MAIL Division

Deutsche Post DHL is Europe's largest postal company, delivering 66 million letters every working day in Germany. We offer all types of products and services to both consumers and business customers, ranging from standard letters and merchandise to special services such as cash on delivery and registered mail. Customers can now purchase stamps at retail outlets, stamp dispensers, online or right from their mobile telephone via text message.

In July 2010, we launched our new E-Postbrief product, a secure, confidential and reliable form of electronic communication. One million consumers had opted for it within four months. We have also sealed the first 100 contracts with business customers. Customers initially sign up to receive an address and login information, after which they must present valid identification in order to become E-Postbrief users. A unique feature of the E-Postbrief is the hybrid letter, which can reach customers who have not yet signed up to the electronic E-Postbrief portal. Here, electronic letters are printed out and delivered reliably by a postal carrier just like traditional mail.

Our mail business focuses on Germany, where the mail market has been fully liberalised since the beginning of 2008. Competition has become more intense since then and the increasing use of electronic forms of communication has resulted in domestic mail market shrinkage. In the year under review, the market decreased by 4.8% to around EUR6.0 billion (previous year: EUR6.3 billion). Our share fell slightly to 86.6%.

We offer companies solutions for designing and printing their advertisements themselves as well as for calculating the best applicable postage rate. For dialogue marketing to work, customers need to be able to update their existing addresses continually and we need to strictly observe all data protection regulations. We provide our customers with online tools and services to ensure the quality of their addresses and efficient identification of target groups.

Where necessary, companies may rent addresses from us from the identified target groups for their own advertising campaigns. We also offer our customers a broad range of digital dialogue marketing solutions to use for cross-media and targeted advertising.

The German dialogue marketing market comprises advertising mail along with telephone and e-mail marketing. In the reporting year, this market shrank by 3.1% year-on-year to a volume of EUR18.7 billion. Many companies, especially mail-order companies and financial service providers, have sharply reduced advertising expenditure. We have maintained our share of 13.4% in this highly fragmented market.

We deliver newspapers and magazines nationwide on the day specified by the customer. Our Press Services business unit offers two products: preferred periodicals, which is how publishers traditionally post their subscribed publications, and standard periodicals, which is how companies that distribute customer or employee magazines via Deutsche Post usually send these items.

Our special services include electronic address updating as well as complaint and quality management. We also partner with newspaper and magazine publishers to sell subscriptions to 4,500 newspapers and magazines both online and offline as part of our Deutsche Post Leserservice, a service that has seen much success.

According to company estimates, the German press services market had a total volume of 16.4 billion items in 2010, a decline of 3.5% on the prior year. Newspaper and magazine circulation has decreased although weights have remained the same. Our competitors are mainly companies that deliver regional daily newspapers. In a market shrinking overall, we held our share at 11.4%.

As at 1 July 2010, we transferred significant parts of Williams Lea Germany from the SUPPLY CHAIN division to the MAIL division. We now report on those parts as the new Value-Added Services business unit. This business involves the components of the mail communications value chain that our customers have entrusted us with. We operate their mailrooms and provide them with printing, enveloping and scanning services. Beyond this, Williams Lea employs its cutting-edge information technology to print and envelope the hybrid option of the E-Postbrief product.

We handle approximately 2.6 million parcels within Germany each working day. Our services are available to both consumers and business customers at any time and any place. They can send and collect parcels and small packages at some 20,000 retail outlets and points of sale, more than 2,500 Packstations and around 1,000 Paketboxes. Our Packstations are located in approximately 1,600 towns and cities across Germany. Nearly 90% of all residents in Germany are just about 10 minutes or less away from the nearest Packstation. Consumers can also go online to purchase shipping boxes, buy postage for parcels, place collection orders and track items.

We are also continually evolving our services for business customers. In the online market place, which continues to see strong growth, both suppliers and customers appreciate that orders are carried out swiftly, simply and securely. That is why we do more than merely transport catalogues, goods and returns. We support our customers throughout the entire process, from the moment the order is placed and the purchase is made, to shipping the product and hedging against non-payment.

Our new online shop, MeinPaket.de, is a pertinent example. Designed with small and medium-sized retailers in mind, customers can use the shop to position their products online. MeinPaket.de places security for retailers and shoppers at centre stage whilst delivering variety and high entertainment value with editorials and other feature content. The site uses a central checkout function that allows customers to make purchases in a secure environment.

In addition to standard parcel exports for cross-border e-commerce, we have also been offering return services in 10 countries in Europe since November 2010. Our product portfolio is planned to be expanded in 2011.

The German parcel market volume totalled around EUR6.8 billion in 2010, some 7.9% more than the prior year. For years now, e-commerce has been a central driver of growth. Growth in mail-order business, a key target market for parcel services, was not slowed by the financial crisis or the insolvency of mail-order company Quelle. An increasing number of Germans are shopping online and consumer confidence has risen of late, resulting in another year of double-digit growth in e-commerce. The business-to-business market also benefited from the economic upswing. At around 39%, our overall market share in 2010 remained at the prior-year level.

We carry mail across borders and offer international dialogue marketing services. We also serve business customers in key domestic mail markets, including the USA, the United Kingdom, the Netherlands and Spain.

Our customers receive a high quality of service that ranks us amongst the top postal companies in the world in terms of transit times. The innovative products we introduce to respond to customer and market needs set us apart from the competition. Our portfolio therefore includes physical, hybrid and electronic written communications, giving customers the flexibility to decide what best suits their needs. Customers abroad tap into our expertise in order to do business successfully on the German market. We have also launched a new package for the online shopping marketplace in Asia, which is considered the chief driver of cross-border shipment volumes.

The global market volume for outbound international mail was approximately EUR6.4 billion in 2010. Our business environment in the reporting year was shaped by lingering economic weakness and tougher competition. However, we braved this difficult market and managed to win back market share. We expect our market share for 2010 to be 16.5%.