Deutsche Post DHL confirms short-term and mid-range targets - stable dividend proposed
- Following a successful financial year in 2012, dividend of EUR 0.70 per share proposed once again
- Group confirms Strategy 2015 targets at halfway point
- Climate efficiency significantly improved - half of 2020 CO2 target achieved already
- CEO Frank Appel: "We remain on track"
Frank Appel: "Strategy 2015 will help us remain on track even without any economic tailwind."
After a successful year 2012 and a solid start in the new year despite a challenging economic environment, the world's leading postal and logistics group, Deutsche Post DHL, is confident about the future. At the Annual General Meeting, Deutsche Post DHL CEO Frank Appel confirmed the Group's targets for 2013 as well as the company's mid-term outlook.
"Strategy 2015 has given our company a clear compass that has made it possible for us to confidently navigate the financial and economic crisis. It will help us remain on track even without any economic tailwind," Appel told shareholders. "At the same time, we continue to benefit from our ongoing efficiency gains. Only streamlined, flexible structures and continuous cost optimization will enable us to have the necessary financial strength to invest in the future and thus generate long-term profitable growth."
Even though the global economy produced, as expected, only moderate growth, the company got off to a solid start at the beginning of this year, Appel said. The Group had released its financial figures for the first quarter of 2013 on May 14. At EUR 13.4 billion, revenues had risen by 0.6 percent above the level generated in the same period last year. Adjusted for exchange-rate effects and inorganic factors, revenues climbed by 1.5 percent - and the Group was able to produce this result even though the loss of around 2.5 working days in Germany had an additional negative impact on the year-on-year comparison. Group EBIT rose by almost 3 percent above the level generated in the previous year, again outpacing revenue growth, and reached EUR 711 million. Once more, the Group's strong position in the international express business and the parcel segment in Germany - both highly dynamic markets - proved to be the driving forces of revenue and earnings growth.
Short-term and mid-range targets confirmed
As a result of its exceptional market position in the world's growth regions and markets the Group boosted its revenues last year by EUR 2.7 billion (+5.1 percent) to EUR 55.5 billion.
For the rest of 2013, Deutsche Post DHL continues to expect the global economy to generate moderate growth. Against this backdrop, Appel once again confirmed the Group's guidance for the year, forecasting Group EBIT to increase to between EUR 2.7 billion and EUR 2.95 billion. The MAIL division is still expected to contribute between EUR 1.1 billion and EUR 1.2 billion. At EUR 2.0 billion to EUR 2.15 billion, the contribution made by the three DHL divisions this year is again forecast to provide the largest share of the Group's operating earnings. Corporate Center/Other expenditures are anticipated to again total about EUR 400 million. The Group's consolidated net profit is projected to grow in line with the operating business in 2013. The company also expects that its focus on cash flow - which already produced results in the first quarter - will enable this year's free cash flow to at least cover the proposed dividend for the 2012 financial year.
Appel also confirmed the company's mid-range targets in his address to shareholders. "As 'The Postal Service for Germany' and 'The Logistics Company for the World,' we intend to become the provider, employer and investment of choice," the CEO said. "By taking this comprehensive company approach, we plan to fully unlock the huge potential of our company." Deutsche Post DHL aims to produce Group EBIT of between EUR 3.35 billion and EUR 3.55 billion in 2015. In the process, the MAIL division's EBIT contribution should stabilize at a level of at least EUR 1 billion. For the DHL divisions, the Group expects earnings to increase at an annual average of 13 percent to 15 percent between 2010 and 2015. As a result, the EBIT contribution of DHL is expected to continue rising to EUR 2.7 billion to EUR 2.9 billion through the end of this time period. At the same time, the company anticipates Corporate Center/Other expenditures to decline to EUR 350 million.
Simplification, globalization and climate efficiency
Appel took the opportunity at the halfway point of Strategy 2015 to reiterate for shareholders the central goals of the Group's plans: In addition to developing innovative solutions to further simplify customer services, the fostering of global trade through the continuous expansion of the company's network and the assumption of corporate responsibility remained the primary focal points of the Group, Appel said. "Effective, efficient logistics plays a fundamental role in the competitiveness of companies, markets and societies. As the world's leading postal and logistics group, we assume this responsibility and consider it an integral component to our business approach," he added.
Within this context, the Group's commitment to the environment plays a key role, Appel said. "As a pioneer in logistics, we must also be a pioneer in climate efficiency," the CEO asserted. At the heart of Deutsche Post DHL's commitment to the environment is the climate-protection program GoGreen, which aims to improve by 2020 the Group's carbon efficiency by 30 percent compared with the base year 2007. With a 16 percent improvement in carbon efficiency at the end of last year, the Group has already progressed more than halfway to this goal.
A look back at 2012: sizeable revenue increase, earnings growth outpaces revenues
Prof Dr Wulf von Schimmelmann (Chairman of the Supervisory Board) and Dr Frank Appel (CEO of Deutsche Post DHL) at the AGM 2013.
During his speech Appel expressed strong satisfaction with the 2012 financial year: "We reached another milestone last year and delivered what we promised," he stated. As a result of its exceptional market position in the world's growth regions and markets - as well as due to favorable exchange-rate effects - Deutsche Post DHL boosted its revenues last year by EUR 2.7 billion (+5.1 percent) to EUR 55.5 billion. Thanks to higher revenues and improved profitability, the company was able to enhance its operating earnings in the same period of time by more than EUR 200 million, or nearly 10 percent, to EUR 2.67 billion. By generating earnings of more than EUR 2 billion - a year-on-year increase of 19 percent - the DHL divisions continued to be the driving force of the Group's growth. With all three divisions producing double-digit earnings gains, the DHL pillar was the main contributor to the Group's operating profits.
At EUR 1.05 billion, the operating earnings produced by the MAIL division in 2012 were EUR 56 million below their level in the previous year. The reason for the decline was a settlement of a VAT audit that had a one-time negative impact of EUR 151 million on the division's earnings. Excluding this non-recurring effect the MAIL EBIT would have increased to EUR 1.2 billion in 2012 from EUR 1.11 billion in the prior year. Overall, the operating improvements together with the final positive effects resulting from the completion of the Postbank transaction led to a 42.6 percent increase in consolidated net profit to EUR 1.66 billion. Similarly, basic earnings per share climbed from EUR 0.96 in 2011 to EUR 1.37 in 2012. Adjusted for major one-time effects, the company's net profit and earnings per share increased by more than 10 percent in 2012.
Dividend of EUR 0.70 proposed
On the basis of this positive development, the Board of Management and the Supervisory Board are proposing a dividend of EUR 0.70 per share for the 2012 financial year to the company's shareholders. Based on the consolidated net profit adjusted for non-recurring items, the dividend proposal reflects a payout ratio of 53 percent. Based on the consolidated net profit adjusted for non-recurring items, the dividend proposal represents a payout ratio of 53 percent. As a result, the Group's dividend proposal is once again within the range of 40 percent to 60 percent that the company set as a target corridor for dividend payments with the introduction of its finance strategy in 2010. Calculated on the basis of the share's year-end closing price, the dividend proposal reflects a dividend yield of 4.2 percent.