08.06.2018
Deutsche Post AG DE0005552004
Deutsche Post AG: Deutsche Post DHL Group addresses challenges in PeP division and lays new foundation for sustainable growt
DGAP-Media / 08.06.2018 / 11:34
Deutsche Post DHL Group addresses challenges in PeP division and lays new
foundation for sustainable growth
- Program for Post - eCommerce - Parcel division initiated to improve
productivity and indirect costs
- Annual operating investment budget of EUR 100 - 150 million to
continuously enhance productivity and service quality
- PeP EBIT guidance for 2018 lowered to EUR 1.1 billion prior to EUR 500
million one-off charges
- Group 2018 EBIT guidance lowered to around EUR 3.2 billion
- 2020 guidance confirmed
- CEO Frank Appel: "We are very confident to reach our 2020 targets"
Bonn, June 8, 2018: Deutsche Post DHL Group, the world's leading mail and
logistics company, has today decided on a suite of measures to sustainably
secure the further earnings growth in the PeP division. To counteract the
decline in profitability in the Post - eCommerce - Parcel (PeP) division,
which became evident in the first quarter of 2018, the Group decided on a
range of measures to safeguard a positive earnings development in 2019 and
2020. The measures mainly target further improvement in productivity,
indirect cost and yield management in the Post and Parcel business.
"We are fully focused on achieving our strategic and financial targets for
2020 and on positioning our business divisions for success in future years.
In order to deliver long-term sustainable growth, we are now consciously
accepting short-term negative effects on our earnings", said Frank Appel,
CEO Deutsche Post DHL Group.
As communicated in the first quarter, the structural shift from Post to
Parcel resulted in a number of challenges in 2018. In Parcel Germany, the
division sees unchanged structural volume growth, but costs inflated with
more FTEs and transport capacities needed in unusually tight labor and
transport markets. The challenge for Post is the unchanged structural volume
decline with stable stamp prices since January 2016 and a high fixed cost
base. Additionally, the structural shift with mail decline and parcel growth
is currently not adequately reflected in the overhead cost of the division,
and the investment into the further development of operations in PeP Germany
has not been sufficient over the last years.
Program to ensure long-term earnings growth of the PeP-division
In order to address these challenges, the Group has initiated a
comprehensive program to improve productivity, reduce indirect costs and
implement yield initiatives.
Productivity: To increase productivity, the Group will lift PeP operations
onto the next S-curve through regular opex investments of EUR 100 - 150
million annually. This will include automation and digitalization,
continuous improvement, increased last mile productivity and intelligent
network utilization. Ultimately, these operational investments will drive
better customer service and higher efficiencies, which will lead to an
improvement of EUR 150 - 250 million per annum.
Indirect Cost Reduction: In order to reflect the continuous decline in
letter volumes, the Group will sustainably reduce the fixed cost base mainly
with an early retirement program focusing on civil servants in overhead
areas. This will come with restructuring costs of EUR 500 million in 2018
and will be implemented in 2018 and 2019. The Group expects the program to
lead to an annual cost reduction of at least EUR 200 million by 2020.
Yield Management: For regulated products in Post, the Group is awaiting the
new regulation from the Federal Network Agency as of January 1, 2019. Price
increases for unregulated larger-size shipments as of July 1 have already
been announced. In Parcel Germany, the Group will focus on a balance between
growth and yield. Even in a competitive market, cost inflation requires
price adjustments, which will be implemented on a rolling basis upon
contract renewal and signing. The future volume growth for Parcel Germany is
expected to be closer to the market development of 5 - 7 percent growth.
The measures will only help in part in 2018; therefore, the PeP-EBIT prior
to one-off cost is now expected to come in at around EUR 1.1 billion. This
includes additional operating expenses for productivity improvements of
around EUR 150 million. In addition, a restructuring charge of EUR 0.5
billion will be recognized in 2018 to implement measures.
Starting in the second quarter of 2018 the activities of the recently
founded area of Corporate Incubations will be shown as part of the new line
Corporate Functions together with Corporate Center/Other. The full-year
result of Corporate Incubations is expected to be EUR -70 million.
Including the above described effects, the management board expects in 2018
an EBIT of around EUR 3.2 billion. The PeP division is likely to contribute
at around EUR 0.6 billion to this figure while the DHL divisions are still
expected to reach around EUR 3.0 billion. The Corporate Functions result is
expected to be at EUR -0.42 billion, including the unchanged projection for
Corporate Center/Others of a result of around EUR -0.35 billion.
The above mentioned measures result in a confirmed earnings forecast for
2020: Group EBIT is expected to reach more than EUR 5.0 billion. The PeP
division is expected to contribute around EUR 1.7 billion of this and the
earnings contribution of the DHL divisions is forecasted to reach around EUR
3.7 billion. Corporate Functions is forecast to reach around EUR -0.35
billion.
The reported Group Free Cash Flow for the full year 2018 - excluding the
debt-financed renewal of the Express intercontinental aircraft fleet - is
hence expected to exceed a minimum of EUR 1.0 billion.
- End -
Media contact
Deutsche Post DHL Group
Media Relations
Anita Gupta
Christina Neuffer
Phone: +49 228 182-9911 [IMAGE]
E-mail: [email protected]
On the Internet: www.dpdhl.com/press
Follow us: www.twitter.com/DeutschePostDHL
Deutsche Post DHL Group
Deutsche Post DHL Group is the world's leading mail and logistics company.
The Group connects people and markets and is an enabler of global trade. It
aspires to be the first choice for customers, employees and investors
worldwide. The Group contributes to the world through responsible business
practice, corporate citizenship and environmental activities. By the year
2050, Deutsche Post DHL Group aims to achieve zero emissions logistics.
Deutsche Post DHL Group is home to two strong brands: Deutsche Post is
Europe's leading postal service provider. DHL offers a comprehensive range
of international express, freight transport, and supply chain management
services, as well as e-commerce logistics solutions. Deutsche Post DHL Group
employs approximately 520,000 people in over 220 countries and territories
worldwide. The Group generated revenues of more than 60 billion Euros in
2017.
Die Post für Deutschland. The logistics company for the world.
End of Media Release
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Issuer: Deutsche Post AG
Key word(s): Enterprise
08.06.2018 Dissemination of a Press Release, transmitted by DGAP - a service
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Language: English
Company: Deutsche Post AG
Charles-de-Gaulle-Straße 20
53113 Bonn
Germany
Phone: +49 (0)228 182 - 63 100
Fax: +49 (0)228 182 - 63 199
E-mail: [email protected]
Internet: www.dpdhl.com
ISIN: DE0005552004
WKN: 555200
Indices: DAX
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime
Standard), Hamburg, Hanover, Munich, Stuttgart; Regulated
Unofficial Market in Tradegate Exchange
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