Interview with the CEO

Act strategically - Simply grow

Deutsche Post DHL’s CEO is convinced that the company’s consistent focus on its Strategy 2015 is bearing fruit and that the Group is off to a good start on the road to achieving its quite ambitious goals.

Dr Appel, how would you rate financial year 2011?

We not only exceeded our own expectations but also those of external observers, who were positively surprised with our results. This shows that focusing consistently on our Strategy 2015 is bearing fruit. Revenue increased to €52.8 billion despite being reduced by currency effects and changes in our portfolio; and even though we raised our earnings guidance twice during the year, in the end we still exceeded our expectations slightly with a figure of €2.44 billion, quite a noteworthy achievement in an uncertain economic environment.

„Why is the iPhone such a success? Because it integrates applications and interfaces and makes everything as simple as possible for its users. We can learn from that and transfer this idea over to our industry. Deutsche Post DHL should become the iPhone of the logistics industry.“

Dr Frank Appel, CEO

Dr Appel also thinks the company will experience growth in 2012.

What do you think were the deciding factors?

We consistently utilised our strengths as the market leader in the German mail business and nearly all of our logistics activities. The encouraging growth we’ve seen in the German parcel business and the fast-growing Asian region substantiate this.

Your goal is to be the provider, employer and investment of choice in the industry. How successful have you been?

We are off to a good start on the road to achieving our quite ambitious goals. We’ve seen a measurable increase in customer satisfaction, both in our MAIL division and in our DHL divisions. We have also made strides as an employer: for the third year in a row, we improved our ratings in our annual employee opinion survey substantially. I’m convinced that satisfied employees and customers have a direct, positive effect on our financial performance.

And what does that mean for investors?

First of all, it’s confirmation that they have invested in a solid company with bright prospects. In 2011, our share price performed better than the DAX. We certainly understand how important a stable dividend policy is. Therefore, we intend to consistently distribute 40% to 60% of our net profits as dividends. We will propose raising the dividend from €0.65 last year to €0.70 per share for financial year 2011 to our shareholders at the Annual General Meeting in May.

In 2010, DHL made the largest contribution to consolidated net profit for the first time. Did this trend continue?

Yes. In 2011, all of our divisions contributed to our very good results. Our express and logistics businesses, in particular, have gained momentum. In some areas, revenues increased quite considerably. This also goes for earnings that were still impacted by restructuring measures in the previous year. These measures substantially improved our profitability, and our margins increased noticeably.

How do you see the trend in the German mail and parcel market?

Without a doubt, the internet is having the greatest impact on this business. It’s presenting challenges but also opening enormous growth opportunities. Traditional mail is giving way to electronic forms of communication. Now we did see volumes stabilise in 2011 but demand will continue to decline due to the overall structural trend. In our parcel business on the other hand, the trend is very encouraging. We are reaping the rewards of the flourishing e-commerce sector. We grew by almost double-digit figures and expect volumes to increase significantly in the future as well. What’s more, we agreed upon a Generations Pact with the trade unions, a trendsetting model that is the first of its kind.

 

Frank Appel sees enormous potential for growth in the flourishing e-commerce sectors.

You’ve set yourself the goal of offering your customers services that are easy to use. What exactly does that mean?

We believe that customers will only purchase services that make their lives easier. That’s why we try, wherever we can, to make things easier and to reduce complexity and to do so along the entire value chain. Why is the iPhone such a success? Because it integrates applications and interfaces and makes everything as simple as possible for its users. We can learn from that and transfer this idea over to our industry. Deutsche Post DHL should become the iPhone of the logistics industry. We just established the position of CCO at DHL, which was a logical step in the development of our customer promise.

Where are the growth opportunities for Deutsche Post DHL?

As a company that supports world trade, we see our opportunities in those places where volume growth is greatest, i.e., in the emerging regions of Asia, Latin America and the Middle East. We already have an outstanding presence in these markets and in many we are the market leader. We will concentrate on these regions without, of course, neglecting our traditional markets of Europe and North America, where there is still potential for growth – particularly in terms of gaining market share. We are well equipped for future growth with a solid, globe-spanning infrastructure, in which we continue to invest.

How significant are Asia and the emerging markets for future growth?

These countries have large populations, with people who are striving for a better life. The demand for goods and services will thus increase provided that employment does not fall. In these particular countries employment is even rising. That is why populous countries such as Brazil, China, India, Russia and Mexico will be central to our company and its sustained success. We already have an outstanding presence in these countries today and will definitely expand our position in the future.

How has Deutsche Post DHL started financial year 2012?

Despite the rather moderate forecasts made by macroeconomists, we see that the overall positive developments from the last quarter are continuing into the new year.

What is your outlook for 2012 as a whole?

Against this backdrop, we expect consolidated EBIT to reach between €2.5 billion and €2.6 billion in the current financial year. The MAIL division is likely to contribute between €1.0 billion and €1.1 billion to this figure. For our DHL divisions, we expect an additional improvement in overall earnings to approximately €1.9 billion compared with the previous year. Consolidated net profit is also expected to continue to improve in line with our operating business.

Angela Titzrath will become the first woman to join your Board of Management. What are your expectations in this regard?

I’m very pleased that we were able to win over Ms Titzrath to join our Group as Board Member for Personnel and as Labour Director. She brings extensive experience and has all the qualifications necessary to take us closer to our goal of being the employer of choice worldwide.

I’d like to take this opportunity to say a personal thank you to Walter Scheurle, who devoted nearly 45 years to our company, playing an important role in shaping our Group through dedication and personal integrity. I have much respect for him and what he accomplished.

Dr Appel, thank you very much for talking to us.