Risks

Opportunity and risk management supports corporate responsibility

Our Group-wide opportunity and risk control system helps identify, analyse and assess both risks and opportunities at an early stage. The Group management is provided with opportunity and risk-related information on a regular basis with the goal of ensuring the company’s sustained success and increasing enterprise value. We have described our opportunity and risk management processes and the significant risks affecting our earnings, financial position, and assets and liabilities in the 2009 Annual Report.

Economy beginning to revive

Demand for logistics services depends greatly on the global economy. At present, the world economy is undergoing a recovery following the difficulties of the previous year. Assuming this trend will continue we are projecting a moderate increase in transport volumes, which should positively impact consolidated earnings. We acquired important new contracts during the period under review. On the whole, we expect our business partners’ activities to pick up and the risks associated with the economic trend to gradually return to a normal level.

Insolvency plan submitted for Karstadt

Insolvency proceedings for Arcandor subsidiaries Karstadt Warenhaus GmbH and Quelle GmbH, two of Deutsche Post DHL’s major customers in Germany, were opened on 1 September 2009. Quelle GmbH has since been liquidated. These insolvency proceedings impacted earnings by a total of €–247 million in the consolidated financial statements for the period ended 31 December 2009. On 15 March 2010, the insolvency administrator for the Karstadt department store chain submitted an insolvency plan to the local court of jurisdiction. The plan calls for continuing business operations and finding an investor. Depending on the course of the insolvency proceedings, we cannot rule out an additional impact on earnings in the Group.

Only certain postal services will remain exempt from value added tax (VAT)

The draft bill to amend the Umsatzsteuergesetz (German value added tax act), which had been under discussion for some time and which included a reduction in the VAT exemption of Deutsche Post AG, was passed on 26 March 2010. Under the new rules, starting on 1 July 2010 the VAT exemption will only apply to specific universal services pursuant to the EU Postal Directive that are not subject to individually negotiated agreements or provided on special terms (discounts etc.). Any enterprise that agrees to provide some or all of these services nationwide in Germany will qualify for the VAT exemption for the services.