Risks arising from industry-specific conditions

In addition to the regulatory environment, market and sector-specific conditions have a significant effect on the business performance of the Group.

The demand for logistics services depends greatly on the global economy. In the year under review, revenue fell substantially on the previous year as shipment volumes dropped in all divisions due to the economic crisis. If the economic situation does not improve, this could have a considerable impact on our projected earnings. On the other hand, an economic upswing beyond the anticipated level could result in our earnings exceeding expectations. Due to uncertainty regarding further developments and the end of the economic crisis, the probability of occurrence of risk or opportunity for our Group cannot be specified more precisely at the present time.

We are also exposed to risk as a result of customer insolvencies because the financial strength of our customers is a key factor in determining the success of our business activities. In the reporting year, the insolvency of Arcandor AG in Germany had a severe impact on consolidated earnings. We do not anticipate any additional risk of this magnitude based on the current outlook. Our goal is to identify critical developments amongst our customers at an early stage and to ensure that our cost structure is flexible enough to limit any potential financial consequences.

We offer our products and services in a competitive market. In the mail and logistics business, customers are gained and retained by offering quality at competitive prices. Thanks to our high quality and the savings generated in the year under review, we consider ourselves able to keep any potential risk to our projected earnings from competition at a fairly low level. As described above, a number of political and regulatory factors are additionally applicable to the MAIL division.