The ongoing labour dispute over lower-paid jobs overshadowed today’s annual shareholder meeting of Deutsche Post DHL, with more strikes affecting mail and parcel delivery across Germany.
Services union Verdi said that some 7,000 employees took industrial action impacting mail and parcel delivery across the country as well as several call centres, although DP DHL put the figure at 5,500 workers. Further strikes are planned tomorrow. In addition, the union staged a major protest with some 4,500 participants in Frankfurt where the AGM took place.
The union claims that Deutsche Post’s creation of 49 regional parcel delivery companies, employing full-time workers at lower pay level, breaches a contract that prevents the company from outsourcing delivery to internal or external companies beyond the existing 990 parcel delivery districts. At the same time, the two sides have failed in five rounds of negotiations to reach an agreement over pay and working times for some 140,000 employees covered by the collective pay agreement. The sixth round of talks is scheduled for June 1-2 in Berlin.
Verdi chairman Frank Bsirske declared at the AGM protest: “We don’t want any split in the business or split in the workforce. For all of us, it’s clear after the contract breach with the creation of DHL Delivery GmbH that there can’t be any security for Deutsche Post employees without legal protection against outsourcing.”
But DP DHL CEO Frank Appel told shareholders: “We don’t break contracts and don’t flee from collective agreements.” He defended the decision to transfer parcel delivery to the new subsidiaries as necessary to reduce high pay levels, which are already significantly higher than competitor levels, and in order to ensure growth. “Our staff costs are not competitive in the long run,” he said.
Yesterday the company won a legal victory over the controversial use of civil servants to replace employees taking industrial action in the last few weeks. The Bonn labour court rejected Verdi’s demand for an injunction against the practice. DP DHL stressed that its use of civil servants in such circumstances was in line with all legal regulations.
Meanwhile, Appel confirmed DP DHL’s financial targets and strategic priorities in his speech to shareholders, and stressed that the transformation of DHL Global Forwarding would be reviewed.
“We increased both revenue and operating profit once again in 2014. And we managed to do this despite only modest growth of the world economy. We achieved our targets and kept our promise,” he told shareholders. “Moreover we have big plans for this year and beyond. We are laying the foundation for the future: With our Strategy 2020 we have set our priorities for the coming years.”
After the moderate Q1 results, Appel confirmed the targets for full-year 2015 that were announced in March. Operating profit is expected to increase to between €3.05 billion to €3.2 billion. The Post – eCommerce – Parcel (PeP) division is likely to contribute at least €1.3 billion to this figure. The forecast for the DHL divisions also remains unchanged at between €2.1 billion to €2.25 billion.
The wide-ranging internal changes and investments in the future will temper the Group’s earnings gains in the current year. For the following years, however, Deutsche Post DHL Group expects the earnings trend once again to be considerably more dynamic. For 2016, the company is maintaining its forecast of a rise in EBIT to between €3.4 billion and €3.7 billion. In the period from 2013 to 2020, the target year of the new strategy, operating profit is expected to rise annually by more than 8% on average.
DP DHL underlined that the current financial year marks a transition from the successful Strategy 2015 to the new Strategy 2020. It said the new strategy is an "evolutionary step" and based on three pillars: A focus on existing strengths, enhanced quality through improved interconnectedness and expansion through new growth drivers. Here the booming e-commerce business and global growth markets have strategic priority. That is why the Group is pressing ahead at PeP with further internationalization of the parcel business, which is profiting especially from the dynamic growth in e-commerce.
“We want to be the global market leader in logistics for e-commerce,” said Appel. To achieve this goal, the Group is exporting the successful model of its DHL Parcel business in Germany to other markets. The DHL Express division is continuing to make significant investments in the maintenance and expansion of its global network, primarily in emerging economies and growth regions, in order to further expand its leading market position.
By investing significantly in the optimal positioning of its businesses, even at the expense of short-term profit gains, Deutsche Post DHL Group is currently laying the foundations for the success of Strategy 2020 across all four of its divisions.
An important step in this regard is the reorganization of DHL Global Forwarding, Freight, which requires substantial expenditures and binds resources. As announced at the presentation of the quarterly figures, the results to date of the transformation process will now be carefully reviewed. Appel, who has run the division in a dual role since the end of April, made statements to shareholders that left no doubt as to the need for the transformation.
The course for future growth is also being charted at DHL Supply Chain – even if this does not involve a fundamental transformation. The optimization program currently underway in that division is mainly targeted at increased standardization of processes, greater efficiency, and the improved utilization of economies of scale globally.
“Our Strategy 2020 gives us a roadmap for our further improvement and organic growth,” Appel concluded. “When people think of logistics, we want them to think of Deutsche Post DHL Group.”
