Deutsche Post CEO Frank Appel today called for higher letter prices inGermany, rejected investor calls to split up the mail and logistics businesses in the style of TNTand confirmed the company’s financial targets for this year.
Speaking at the annual shareholders meeting in Frankfurt, Appel stressedthat the group’s Strategy 2015 was “the right foundation for the future” with its focus on a ‘two-pillar’ business model of mail services in Germany and worldwide express and logisticsservices.
“With this strategy, we do not intend to reinvent the group, but to unlockour full potential from within. The strategy focuses on closely interlocking our structures andproviding integrated solutions that make the lives of our customers easier,” he told shareholders.This was effectively a rejection of the TNT strategy of separating the express and mailbusinesses.
On the future of the mail business, which is faced with declining physicalvolumes and falling profits, Appel said: “We are clearly committed to the mail business but in thisarea we need to re-orientate ourselves and press ahead with solutions that link physical anddigital communication.” The company is heavily marketing its new secure digital mail service, theE-Postbrief, and more than 100 companies have now signed up to send letters electronically usingthe system, he said.
“The general trend of the replacement of the physical letter by electronicmedia remains a fact of life and a challenge for us. With innovations such as the E-Postbrief, weare not standing idly by and watching this develop, rather we are taking a proactive approach andleveraging the opportunities presented to us by the trend towards an increasingly digital world,”Appel said.
German media also citing him as calling for Deutsche Post to be permittedto raise the standard letter price in Germany, which has been virtually unchanged for the last 14years at €0.55. “It’s not a question of increasing our profit but of maintaining the status quo anda good infrastructure,” he declared. The German regulatory authority is due to present newproposals for the future price regulation since the current prices expire at the end of thisyear.
The DHL division had completed a long restructuring phase and was nowoptimally positioned in global growth markets, Appel told the AGM. The company remained “fundamentally optimistic” about economic prospects, although growth might be slower this year. OnDHL Express, Appel said the financial turnaround had been “definitively accomplished” and thebusiness was now growing strongly again, especially in Asia. The Freight Forwarding business wasalso growing well and Supply Chain had improved its profitability, he added.
Looking ahead, he added: “Our objective for the DHL divisions is togenerate average yearly growth of 13% to 15% in operative earnings by 2015. With this goal in mind,we shall invest even more to further refine our business model over the next few years. The focushere will be on developing new products, identifying new customer groups and expanding our marketposition in high-growth industries and sectors.”
Appel highlighted Asia as DHL’s key growth market, including thesuccessful partnerships with Sinotrans in China and Blue Dart in India, and the construction of the$175 million new North Asia Express Hub in Shanghai. “It will be our largest DHL hub in Asia. Withstate-of-the-art sorting technology and additional capacities, the hub will pave the way foradditional growth in the future,” he commented.
On financial goals, Appel said that Deutsche Post DHL expects to continueits significant revenue and earnings growth during the rest of the current year and beyond, andconfirmed the group’s targets for 2011 as well as the mid-range guidance. “Thanks to our excellentposition, we can and will continue to take advantage of the continuing recovery of the globaleconomy: our future will be all about profitable growth.”
Despite the current economic risks, the further recovery in transportvolumes observed during the first months of the year would point to a continuation of the economicupswing, he said. In light of this, the group continues to project an EBIT of between €2.2 billionand €2.4 billion for the current financial year. The Mail division is expected to contributebetween €1.0 billion and €1.1 billion to this result. For the DHL divisions, the Group expectsoperating earnings to improve to between €1.6 billion and €1.7 billion.
The AGM approved the 2010 dividend of €0.65 by a large majority.
