Tag: Deutsche Post

The Profitability of The Mail Division of Deutsche Post: A Final Report

By Dr. Richard Hern, Tomas Haug, Phillippa Lowe, Marco Schönborn, and Yves Gueron

In this report, a NERA team led by Associate Director Dr. Richard Hern and Analyst Marco Schönborn assesses the profitability of DP’s mail division and updates conclusions presented in two earlier NERA reports from 2003 and 2005.

Using the most recent available data from DP’s Annual Reports, the team considers estimates of profitability for 2005 and over a longer period dating back to 1998. Their estimates are based on calculations of the return on capital employed (ROCE) of the mail segment, which they compare to the cost of capital for DP’s mail segment. By comparing ROCE and the cost of capital over a period of time, it is possible to assess whether investment in the company is appropriately rewarded, under-rewarded, or over-rewarded. The team concludes that while DP has faced competition in other segments, it was able to generate substantial profits in the mail division. NERA’s results, which are in line with the findings of the 2003 and 2005 reports, demonstrate that DP’s profits in the mail division are significantly higher than in other divisions and have been so over the whole period under investigation.

Deutsche Post, the German postal service operator, is planning unchanged prices for inland letter post in 2007, in most cases. Applications for pricing are reported by the company to have been submitted to the German networks regulator, and postage is not due to be increased in the regulated section of mail delivery.

Price increases are reported to be planned for deliveries abroad, but the company has indicated that it does not plan to make full use of its scope to raise the price by 0.2 per cent altogether. Deutsche Post expects the regulator to reach a decision within two weeks.

German postal group Deutsche Post AG has appointed four executives to succeed former head of sales Marco Demuth, thus dividing the Sales Division into four, it was reported on October 20, 2006.

The new segments are Large Clients, Corporate Clients, Industrial Clients and Private Clients and Branches.

Ingo Bohlken will be the new marketing director of Deutsche Post’s German activities, replacing Reinhard Pranke. Pranke will be in charge of the newly established Market Liberalisation segment.

Peter Kruse stepped down from the executive management of the Express Germany business division. Deutsche Post’s mail business head, Hans-Dieter Petr, has already introduced his successor Juergen Gerdes into business, since Petr’s contract is to expire at the end of 2007.

Deutsche Post will appoint Tim Griffiths executive board member in charge of newly created British mail business segment. Griffiths is CEO of Deutsche Post’s British subsidiary Williams Lea.

The board reshuffling, the expansion abroad and the new services are aimed to offset the abolition of Deutsche Post’s mail-delivery monopoly as of 2008.

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