Deutsche Post DHL confirms positive outlook and proposes dividend increase to shareholders
- Following successful 2011 financial year, company proposes dividend increase to EUR0.70 per share
- Further customer-focused investments to boost future growth
- CEO Frank Appel at today's annual general meeting: "We are positioned better than ever"
Following a very successful 2011 financial year and a dynamic start to the current year, Deutsche Post DHL, the world's leading mail and logistics group, expects to generate further growth in revenues and earnings against the backdrop of a moderately expanding global economy. At the company's annual general meeting, Frank Appel, CEO of Deutsche Post DHL, confirmed both the Group's targets for 2012 and the company's midrange outlook.
"2011 was a very good year for our Group", said Appel. "We met all of our targets and have - by continuing to implement our Strategy 2015 - further bolstered the foundation for future growth." The positive start into the current year - the Group increased revenues and earnings in all divisions in the first quarter - pointed to a continuation of the company's profitable growth trend, Appel added. These results also underpinned the guidance for the entire year: the Group forecasts an increase in Group EBIT to between EUR2.5 billion and EUR2.6 billion.
The DHL divisions are expected to continue in their role as the Group's growth driver, with operating profit in the logistics business projected to increase to around EUR1.9 billion. The Group aims to stabilize profitability in its Mail division at between EUR1.0 billion and EUR1.1 billion. In addition, the Group's consolidated net profit adjusted for the deconsolidation effects from the concluded Postbank transaction should continue to improve in line with the operating business.
Midterm targets confirmed
In his address to shareholders, Mr. Appel also reiterated the company's midterm targets. "The Group is positioned better than ever," he commented. "We have a very strong presence in exactly the places where growth is being generated: in the dynamic parcel business in Germany as well as in the emerging markets of the world that continue to grow rapidly." For this reason, the company also expected the positive earnings trend to continue beyond the current financial year, he added. Even as letter volumes continue to fall, cost-cutting measures and growth programs should stabilize the profitability of the MAIL division. "We are 'the postal service for Germany' and we intend to remain it in the future. We can achieve this goal only by offering the best service and the highest quality as well as investing in new products that will fulfill our customers' needs both today and tomorrow", Appel said.
The Group expects the DHL divisions to produce annual earnings growth that will average between 13 percent and 15 percent between 2010 and 2015. Given the continued prevailing uncertainty about global economic growth prospects, Appel also drew attention to the company's significantly improved flexibility. "Today we are much more capable of adapting quickly to a volatile business environment than we were just a few years ago. As a result, we can use opportunities at any time as they arise and respond at short notice to challenges that emerge. Combined with our strong competitive position, we are well prepared for the future", he emphasized.
2011 in review: double-digit earnings growth
Despite a weakening of the global economic environment over the course of the year, the Group performed exceptionally well in the 2011 financial year and reached the earnings guidance that had been raised multiple times. Group revenues rose by 2.8 percent to EUR52.8 billion. Adjusted for exchange-rate and consolidation effects, this amounts to organic revenue growth of more than EUR2.7 billion (+5.3 percent) year on year. In addition, the company's improved earnings power resulted in an above-average increase in the Group's EBIT. At more than EUR2.4 billion, the Group's operating earnings were almost one-third higher than the previous year's level. With earnings of EUR1.7 billion and an improvement of nearly 55 percent compared with the previous year's level, the DHL divisions contributed the lion's share to the Group's EBIT and its growth.
The very strong performance of the logistics division resulted largely from the exceptional market position of DHL in the world's growth markets, particularly in Asia. The MAIL division continued to profit from its dynamic parcel business, which, together with strict cost management, contributed significantly to the stabilization of the division's profitability. At more than EUR1.1 billion, the division's operating earnings finished the 2011 financial year only very slightly below the previous year's level. Consolidated net profit fell to EUR1.2 billion (2010: EUR2.5 billion), a decrease that was caused by extraordinary effects related to the Postbank transaction.
Adjusted for the Postbank valuation effects in both years, consolidated net profit and earnings per share both would have risen more than 50 percent in the 2011 financial year. "We have successfully applied our strengths as the market leader in the German mail and parcel business as well as in international logistics," Appel said, in summing up the company's strong performance of the past financial year.
Renewed dividend increase proposed
In light of these positive results, the Board of Management and Supervisory Board proposed a dividend of EUR0.70 per share for 2011 to company shareholders. This represents an increase of EUR0.05 per share from the EUR0.65 per share that the Group paid its shareholders last year. Based on the company's consolidated net profit adjusted for non-recurring items, this dividend reflects a payout ratio of 58 percent. "With this dividend proposal we are again at the upper end of the range of 40 percent to 60 percent that we set as a target corridor in our finance strategy when we introduced it in 2010 and are once more demonstrating continuity and predictability", said Appel. Based on the year-end closing price of the share, the dividend yield totals 5.9 percent.
Growth through investments for more benefits to customers
In his address to shareholders at the annual general meeting, the CEO announced the Group's midrange investment plans: "We are determined to make our customers' lives as easy as possible by offering products, solutions and services that are tailored thoroughly to meet their logistics needs," Appel explained. To do this, the Group will invest, for example, around EUR420 million in new mail sorting equipment by the end of 2012. The largest investment in new letter technology since building the mail centers in the 1990s will increase processing speed, improve delivery quality and ensure that mail sorting is performed in a more environmentally conscious way. "This represents a clear commitment to the future of the letter", said Appel.
Against the backdrop of the strong volume increases in the parcel business - in the first quarter alone, the company shipped almost 14 percent more parcels than a year ago - the Group will also invest about EUR750 million in the modernization of its Germany-wide parcel network. In the DHL divisions, the company is also planning to make additional investments in a new IT infrastructure for Global Forwarding as well as in the further expansion of the Express network. To even better meet the needs of its customers in the future, DHL Express recently began to offer a new flight route that spans the globe by linking Hong Kong, Los Angeles and Leipzig. The company also announced a US$50 million expansion of its hub in Cincinnati.
In a few weeks, the company will open a new hub for North Asia at Shanghai's international airport, representing an investment of US$175 million. Together with the existing Asian hubs in Hong Kong, Bangkok and Singapore as well as more than fifty additional DHL express gateways, the global leader in time-sensitive international shipments now boasts the largest network in Asia. "We continue to see enormous growth opportunities in the emerging markets of Asia, Latin America and the Middle East," Appel said. "With an unparalleled global infrastructure at our disposal in which we are investing constantly, we have the best possible foundation for generating further profitable growth."