Deutsche Post DHL today unveiled ambitious targets for the next five years, including outgrowingexpress and freight rivals, higher group profits and a stable mail business. DHL Express is aiming
at a 10% profit margin within the next few years.The DHL divisions will be the growth drivers and focus for investments while the Mail divisionwill focus on stabilising its revenues and profits, executives said during an investor and analystconference in Frankfurt. Today’s medium-term targets followed last year’s launch of the Strategy2015.
“Thanks to our products and services, we are already the leader in many areas. We now intend toset the pace in the industry in profitability terms as well,” Frank Appel, the CEO of Deutsche PostDHL, said. “In recent years, we have laid the strongest foundation for this by introducingfar-reaching efficiency-enhancing measures. In future years, our focus will be directed clearly atgenerating growth – in terms of both earnings and revenues.”
For its DHL divisions the group intends to generate annual EBIT growth by an average of 13-15%through 2015, based on the expected operating profit of more than €1.3 billion this year andassuming the absence of another major global economic downturn. While the next two years will beimpacted by investments, earnings momentum should accelerate towards the end of the period, thecompany said.
In revenue terms, CFO Larry Rosen stressed that the company remains committed to the goal ofexceeding the respective market growth rates by 1-2 percentage points. Express revenues areprojected to grow 7% a year on average and Supply Chain revenues are forecast to climb by anaverage of 8-9%. In the Global Forwarding/Freight division, Deutsche Post DHL expects to increaserevenues in air freight by 6-8% annually and in sea freight by an average of 7-8%.
To achieve its goals, DP DHL said it will invest various strategic initiatives, mostly in newproducts, tapping new customer groups and expanding its market position in rapidly growingindustrial sectors. This includes specific logistics solutions for the Life Sciences &Healthcare, Technology and Energy industries.
Express CEO Ken Allen told investors that DHL had successfully disposed of loss-making domesticbusinesses over the last year and completed its US restructuring. In future, it would aim to defendits leadership of the time-definite international market, where it had a 30% global share, and growits parcels business in particular. DHL Express would continue to add intercontinental flights andwas targeting a profit margin of 10% by 2015 after focusing on investment and expanding marketshare in 2011 and 2012, he added.
Hermann Ude, head of Global Forwarding/Freight, told analysts that volumes are now back topre-crisis levels and the Freight business had been turned around in several European countries. Heexpected the air freight growth to moderate in the final quarter of this year and early 2011against a background of stable capacity, while road freight market volumes would be up more than10% this year and then grow more slowly next year.
Supply Chain chief Bruce Edwards stressed his division had retained 90% of contracts and wonmore than €1 billion in new revenues while reducing operating costs and disposing of non-coreactivities over the last year. According to an unconfirmed report in the Financial TimesDeutschland, the division plans to sell off its small US-based trucking business ExelTransportation Services, which has revenues of $180 million, in the first quarter of 2011.
The Mail division, which is expected to earn €1.1-1.2 billion this year, aims to stabilise itsannual operating profit at about €1 billion and also maintain present revenue levels in theforthcoming years.
Jürgen Gerdes, head of Mail, told investors that the core postal business was being successfullytransformed and future growth drivers would be digital services such as the E-Postbrief or theshopping portal “Mein Paket”. The secure electronic mail service now has more than one millionregistered users and over 100 business customers signed up, with 100 ready to sign, he added. TheMein Paket portal features 600 traders with more than 400,000 products. In parallel, a new parcelnetwork was being created to handle greater volumes in future, he added.
CFO Larry Rosen noted that maintaining sustainable financial stability and flexibility wouldremain a top priority as the company carries out its growth plans. He also reiterated the futuredividend policy of Deutsche Post DHL, which is to pay out 40-60% of the net profit adjusted forpositive as well as negative non-recurring effects.
