PRESS CONFERENCE FRANKFURT AM MAIN, APRIL 2, · PDF fileKEY BUILDING BLOCKS OF PeP BUSINESS STRATEGY Digital Diversification Physical mail Parcel / ... business Develop eCommerce to

PRESS CONFERENCE

FRANKFURT AM MAIN, APRIL 2, 2014

OUR NEXT HORIZON: ACCELERATING ORGANIC GROWTH

Inorganic

expansion

1998–2008

Create the base

1990–1997 2014–2020

Accelerating

organic expansion

Unlocking

our potential

2009–2015

PRESS CONFERENCE | APRIL 2, 2014 PAGE 2

� Stabilized MAIL EBIT above EUR 1bn

� Offset of mail revenue decline through parcel growth

� EXPRESS: Focus on Time Definite International strategy

� FORWARDING: Exploit global market share and growth

RECAP ON MAJOR FUNDAMENTAL STRATEGIC CHOICES

� SUPPLY CHAIN: Take advantage of global outsourcingtrend

� Increase margin through contract lifecycle discipline

Logistics outsourcing

Long-haul international trade

Defend and expand position in Germany


STRONG PROGRESS ALONG ALL DIMENSIONS

GoGreen

C 2 efficiency:

+18% (2013) (cp. to base year 2007)

Results of group-wide Employee Opinion Survey

Active Leadership

Business Performance

Provider of Choice

Investment of Choice Employer of Choice

‒ EUR bn ‒Reported EBIT

20122009

Customer Satisfaction(Example: DHL Express)

(Scale 0-100)

2013200920132012

2.7

2011

2.4

2010

1.8

2009

0.2 2.861

Employee Engagement

20132009

68 79

58 70 60 72

PRESS CONFERENCE | APRIL 2, 2014

(Scale 0-100) (Scale 0-100)

PAGE 4

Our markets are affected by four major actionable global trends

STRUCTURAL MARKET TRENDS

� Automation drives efficiencies

� Importance of dataleads to new ways of running businesses

� Increasing importance of social and ethical behavior

� Growing need for greener solutions

� More “fine distribution“ and direct shipping, also in B2B

� Multi-channel deliveryfor B2C

� Growth in long-haul trade and transport slowing down

� Importance of emerging markets still increasing

Accelerating impact of process technology and automation

Continued global trade growth but shift in pattern

Acceleration of eCommerce and more demand for last-mile solutions

Increasing demands for responsible business


Die Post für Deutschland,The Logistics Company for the World

Excellence. Simply delivered.

We connect people, improving their lives.

Respect & Results

3 Bottom Lines & Living Responsibility

NEW STRATEGIC PLAN BUILDS ON SUCCESSFUL BASE

Vision

Mission

Purpose

Guiding Principles

Goals

Our DPDHL Corporate Framework remains valid

STRATEGY 2020

Focus.

Connect.

Grow.

Our Strategic Plan


OUR STRATEGY 2020.


Grow.

We expand in new segments…

Connect.

… to achieve quality leader-… to achieve quality leadership and service excellence.

We connect across the organization…

… to further expand margins.

1

2

Logistics as our core

Committed to the needsof our stakeholders &our planet

A family of divisions

Focus.

We focus on what has made us successful…

3

1

2

A global team

Certified specialistsfor everythingwe do

Connected approach in operations, commercial,green solutions andshared services

3

… to achieve sustainableabove-market growth.

1

2

Leader in eCommercerelated logistics

Accelerate footprintshift towards emerging markets

Tap new market opportunities for organic expansion3

PAGE 7


We focuson what has made us successful

to further expand margins.

PAGE 8



Logistics as our core1

Committed to the needs of our stakeholders &our planet

2

A family of divisions3

Logistics continues to be an attractive industryoffering high growth and returns.

Our focus on success criteria which are relevant for our stakeholders has proven effective and will remain so in the future.

We want each division to be excellent in its focus areas.

The rationale behind FOCUS.


PAGE 9

LOGISTICS MARKETS OFFER ATTRACTIVE GROWTH

Plenty of room to grow within logistics market1)

Attractive growth in key addressable market segments within logistics

Market share DPDHL in totallogistics market2)

Share of market with significant DPDHL presence3)

19%4%

Estimated Market CAGR 2011‒2020

+5-7%+8% +5-6%+4-5%

+2-3%+5-6%

Parcel Germany International

Express

Air Freight

Forwarding

Contract

Logistics

Parcel Domestic

International

Ocean Freight

Forwarding

1) 2011 data; 2) i.e. Global SameDay/ Courier, Parcel, Express, AFR, OFR, Ind. Proj., LTL, FTL and Cont. Logistics; 3) i.e. >5% market share (in value) in respective market


WE REMAIN COMMITTED TO OUR LETTER BUSINESS

IN GERMANY


“MAIL” Division becomes “Post - eCommerce - Parcel” Division (PeP).

Deutsche Post business and brand remain a key pillar for the Group.

Over the last years, substantial investments in physical infrastructureand digital services have been made.

The efforts of the past years are paying off, and we remain committed.

1

2

3

“The Post for Germany”

“MAIL” Division is ready for new opportunities in eCommerce & Parcel.

PAGE 11

COMMITTED TO THE NEEDS OF OUR STAKEHOLDERS


GoGreen

C 2 efficiency improvement:

+30% (by 2020)Provider of Choice

Investment of Choice Employer of Choice

Customer Satisfaction(Scale from 0-100)

EBIT(in EUR bn)

Employee Engagement & Active Leadership(% favorable votes)>8%

CAGR

Consistently>80

20202015

Min. 80group-wide

2013

70‒79

2010

70‒78

20202015

min. 80

2013

70‒72

2009

58‒61

2015 2020

3.35‒3.55

2013

2.86

2009

0.23

Provider of Choice

PAGE 12

Consistently>80

A FAMILY OF DIVISIONS


Joint key account management and focused shared service unit

Focus on governance/ ownership tasks

A team: Professional, diverse, and in tune with market needs

Stand alone divisionsConnected by a common management approach

Selective Group-wide shared functions and services

Customer Solutions & Innovation

One global team

Lean Corporate Center

PAGE 13


We connectacross the organization to achieve

quality leadership and service excellence.

PAGE 14


… to achieve quality leadership andservice excellence.

A global team1

Certified specialists for everything we do2

Connected approach inoperations, commercial,green solutions and shared services

3

A highly professional and diverse management group is essential in order to meet the rising bar.

Best-in-class team to achieve quality leadershipand improve leadership.

An approach leveraging our global platform to create value as a Group (i.e. support and connections but no integration).

The rationale behind CONNECT.

We connect across the organization …

PAGE 15

Target state is >80% of all staff trained until 2020

Executives 100%

Managers >90%

Supervisors & Staff >80%

„The First Choice Way“ becomes part of „Certified“

Combination of:

- Class room sessions

- On the job training

- Specialized application

� 100,000 Certified International Specialists since Dec. 2011

� Delivered in >40 languages by 1,800 DHL Express employees that are trained as facilitators

� Modular platform for each country and function

Pioneer DHL Express Group implementation

Facts & FiguresDHL CIS Program

Integrating continuousprocess optimization

Certified Specialist Trainings Targets


PROVEN CIS PROGRAM EXTENDED GROUP-WIDE

PAGE 16

� Pilots to solve divisional business issues and mineDPDHL data

� Automation agenda with cross-divisional Operations Board to review divisional activities

� Divisions to drive pilots and applications

� Capability building and stronger leverage across Group

� Obertshausen Parcel site as pilot to enhance expertise

Sorting Automation/ Robotics Data Analytics

LEVERAGE PRE-EMINENT INTERNAL SKILLS



LEVERAGE EXCELLENCE IN GREEN LOGISTICS

SOLUTIONS

Target 2020

C 2 efficiency:

+30%Next development level:GoGreen 2.0 – GoGreen Solutions2

Make a difference withcustomers

Action areas

• Commercialize green productsand services

• Focus on optimizing customer supply chains

• Help customers achieve CO2 and efficiency aspirations

Focus today:GoGreen Efficiency1

Success examples

• First efficiency target, carbon accounting and controlling in industry

• Role modeling in alternative fleet

• Climate-neutral shipping

• Driving industry standards

PAGE 18


We expandin new segments to achieve

sustainable above-market growth.

PAGE 19


… to achieve sustainable above-market growth.

Leader in eCommercerelated logistics1

Accelerate footprint shifttowards emerging markets

2

Tap new market opportunitiesfor organic expansion3

We want to create value by utilizing our existingcapabilities to build new businesses and grow organically.

We want to continue being a leader in fast growing markets.

We want to serve changing customer needs and tap new sources of growth.

The rationale behind GROW.We expand in new segments…

PAGE 20

EMERGING MARKETS CONTINUE TO GROW STRONGER

Macro trends continue to support high growth in emerging markets

• Demographics, e.g. India and China to provide >50% of increase in global workforce with college education by 2030

• Continuing urbanization, e.g. in China expected to reach 70% by 2030

• Growing consumer base, e.g. global middle class set to grow 2.6 fold by 2030 with 90% coming from Asia Pacific

Growth differential expected to continue

GDP, real, CAGR 2011-2020e

‒ in % ‒

2.0

5.4

• USA

• UK

• Japan

• Western Europe

• …

• China

• India

• Brazil

• South East Asia

• …

Mature Markets Emerging Markets


Group revenue footprint

22% 30%

78% 70%

Today Target

Mature Markets

2020 target2013


OUR AMBITION FOR THE EMERGING MARKETS

Emerging Markets

30% emerging market footprint is ambitious butrealistic

PAGE 22


eCommerce trend is a structural growth trend for logistics businesses

MAIL Division becomes “Post - eCommerce - Parcel” (PeP)

Leveraging its two strong brands

• Domestic Parcel business driving strong eCommerce growth in Germany

• International domestic and cross-border parcel activities already in DHL portfolio

Opportunity to expand eCommerce and parcel activities internationally

LEADER IN eCOMMERCE-RELATED LOGISTICS

PAGE 23


The Post for Germany and

the global eCommerce enabler

PAGE 24


KEY BUILDING BLOCKS OF PeP BUSINESS STRATEGY

Digital Diversification

Physical mail Parcel / e-Commerce

Internationalization

We are theleading parcel andeCommerceservice provider

We offer innovative services based on our our core competencies

We are thetrusted communications and target-oriented advertising provider – online & offline

� Defend physical mail

� Enter into the digital world

� Restructure international business

� Develop eCommerce to drive parcel

� Diversify based on core competences

Our guiding principles:

PAGE 25

• Overall volumes in Mail Germany declined at an average rate of only 1.8% through Strategy 2015

• Mail Communicationbenefitted from discontinuation of product „Infobrief“ in 2013

• Dialogue Marketing volumes continue to be under pressure

• Parcel Germany continues to show strong development. Market growth rates should come down slightly (expected CAGR ~ 6%)

Volume Development


OVERALL UNCHANGED VOLUME TRENDS IN GERMANY

7.96

MailCommunication

2013

7.82

2009

10.90

DialogueMarketing

9.75

in bn items

0.761ParcelGermany

1.026

in bn items

20132009

20132009

19.65

21.16Mail Germany

20132009

PAGE 26

1)excluding VAT impact EUR 151m

CustomerSatisfaction

EmployeeSatisfaction

EBITEUR bn

2009

66%

93%

1.4

2012

77%

96%

1.21)

2010

74%

93%

1.1

2011

76%

95%

1.1

2015

≥ 90%

≥ 95%

≥ 1.1

2013

1.2

76%

95%

2014

~1.2

95%

80%

Estimate

PeP Strategy 2015:We‘ve put down solid roots for future growth

Investment

of Choice

Employer

of ChoiceProvider

of Choice


PeP: PERFORMANCE & HIGHLIGHTS STRATEGY 2015

PAGE 27


STRATEGIC EVOLUTION OF PeP DIVISION

� Internationalization of the successful German “Parcel Strategy”

� Transfer of domestic parcel business in Poland,

BeNeLux, Czech Republic and India to PeP

� Expansion and entries into additional domestic parcel

markets in APAC/ Americas

� Stabilisation of classic letter mail operations remains a key challenge

� Expansion of digital services

� Increase profitability in Mail Communication

� Stabilization of the traditional letter mail business and build-up of domestic parcel operations „Defend Germany“

� Domestic mail volume development stabilized- e-substitution remains the key challenge long-term

� E-Post established in the market for digital

communication

� Strategic realignment of Global Mail completed

� Successful build-up of “DHL Paket” as innovation andmarket leader in Germany

Restructuring Growth

› 2014› 2007 › 2020

Appointment of PeP Division as global lead division for eCommerce logistics services!

Vision: Global No. 1 eCommerce service provider

PAGE 28


Global CAGR 2011‒2020: New competitors entering the market

Opportunity Threat

+8%

2011 2020

Emerging Markets +11% p.a.

Mature Markets +7% p.a.

Mainland China +15% p.a.

Parcel domestic market revenue

eCOMMERCE ACCELERATION: OPPORTUNITY & THREAT

eCommercecompanies venturing into logistics to support eCommerce

Logistics companies venturing into eCommerce to support logistics

PAGE 29

includes

• Mail Communication

• E-Post

• Dialogue Marketing

• Presse Services

• Export/Import Germany

includes

• Germany

• Europe

• International

• Cross-Border/Intercontinental

The Post for Germany The global eCommerce enabler

Two main businesses, leveraging their existing strong brands

Sub-division PostSub-divisiion eCommerce & Parcel


MAIL DIVISION BECOMES “Post - eCommerce - Parcel”

Brand power, expertise and resources necessary to meet our ambitious growth targets

PAGE 30

Private parcelbox

Grocery delivery

Evening delivery/

Flexible deliveryShopping platforms

Packstation

DHL Paketshops

EXAMPLES

Consumer centric innovation leader on the first and last mile in Germany


DHL PAKET SUCCESSFUL MODEL IN GERMANY

PAGE 31

1) Incl. intra-EU delivery and return

• Domestic eFulfillment

(incl. value added

services)

• In collaboration with

DHL Supply Chain

• Multichannel

domestic delivery

and return1)

50 10

2030

40

00

• Marketplaces

• Marketing services

• Payment solutions

• International B2C

shipping

• Combined with int‘l

eFulfillment and

eFacilitation services

CROSS-BORDER

eCOMMERCEeFULFILLMENT DELIVERYeFACILITATION


COMMERCE & PARCEL: SERVICE PORTFOLIOe

PAGE 32

DHL Parcel

Parcel Germany Parcel Europe

DHL eCommerce

Americas Asia

• Leverage & invest in

businesses transferred

from DHL(BeNeLux,

PL, CZ)

• Re-orient and broaden

service offering

towards B2C

• Gradually expand

European coverage

• Continue success

story

• Expand and innovate

production capacity

• Invest in new service

features, e.g. private

parcelbox,

allyouneed.com

• Build on existing businesses

– Global Mail US

– Blue Dart India

• International B2C shipping services/ Domestic

and destination based eFulfillment as a start in

emerging markets

• Aspiration: Integrated offer of all eCommerce-

related logistics and eFacilitation services

The key element of future profit growth


SUBDIVISION DHL “eCommerce & Parcel”

PAGE 33

Our Aspiration for 2020

Top 3 of domestic B2C delivery and

eCommerce logistics in selected markets

No. 1 for x-border eCommerce services on

most attractive international trade lanes

Our assets to get there

Further grow and maintain No. 1 position

in Germany

• Passion to win

• Support by ”family of divisions”

• Great entrepreneurs

• Strong brands

• World-class processes

• Love for our customers


OUR ASPIRATION:

LEADER IN eCOMMERCE-RELATED LOGISTICS

PAGE 34


Financial outlook & aspiration

PAGE 35

Strong increase in Group EBIT

Supported by strong EBIT performance in all Divisions

Driving turnaround in Free Cash Flow

FINANCIAL PERFORMANCE 2009-2013

2009 2013

-790

1,133

EXPRESS

2009 2013

1,391 1,226

MAIL/PeP

2009 2013

174483

SUPPLY CHAIN

0.21.8 2.4 2.7 2.861

2009 2010 2011 2012 2013

‒ in EUR mn‒

2009 2013

FORWARDING,FREIGHT

-216441

‒ in EUR bn‒


1) Adjusted for non-recurring items

-0.2

0.5 0.7 0.7

1.6

-1.500

-500

500

1.500

2.500

2009 2010 2011 2012 20131)

2009 2010 2011 20121) 2013

‒ in EUR bn‒

PAGE 36

FINANCIAL OUTLOOK AND ASPIRATIONS

Further revenue and earnings growth expected

Investments to remain at current levels to take full advantage

of attractive growth opportunities

Free Cash Flow generation to continue positive and

increasing

Financial policy unchanged


2015 EBIT targets confirmed, new 2020 targets introduced

2020 TARGETS

� Free Cash Flow generation to remain priority

� No ambition for major M&A

� Finance policy including payout ratio range to remain unchanged

EBIT 2013 base1) FY 2015 FY 2020

PeP2) EUR 1.286bn Min. EUR 1.1bn ~3% CAGR 2013-2020

DHL EUR 1.997bn EUR 2.6-2.8bn ~10% CAGR 2013-2020

CC/ Other EUR -422m ~ EUR 350m < 0.5% of Group revenue

Group EUR 2.861bn EUR 3.35-3.55bn >8% CAGR 2013-2020

1) Adjusted for 2013 EBIT of ~ EUR 60m from transfer of assets from DHL to PeP effective on Jan. 1, 2014

2) POST - eCOMMERCE - PARCEL


2014 Gross Capex guidance (EUR 1.9bn) Major projects:

PeP� Investments into new international Parcel businesses

� Continuation of Parcel 2012 investment program

EXPRESS� Network investment, mainly aviation/ aircraft

� Extention Leipzig Hub

FORWARDING,FREIGHT

� New Forwarding Environment

SUPPLY CHAIN

� Significant new business wins


MAJOR INVESTMENTS PLANNED FOR 2014

PAGE 39

NO CHANGE IN M&A STRATEGY


Recent M&A historyGoal

Continued focus on organic growth

M&A Objectives

� Bolt-on acquisitions to support strategies and new growth initiatives of divisions

� Further small disposals where necessary to optimize divisional business portfolios

Conclusion

No significant increase in M&A spend expected

-400

-300

-200

-100

0

2009 2010 2011 2012 2013

Cash-out related to disposal of domestic Express activities

Net cash from M&A

(in EUR m)

PAGE 40

Turnaround in FCF generation lays base for further improvementMajor drivers:

1) Adjusted for non-recurring items

FREE CASH FLOW DEVELOPMENT 2009-2013


-1.500

-500

500

1.500

2.500

2009 2010 2011 2012 2013 2009 2010 2011 2012 20131)

2009 2010 2011 2012 2013 2009 2010 2011 2012 20131)

OCF Net Capex Net Cash from M&A FCF

2,500

1,500

-1,500

(in EUR m)

PAGE 41

Target/ maintain rating BBB+

Dividend payout ratio to remain between 40-60% of net profit (continuity and Cash Flow performance considered)

Excess liquidity will be used for

� Stepwise pension funding

and/ or

� Share buybacks and/or extraordinary dividends

Deployment of Free Cash Flow

CONFIRMATION OF FINANCE POLICY


Recap Strategy 2020


OUR STRATEGY 2020.


Grow.

We expand in new segments…

Connect.

… to achieve quality leader-… to achieve quality leadership and service excellence.

We connect across the organization…


1

2

Logistics as our core

Committed to the needsof our stakeholders &our planet

A family of divisions

Focus.


3

1

2

A global team

Certified specialistsfor everythingwe do

Connected approach in operations, commercial,green solutions andshared services

3

… to achieve sustainableabove-market growth.

1

2

Leader in eCommercerelated logistics

Accelerate footprintshift towards emerging markets

Tap new market opportunities for organic expansion3

PAGE 44

OUR ASPIRATION FOR 2020: DEFINING OUR INDUSTRY

� WE are the most global

� WE are the quality leader

� WE are most customer-centric

When people think of logistics,

we want them to think DPDHL


PRESS CONFERENCE

FRANKFURT AM MAIN, APRIL 2, 2014

Documents

PRESS CONFERENCE FRANKFURT AM MAIN, APRIL 2, · PDF fileKEY BUILDING BLOCKS OF PeP BUSINESS STRATEGY Digital Diversification Physical mail Parcel / ... business Develop eCommerce to