Deutsche Post DHL bullish over future growth

Deutsche Post DHL intends to “significantly increase its earnings” in the coming years and become “the industry’s trendsetter in profitability”. After announcing its Strategy 2015 based on the two pillars mail and logistics last year, the Group now further specified its targets during an investor conference held today in Frankfurt.

For its DHL divisions the Group intends to generate annual EBIT growth by an average of 13 to 15% through 2015, based on the expected operating profit of more than EUR 1.3bn this year and assuming the absence of another major global economic downturn.

In the process, which will be impacted in the next two years by investments in the further development of the existing business, the company expects earnings momentum to accelerate towards the end of the period. The MAIL divison is to stabilise its annual earnings contribution at about EUR 1bn. During the current year, it is expected to generate between EUR 1.1bn and EUR 1.2bn.

“Thanks to our products and services, we are already the leader in many areas. We now intend to set the pace in the industry in profitability terms as well,” Frank Appel, the CEO of Deutsche Post DHL, told investors and analysts in Frankfurt. “In recent years, we have laid the strongest foundation for this by introducing far-reaching efficiency-enhancing measures. In future years, our focus will be directed clearly at generating growth – in terms of both earnings and revenues.”

The planned growth in revenue will also be primarily driven by the DHL divisions. CFO Larry Rosen stressed that the company remains committed to the goal of exceeding the respective market growth rates by 1 to 2 percentage points and provided a detailed revenue outlook for the individual DHL divisions: Against the backdrop of a largely stable world economy, the company projects revenue growth in its EXPRESS divison to total an average of about 7% in future years.

In the GLOBAL FORWARDING, FREIGHT division, Deutsche Post DHL expects to increase revenues in air freight by 6 to 8% annually and in sea freight by an average of 7 to 8%. In the SUPPLY CHAIN division, revenues are forecast to climb by an average of 8 to 9%.

To achieve its goals, the Group will invest in an array of strategic initiatives over the next few years. The primary focus of these investments will be developing new products, tapping new customer groups and expanding the company’s market position in rapidly growing industrial sectors.

In a reflection of this effort, Deutsche Post DHL is concentrating on specific logistics solutions for the Life Sciences & Healthcare, Technology and Energy industries. The customer base is to be expanded both in the area of major customers and in the group of fast-growing new companies. In the MAIL division, the Group intends to also stabilise revenues in the medium term, particularly by transforming its business into the digital age through the introduction of such products as the E-Postbrief or the shopping portal “Mein Paket”.

“We are systematically adapting ourselves to meet the needs of our customers and are developing solutions in every business area that will make their lives easier. By taking this approach, we will accomplish our goal of remaining the postal service for Germany and becoming the logistics service provider for the world as well as completely unlock the full potential of Deutsche Post DHL for the benefit of our customers, employees and investors,” Appel said.

CFO Larry Rosen noted that maintaining sustainable financial stability and flexibility would remain a top priority as the company carries out its growth plans. To achieve this goal, an appropriate balance sheet structure will play a key role.

This forms the core of the Group’s finance strategy that Rosen announced in March and explained in detail in front of investors and analysts today.

In this connection, Rosen also reiterated the future dividend policy of Deutsche Post DHL: The company plans to pay out 40 to 60% of its net profit adjusted for positive as well as negative non-recurring effects.