net profit accelerates on the back of improvements along all P&L lines EPS (in EUR) % 1) Attributable to Deutsche Post AG shareholders PAGE 18

19 FREE CASH FLOW Q FCF generation in line with good previous year performance EUR m Q Q 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 Net M&A Net Interest Usual strong Operating Cash Flow generation in Q3 Timing effects related to Parcel infrastructure build-out affecting provision and WC change, but with neutral effect on OCF Cash-out for capex increasing as phasing of investments shows some acceleration vs H1 FFO/Debt at 30.4% (year-end 2013: 34.4%) Free Cash Flow PAGE 19

20 NET DEBT (-)/LIQUIDITY (+) Usual deleveraging expected in H2 Q3 net debt reduction of EUR 284m 2, ,499-1,074-1, ,660-2,944 Net debt (Dec 31, 2013) OCF before change in W/C Changes in W/C Net capex Net dividend Other effects Net debt (Sep 30, 2014) Net debt (Jun 30, 2014) Debt rating upgrade by Moody s from Baa1 to A3 (announced Sep 15 th ) PAGE 20

21 PeP PEP EXPECTED SOLID VOLUME LETTER DEVELOPMENT DECLINE, GERMAN PARCEL VERY STRONG Mail Communication volumes (in m pieces) Q3 13 Q3 14 Dialogue Marketing volumes (in m pieces) Q3 13 Q3 14 Parcel Germany volumes (in m pieces) Business Highlights Decrease in Post volumes reflects Modest decline in Mail Communication resuming after positive one-offs in H1 Dialogue Marketing volume decline reflects federal elections in Q3 last year E-POST: targeting EUR 300m revenue in 2014 (2013: EUR ~100m) Continued growth in German Parcel business driven by B2C trend towards e-commerce Q3 13 Q3 14 PAGE 21

22 PeP DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,643 3, % Reflecting stamp price increase and positive volume development in parcel EBIT % Solid increase, but constrained by rising wage and material costs Operating Cash Flow % Driven by positive working capital development and increased EBIT Capex % Main investments in Parcel infrastructure expansion PAGE 22

23 EXPRESS STRONG TDI GROWTH CONTINUED Time Definite International (TDI) Revenues per day in EUR m Business Highlights 33,3 Time Definite International (TDI) Shipments per day 000s ,6 Q3 13 Q TDI shipment growth continuing all regions contributing to volume growth Highest TDI shipment per day growth rates in Middle East, Africa (+10.7%), followed by the Americas (+8.0%). Asia Pacific volume growth (+7.8%) and Europe (+5.8%) reflect active yield management Strong margin increase driven by higher TDI daily revenue growth and efficient network utilization Q3 13 Q3 14 PAGE 23

24 EXPRESS DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 2,893 3, % Strong TDI volume growth across all regions. Currency effects turned neutral. Organic revenue growth +7.5% EBIT % Increased TDI volume, higher efficiency in aviation and ground networks Operating Cash Flow % Strong operating cash flow increase in line with trend in EBIT performance Capex % Main investments going towards hub and gateway infrastructure upgrade as well as air fleet modernization and expansion PAGE 24

25 GLOBAL FORWARDING, FREIGHT: VOLUMES IMPROVING, YIELDS STILL WEAK Air Freight 000s Tons Business Highlights Q3 13 Q3 14 Ocean Freight 000s TEU 1) Air Freight and Ocean Freight volume recovery confirmed, reflecting stronger demand in Asia and new customer wins GP/unit decline yoy in Air Freight and Ocean Freight reflects increase in buying rates on selected tradelanes NFE transformation program: step-by-step implementation continues Q3 13 Q3 14 1)Twenty Foot Equivalent Unit PAGE 25

26 GLOBAL FORWARDING, FREIGHT DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,702 3, % Improvement vs past quarters reflecting continued volume recovery in AFR and OFR. Continued slight negative FX effect. Organic growth of 3.5% Gross Profit % Held back by continued pressure from competitive markets EBIT % Affected by ongoing NFE transformation program and lower GP margin Operating Cash Flow % Mainly reflecting EBIT decline, with some increase in working capital Capex % Increase on low level as a result of NFE implementation PAGE 26

27 SUPPLY CHAIN HEALTHY BUSINESS WINS CONTINUE New signings, EUR m 1) Q Q Q Q Revenue by Sector Q Others Williams Lea 5% Retail Energy 10% 2% 23% Automotive 10% Business Highlights New signings on track for another year of EUR >1 bn order intake Continued selective approach to new business signings based on profitability and leveraging our sector expertise Automotive and Life Sciences & Healthcare showing strongest revenue growth yoy Technology 10% 20% 1) Annualized revenue gains Life Sciences & Healthcare 20% Consumer PAGE 27

28 SUPPLY CHAIN DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,519 3, % FX turned positive, mainly reflecting stronger USD and GBP. Organic revenue up 0.6% supported by new business in APAC and UK retail EBIT % Good growth reflects increase in volumes and new business start-ups Operating Cash Flow % Cash flow in line with previous year s performance Capex % Slightly lower than last year due to phasing of investments PAGE 28

29 AGENDA Q3 Highlights: Key trends (Frank Appel) We have set course for 2020 (Frank Appel) Financial results Q (Larry Rosen) Guidance FY (Larry Rosen) PAGE 29

30 GUIDANCE SUMMARY guidance confirmed EBIT FY 2014 FY 2015 FY 2016 PeP ~ EUR 1.3bn Better than 2014 > EUR 1.3bn DHL EUR bn Better than 2014 EUR bn CC/Other Group Better than EUR -400m EUR bn ~ EUR -350m ~ EUR -350m Significantly better than 2014 EUR bn 2014 Free Cash Flow to at least cover 2013 dividend Tax rate around 16% Gross Capex of around EUR 1.9bn PAGE 30

31 Q WRAP-UP Delivering solid EBIT and cash flow growth despite continued weak macro environment DEFINING THE LOGISTICS INDUSTRY Strategy 2020 provides clear operating and strategic roadmap for all Divisions Leverage e-commerce & EM growth Promote sustainable, organic growth guidance confirmed while setting course for 2020 targets Continue EBIT margin expansion Increase free cash flow PAGE 31

32 DON T FORGET SEE YOU TOMORROW! Capital Markets Tutorial Workshop DHL Supply Chain Hosted by Larry Rosen, CFO DPDHL and John Gilbert, CEO DHL Supply Chain November 13 th, 2014 at 10am London (also available on webcast) PAGE 32