Deutsche Post DHL targets growth in emerging markets and e-commerce

Deutsche Post DHL targets growth in emerging markets and e-commerce

Deutsche Post DHL has launched a new five-year strategy targeting growth in the world’s emerging markets and by tapping the global e-commerce boom. The postal and logistics giant unveiled its new “Strategy 2020:Focus.Connect.Grow” yesterday, as the successor to its current Strategy 2015.

The company said its main emphasis would continue to be on organic growth of its business rather than acquisitions, but at an accelerated pace.

Frank Appel, the Deutsche Post chief executive, said the new strategy aims to power the group’s “next big growth stage” and open up new opportunities in an “ever-changing environment”.

“Our aspiration is to be the leading force in the logistics industry by 2020 and the company that defines logistics,” he said.

From 2013 to 2020, executives expect 8% growth in earnings each year, from the baseline of the EUR 2.86m pre-tax earnings made in 2013.

Mail

The company’s DHL divisions are likely to be the main contributor to this earnings growth, the firm said, although the company’s mail division should benefit from growth in the parcel business linked to e-commerce.

The increasing importance of parcels should mean a 3% per year improvement in operating profits for the mail division and stable pre-tax earnings, Deutsche Post said. Meanwhile, the Mail division will also fight to defend its physical mail business, push further into the digital world and diversify according to its key strengths.


Deutsche Post CFO Larry Rosen (left), CEO Frank Appel (centre) and board member for the Mail Division Jürgen Gerdes launching the Strategy 2020 document yesterday

The Mail division is to be renamed “Post – eCommerce – Parcel” (PeP) to reflect its priorities.

Logistics

Within the logistics arena, Deutsche Post said it would enjoy a “substantial” increase in revenue from emerging markets like India, Brazil and China, with expectations that the 20% of group revenue drawn from these areas will increase to 30% by 2020.

DHL Express will continue to focus on time-definite international services, with DHL Global Forwarding looking to exploit its global market share, and DHL Supply Chain taking advantage of a global trend towards outsourcing distribution. And, the DHL divisions as a whole will work more closely together under the new Strategy 2020.

Despite its huge size, Deutsche Post DHL said yesterday that its share of the total global logistics market was only about 4% at present, leaving “plenty of room to grow”.

The company is also aiming to become the “number one provider” of cross-border logistics for the e-commerce sector on key international trade lanes, and gradually export its German e-commerce parcel “success model” to other countries in Europe, Asia and the Americas. It has already moved its parcel activities in the Benelux countries, Poland, the Czech Republic and India from its DHL divisions to its Mail division.

Along with its logistics and e-commerce parcels ambitions, Deutsche Post said its new strategy would be marked by a major training initiative that would see 80% of its worldwide workforce going through training programmes similar to the existing Certified International Specialist programme by 2020.

Meanwhile, Deutsche Post DHL is promising to pay out between 40% and 60% of consolidated net profit in dividends to shareholders under the new strategy.

“Over the past several years we have demonstrated what we are capable of,” said Appel. “Now we will accelerate our organic growth and continue to pursue a clear vision: we want Deutsche Post DHL to be not only the most global company in our industry, but also the clear leader in quality and customer orientation.”

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