Deutsche Post World Net launches new, global quality initiative
"First Choice" to reinforce the Group's market leadership and contribute to the forecast 2009 earnings of at least 5 billion eurosBonn, 03/14/2006, 10:30 AM CET
"In strategic terms, no other logistics provider is better placed to compete on a global scale. From this platform, the launch of First Choice ushers in a new era in our company's history.
In addition to strengthening our financial performance further, we will work hard to become the world number one for quality and customer satisfaction," said Chairman and Chief Executive Officer Klaus Zumwinkel. "The acquisition of Exel makes us the world's largest logistics company. Yet success is not determined by size alone. Satisfying our customers is what counts. And this is why we will focus all of our processes even more firmly on the needs of our customers."
The First Choice program comprises a package of medium-term measures designed to meet customer needs in all sectors. It will improve the way Deutsche Post World Net communicates with its customers, strengthen customer loyalty and raise the quality of the Group's products and processes across all business units. Numerous operational and structural improvements, bolstered by the new quality initiative, will boost EBIT to at least 5 billion euros by 2009. First Choice will start in six to eight pilot countries in 2006 and will go global from 2007.
First Choice follows the successful STAR value-creation program, which focused primarily on maximizing internal synergies and reducing costs. By the end of 2005, STAR had contributed 1.44 billion euros to earnings, exceeding original expectations.
First Choice will begin with a series of reference projects, for example the planning of aviation, pro-active shipment tracking and tracing, call centers and Global Business Services. There is potential to improve customer communications and complaints management at regional and country level, as well as pick-up, transport and delivery.
Some 50,000 managers will be involved in the first stage of the process. Their task will be to kick off and then steer individual initiatives. The program will use scorecards to measure results, which will be reflected in all employees' performance evaluations and compensation schemes.
Key financial figures
In business year 2005, profit from operating activities on a like-for-like EBIT basis rose by 25.1 percent to 3.76 billion euros, up from 3 billion euros in 2004. Revenue grew by 3.3 percent to 44.6 billion euros in 2005, while consolidated net income climbed 39.9 percent to 2.24 billion euros. In the past fiscal year, Deutsche Post World Net improved its earnings per share by 38 percent to 1.99 euros, up from 1.44 euros the previous year.
At the Annual General Meeting on May 10, the Board of Management will propose a dividend for 2005 of 70 cents per share, an increase of 40 percent. The Group plans to continue its current dividend policy in the future, in order that its shareholders benefit from the continued development of the Group's business and its strong financial performance.
MAIL Corporate Division
In the MAIL division, international revenue growth has more than offset the anticipated decline in domestic revenue. Overall revenue in MAIL climbed by 1 percent to 12.9 billion euros, while EBIT amounted to 2.03 billion euros. The market for mail communication in Germany is expected to contract further, yet it is anticipated that growth in the German advertising market will pick up again in the future. Deutsche Post World Net intends to strengthen its presence in the overall advertising market by positioning itself as an integrated provider of cross-media offerings. The company is also alert to new market opportunities created by the further deregulation of foreign mail markets.
EXPRESS Corporate Division
In 2005, EXPRESS increased its revenue by 4.1 percent to 18.3 billion euros. Business in the Asia Pacific and Emerging Markets regions remained strong, with both regions posting double-digit revenue growth. Revenue in the Americas region rose by 5.8 percent to 4.6 billion euros, despite the previously announced start-up issues. Profit before impairment on goodwill was 445 million euros, up from 117 million euros the previous year. Profit after this impairment, which amounted to 434 million euros in the Americas region, was 11 million euros.
LOGISTICS Corporate Division
As in the previous year, the LOGISTICS division performed successfully in 2005. Revenue climbed 17.1 percent to about 7.9 billion euros, driven by strong organic growth in DHL Global Forwarding and DHL Exel Supply Chain. EBIT increased by 73.1 percent to 315 million euros, boosting the return on sales for the corporate division from 2.7 percent in 2004 to 4 percent in 2005. The figures for 2005 do not yet include Exel.
FINANCIAL SERVICES Corporate Division
EBIT for the FINANCIAL SERVICES division, which consists mainly of Postbank, increased in 2005 by 10.6 percent from 714 million euros to 790 million euros. Postbank reported separately on its results on March 13.
Outlook for 2006
Deutsche Post World Net expects to make further progress in developing its business in 2006. The Group anticipates revenue for the current year to exceed 60 billion euros and EBIT to total at least 3.7 billion euros. This includes significant non-recurrent expenditure on the integration of Exel and BHW.
Revenue in the MAIL Corporate Division is expected to remain stable or rise slightly, while EBIT is forecast at about 2 billion euros. In the EXPRESS Corporate Division, the Group is anticipating single-digit revenue growth in 2006. The operating profit for 2006 should be equivalent to the 2005 figure without the impairment loss on goodwill of 445 million euros. In the LOGISTICS Corporate Division, enlarged by the acquisition of Exel, revenue is expected to exceed 18 billion euros by some margin, with EBIT at about 500 million euros. In the FINANCIAL SERVICES Corporate Division, income is forecast to rise, driven in part by the inclusion of BHW Holding AG. This will be accompanied by double-digit growth in operating profit to at least 900 million euros.