Background information on the MAIL Corporate Division
One and half years after the German mail market was completely opened, Deutsche Post still maintains a strong position: Six days a week, more than 95 percent of all letters reach their recipients the day after being mailed. Today, the services of Deutsche Post can be used in more places than ever before. Deutsche Post operates 14,000 retail outlets in Germany. An additional 2,000 Packstationen, 1,000 Paketboxen and 2,500 points of sale for letter and package stamps are also available. Thanks to its unique portfolio of services and its high quality, Deutsche Post maintained its market share of nearly 90 percent last year.
To keep this strong position in the future, Deutsche Post must take the right steps now. The decline in underlying EBIT of around 30 percent recorded in the first half of the year cannot be attributed solely to the economic crisis. It is also the result of higher labor costs and changing demand. As part of Strategy 2015, a program designed to strengthen the two pillars of Deutsche Post and DHL, the MAIL Corporate Division has gained a comprehensive program for the future.
What's involved: The goal is to secure jobs on the one hand and profitability on the other, with the help of cost-cutting measures and innovative products. In the first half of the year, the MAIL Corporate Division reduced direct costs by 180 million euros among others by taking measures to raise productivity. Additional savings are to be achieved in the second half of the year. These steps will have a total impact on EBIT of around 300 million euros this year.
To lower the cost base over the long term, Deutsche Post plans to increase the workweek to 40 hours from 38.5 hours currently without providing additional compensation and to delay a pay raise that was agreed on in a collective-bargaining agreement. In addition, starting pay for new workers is to be tied to the minimum wage. While striving to avoid layoffs, Deutsche Post aims to reduce its workforce over the mid term.
On the other hand, new products are to be introduced: Deutsche Post has already become a pacesetter by creating such products as Stampit, Internet stamps, Plusbrief Individuell or Handyporto. But to become an all around provider of communications, the Group wants to help its customers to digitalize their communications: With the "Letter on the Internet," Deutsche Post will bring a physical letter's security and postal confidentiality to the Web. Internal testing was begun in mid-July, and a market test is planned for the fourth quarter.