Deutsche Post DHL confirms short and mid-range targets - dividend increase proposed
- Following the successful financial year 2013, dividend increase to EUR 0.80 per share proposed
- Group confirms guidance for 2014 following good start to the year
- Earnings targets of "Strategy 2020" as announced in April reiterated
- Further CO2 efficiency increase in 2013: improvement of 18 percent since 2007
- CEO Frank Appel: "We are ready to take the next steps"
Frank Appel: "We are ready to take our next growth steps and have many initiatives planned for the future."
Deutsche Post DHL is looking back on a successful year 2013 and a good start to the current financial year 2014. For the rest of the year, the Group expects to continue its positive performance despite the persistently challenging economic conditions and to once again generate earnings growth. The company also remains confident about the period that extends beyond this year: During the company's Annual General Meeting, CEO Frank Appel underscored the mid-range growth targets contained in the "Strategy 2020" the company announced in April.
"With our new 'Strategy 2020', we are drawing on our past achievements and our strengths to seize new opportunities to generate additional organic growth in a changing marketplace," Frank Appel told the company's shareholders. "We are ready to take our next growth steps and have many initiatives planned for the future."
Good start to the year 2014 - earnings guidance confirmed
Prof Dr Wulf von Schimmelmann (Chairman of the Supervisory Board), John Gilbert (CEO DHL Supply Chain) and Dr Frank Appel (CEO Deutsche Post DHL) at the AGM 2014.
During the first quarter of 2014, the Group again performed well and continued to grow. The company announced its first-quarter results on May 15. The Group's revenues totaled nearly EUR 13.6 billion in the quarter, an increase of more than 1 percent compared to the previous year's period. Adjusted for negative exchange-rate effects and other inorganic factors, the revenue increase was more than 5 percent. The Group also continued to improve its operating earnings: During the first quarter of 2014, consolidated EBIT rose by more than 2 percent to EUR 726 million. This increase reflects the strong position that the Group and its divisions maintain in the world's growth markets.
On the basis of the good start to the year, Appel confirmed the company's full-year earnings guidance: Overall, the Group's EBIT is projected to rise to between EUR 2.9 billion and EUR 3.1 billion in 2014. While the Post - eCommerce - Parcel (PeP) division is anticipated to contribute about EUR 1.2 billion to this total, the DHL divisions should continue to grow earnings and generate an EBIT of between EUR 2.1 billion and EUR 2.3 billion for the year. In addition, the Group plans to reduce Corporate Center/Other expenses to below EUR 400 million in 2014. Furthermore, the company expects to again generate sufficient free cash flow to cover this year's dividend for financial year 2013.
"Strategy 2020: Focus.Connect.Grow." - Ambitious goals for the future
Overall, the Group's EBIT is projected to rise to between EUR 2.9 billion and EUR 3.1 billion in 2014.
CEO Frank Appel also told shareholders about the ways the company will continue to grow beyond the period covered by its "Strategy 2015". The company had presented the strategic priorities for the next planning horizon in the new "Strategy 2020: Focus.Connect.Grow." in April: The main focus of this strategy is the systematic growth of the logistics business in emerging markets and the international expansion of the successful parcel business in order to take advantage of the global eCommerce boom. As in the recent past, it is anticipated that the emphasis will remain on organic growth going forward.
"Strategy 2020" is based on three pillars: Under the "Focus" pillar, Deutsche Post DHL intends to continue to concentrate on its existing strengths, with the goal of further expanding margins. Deutsche Post DHL views itself, according to Appel, as a "family" of high-performance divisions. "Logistics is and will remain our core business," Appel said. The CEO also stressed his commitment to the new PeP division that was formerly known as MAIL. As part of "Connect", the company is planning to further systematically increase connectivity within the organization in order to extend its quality leadership and to deliver consistent, top service to its customers. With the strategy's third pillar - "Grow" - the Group intends to tap new segments to make sure growth remains above market average. The main focus here is sustainable and accelerated organic growth - generated particularly in emerging markets and eCommerce-related logistics.
With this new strategy, the Group is expressing its aspiration to become the clear industry leader: "The future belongs to logistics. And we intend to set the standards in this industry. In the future, when people think logistics, we want them to think Deutsche Post DHL," Appel said. "Strategy 2020" also includes a number of ambitious financial targets, which the CEO elaborated for the company's shareholders at the Annual General Meeting: For the period 2013 to 2020, the Group expects earnings growth of more than 8 percent per year on average based on the 2013 EBIT of EUR 2.86 billion. The 2015 EBIT target of between EUR 3.35 billion and EUR 3.55 billion remains unchanged. The DHL divisions are expected to continue to be the main contributor to the Group's revenue and profitability growth, with an annual average EBIT growth of approximately 10 percent per year over the period. At the same time, the PeP division is forecast to increase operating earnings by an average of around 3 percent each year.
Corporate responsibility as an integral part of the strategy
"To us, commercial success and responsible business practices do not represent a contradiction in terms. Rather, they go hand in hand," CEO Frank Appel explained.
As it moves forward, the company plans to continue applying the maxim "Respect and Results". "To us, commercial success and responsible business practices do not represent a contradiction in terms. Rather, they go hand in hand," CEO Frank Appel explained. "A smoothly operating logistics industry forms the foundation of efficient global trade and, thus, enables higher standards of living for many members of society in all parts of the world." To live up to its commitment, Deutsche Post DHL systematically applies its core areas of expertise on behalf of society and the environment. In the process, it melds profitability and sustainability.
With its environmental sustainability program "GoGreen", the Group became the first major logistics group to set an ambitious climate target in 2008: improving carbon efficiency by 30 percent by 2020. Since then, the company has moved closer and closer to achieving this goal. By the end of 2013, it had improved its carbon efficiency by 18 percent compared with the base year of 2007. The company's expertise in this field will increasingly be made available to others as well: "In the next step, we intend to help more and more of our customers to meet their own environmental targets," Appel told shareholders. Acting as a good corporate citizen, Deutsche Post DHL continues to play a role in education initiatives around the world, supports local charitable projects and uses its core logistics skills to prepare for and respond to natural disasters.
A look back at 2013: Sharp rise in net profit
CEO Frank Appel expressed his satisfaction with the company's performance during the past year: "2013 was a very good year for Deutsche Post DHL. We continued to write our success story and met all of our targets." At EUR 55.1 billion, last year's revenues were slightly lower than in 2012. However, adjusted for negative exchange-rate effects and other inorganic factors, revenues would have risen by nearly 3 percent, or more than EUR 1.5 billion in 2013. The Group's EBIT increased by 7.4 percent, or about EUR 200 million, to EUR 2.86 billion in 2013, finishing the year within the targeted range of between EUR 2.75 billion and EUR 3.0 billion. The DHL divisions contributed more than EUR 2 billion to the company's total operating earnings. Earnings also met the targets for the MAIL division: Supported by a number of non-recurring factors, EBIT increased by 17 percent to EUR 1.2 billion. Adjusted for the non-recurring factors, EBIT produced by the MAIL division decreased slightly as a result of higher material and personnel costs. Overall, the Group generated consolidated net profit of EUR 2.1 billion in 2013, more than EUR 450 million above the previous year's level. Basic earnings per share rose from EUR 1.36 to EUR 1.73 in 2013. Even adjusted for all major non-recurring factors, net profit and earnings per share rose significantly during financial year 2013.
Dividend increase to EUR 0.80 proposed
In light of the Group's good performance during this past financial year and its confidence about the company's future growth, the Board of Management and the Supervisory Board are proposing a dividend of EUR 0.80 per share for the year 2013. This represents an increase of EUR 0.10 per share over the previous year's dividend. Should shareholders approve this proposal, the Group will pay out a total of approximately EUR 968 million to its shareholders. This reflects a 14 percent increase compared to the previous year. Based on the consolidated net profit adjusted for non-recurring-items, the dividend proposal represents a payout ratio of 49 percent. As a result, the company's dividend proposal remains in the middle range of the target corridor of between 40 percent and 60 percent that was set in 2010 as part of the finance strategy introduced that year. Calculated on the basis of the share's year-end closing price, the dividend yield is about 3 percent.
Planned changes on the Supervisory Board
The agenda of this year's Annual General Meeting includes Supervisory Board elections made necessary by the expiration of the terms of four shareholder representatives. While the Supervisory Board is proposing the reelection of Prof. Dr. Henning Kagermann, Dr. Ulrich Schröder and Dr. Stefan Schulte to the Annual General Meeting, Hero Brahms will be leaving the company's Supervisory Board on grounds of age. Simone Menne, a member of the Executive Board of Deutsche Lufthansa AG, has been proposed as his successor. This recommendation is subject to approval by the Annual General Meeting. The election of Simone Menne would raise the share of women on the Supervisory Board of Deutsche Post DHL to 35 percent.