Tag: Deutsche Post

Deutsche Post World Net’s (DPWN) senior managers have been energetically defending the strategic direction of their company, after the publication of their nine-monthly results last week which saw revenue rise by 5.3pct and EBIT (Earnings Before Interest and Tax) after exceptional items fall by 2.5pct.

In particular, the new chief financial officer, John Allan, has been thrust forward to help articulate the new ‘capital markets programme’. Entitled a “Road Map to Value” this is designed to underline DPWN’s commitment to better returns to shareholders. It also emphasises what is an important change in direction for DPWN’s corporate strategy. DPWN’s CEO Klaus Zumwinkel articulated this as “following an expansion phase to build the leading logistics company worldwide, we’re now entering a new era…… We are implementing a series of long-term measures in order to raise profitability, generate more cash, increase payouts to shareholders and improve transparency.”

For a company as acquisitive as DPWN this is an interesting statement, indicating that the strategy of global expansion is being reigned-back, although targeted acquisitions are still being made.

Underlying DPWN’s concern is disenchantment amongst institutional investors outside Germany over the performance of the company’s shares. This is leading to mutterings on stock markets about the merits of a break-up of DPWN, particularly through a buy-out from a private equity house.

From the remarks emerging from Bonn, it does appear that DPWN is feeling the capital markets breathing down its neck. For example, John Allan commented that he didn’t think a private equity bid was a big risk “but I think one can never be complacent and the best way of stopping it even being a small risk and protect the future of our company, the jobs of our employees and so on, is really going to be to carry through very aggressively the programme we have announced today, which should make our shareholders happy”.

Deutsche Post World Net today presented its “Roadmap to Value,” a far-reaching capital markets program to use the company’s excellent market position to generate more value for its shareholders. The program is aimed at making Deutsche Post World Net the most attractive investment in the logistics industry in addition to being the No. 1 choice for customers and employees.

The capital markets program “Roadmap to Value” is aimed at making the group the most attractive investment in the logistics industry.

With a comprehensive profit improvement program affecting all units and divisions, Deutsche Post World Net plans to generate 1 billion euros to underpin EBIT growth through 2009. In order to boost cash, the Group aims to reduce net working capital by 700 million euros and raise at least 1 billion euros in proceeds from the disposal of real-estate and other non-strategic assets over the next two years. The management board will also propose to raise the 2007 dividend by 20 percent to 90 cents per share compared with 75 cents per share for 2006. To help increase transparency, Deutsche Post World Net will unbundle its SERVICES division and in principle has committed itself to a stable reporting structure in the future.

In order to establish the value-based approach throughout the Group, Deutsche Post World Net will introduce a new performance metric. The metric, EBIT after Asset Charge, is aimed at motivating managers to generate more value from their day-to-day businesses. Chief Financial Officer John Allan: “The new metric will help us leverage our strengths and attack our weaknesses in order to raise returns for investors and to serve customers even better. We have highly motivated, best-in-class managers and employees around the globe and I am very confident that they are going to rise to this challenge.”