Speech Dr. Klaus Zumwinkel
At the Annual General Meeting 2007 of Deutsche Post AG on May 8, 2007, in Cologne.
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I would like to warmly welcome you to our Annual General Meeting in the Cologne Arena. I would also like to extend a warm welcome to our shareholders who are watching on the Internet.
Before I tell you about our company's development in 2006, I would like to say a few words about our industry in general.
The logistics industry is booming. It is one of the world's largest growth markets with a volume of EUR 5.4 trillion. Let's take Germany as an example: The logistics industry here is the third-largest business sector with revenue of EUR 170 billion and 2.5 million employees. And that is not all: World trade is booming internationally as well. This year, its growth will be around 8%. And our company brings global trade to all corners of the world. It is a true pleasure to be working in such a dynamic industry.
Your company, Deutsche Post World Net, is the market leader in this industry: It is a company with a global network, broad know-how and, above all, qualified and highly motivated employees. This is our strength and our basis for further growth.
In the past year, we worked extremely hard to move your company farther ahead and to make it the best in the industry. Let me mention just a few "highlights":
- With Exel/DHL, we successfully completed the largest integration in our industry as well as in our company's own history
- We finished the second integration - that of Postbank/BHW and 850 retail outlets with 10,000 employees - three months ahead of schedule
- We succeeded in acquiring new customers and in growing organically, in spite of the intense integration work
- We kept our word both in terms of revenue and earnings, and reached our goals
INow, I would like to provide you with a status report about the company and the important issues facing us. This brings us to fiscal year 2006.
2006 - a good year
Overall, this was a good, successful year for our company.
- Revenue rose about 36% to EUR 60.6 billion.
- At 59%, the majority of our revenue was generated for the first time by our international business.
- Operating profit rose nearly 3% to EUR 3.9 billion. The result was a perfect landing in which we achieved the promised objectives for revenue and operating profit.
- Earnings fell 14.3% to EUR 1.9 billion. One major reason for this was the higher share of third parties as a result of the reduced stake in Postbank.
- Cash flow rose 40% and is an expression of our improved earnings quality. This is because the ratio of EBIT to cash flow, or cash conversion, rose from 57% to 84%.
Stock trends 2006
To you, our shareholders, the development of our share price is of course of particular interest. In December, Deutsche Post stock closed at EUR 22.84. This represents an increase of 11.5% in 2006, less than the DAX or the successful Postbank stock.
But compared with our company's main competitors, Deutsche Post stock performed considerably better. Since the beginning of the year, Deutsche Post's share price performance has nearly kept pace with the DAX. The Postbank share has developed equally favorably.
Remarkably, the logistics sector index performed rather sluggishly during the same period with a gain of nearly six percent. Deutsche Post has thus substantially outperformed its industry sector.
Stock trends 2007
Since the beginning of the year, Deutsche Post's share price performance has nearly kept pace with the DAX. The Postbank share has developed equally favorably.
Remarkably, the logistics sector index performed rather sluggishly during the same period with a gain of nearly 6 percent. Deutsche Post has thus substantially outperformed its industry sector.
Ladies and gentlemen,
Our stockholder structure changed during the past year. As expected, our largest shareholder, the KfW, continued to reduce its stake. In July 2006, it sold about 73.1 million shares of Deutsche Post stock from its portfolio. In January 2007, the convertible bonds issued by the KfW in December 2003 came due. Through the conversion of KfW bonds into Deutsche Post stock, about 56 million shares were placed on capital markets. Since last year's Annual General Meeting, the KfW's stake has fallen from 41.7% to 30.6%.
At the same time, the free float rose from 58.3% to 69.4%. As a result, we took another step toward achieving our goal of 100% free float.
A higher free float makes the stock more appealing to institutional investors around the world. We are the leading international logistics company, and it is logical for this fact to be reflected in our shareholder structure. Today, a major portion of the free float is already in the United States, Great Britain and, of course, Germany.
But there is another factor in a stock's appeal that is just as important: the dividend.
We would like to honor your trust in us and enable you, our stockholders, to reap the success of your company. Since we have been listed on the stock exchange, we have consistently raised the dividend. Over this period, this increase has averaged 19% per year. I think this is an achievement that is worth showing off.
For fiscal year 2006, too, the dividend is to rise again. The proposed dividend is 75 euro cents per share.
Ladies and gentlemen,
Mr. Weber has already indicated to you that I am required this year for the first time to give you a brief explanation about the report that is available here today concerning mandatory statements under sections 289 and 315 of the German Commercial Code. I welcome this opportunity.
This report offers you information about the legally required statements that must be included in the appendix of the annual report and consolidated financial statements.
Because the report has been available to you on the Internet since the opening of the Annual General Meeting and today at information stands, I will limit my comments to a few key points - if you do not mind:
As the report shows, our company's share capital is about 1.2 billion shares. No stockholder or group of stockholders is entitled to special rights. The principle of "one share one vote" applies. As I previously mentioned, we have a high free-float level of nearly 70%. The sole stockholder with a stake of more than 10% is the KfW bank group, which holds about 30% of shares. The articles of our company can be changed by a simple majority as long as the law does not require something different.
The appointment and dismissal of members to the Board of Management or Supervisory Board is based solely on stock and codetermination regulations. In the report, we have provided a summary of authorizations granted by the Annual General Meeting to issue new shares from the approved capital and the conditional capital as well as the authorization to issue convertible and option bonds. With these capital measures, we have been put in a position of being able to react to short-term market requirements in the best possible way.
Ladies and gentlemen,
I would now like to give you an overview of our individual divisions, starting with MAIL.
In the MAIL division, revenue rose about 3%. I am particularly proud of being able to report to you today that we succeeded in keeping operating profit stable at EUR 2 billion.
In Germany, Deutsche Post offers the highest level of quality around the world. On average, a letter takes just 1.06 days to reach its destination in Germany. More than 95% of letters arrive the next day within the national network - a top-level performance even in an international comparison!
Quality is one of the core Corporate Values, and customer satisfaction is a subject that is particularly close to our hearts. For this reason, we constantly work on improving our processes and structures.
In our key business, letter communication, the trend is pointing downward - just as it has in previous years. This drop is associated with a fundamentally shrinking market. The substitution of the classic letter with faxes, e-mail, text messages and the Internet is a fact of life.
Furthermore, our key sectors, like mail-order businesses, have not been able to profit from the strengthening economy. In direct marketing - or advertising mail - we suffered a slight drop for the first time during 2006.
At the beginning of 2007, we integrated the German parcel business into the Mail division. We expect this reorganization will generate improved service for our customers by doing such things as further simplifying IT platforms. As part of joint delivery, Mail and Parcel are already cooperating today, serving 85% of the area jointly. We see savings potential in IT and overhead costs. In one example of this, we will combine 33 parcel centers with Mail branches.
In the area of value-added services, we improved our strategic position last year by acquiring Williams Lea, the world's leading provider of mail and document management, and created an international platform for value-added services in the Mail division. We now have a global network for transferring data across borders and for outsourcing business processes. Our national business will also profit from this expertise.
In the past 12 months, Williams Lea has generated solid growth as one of the world's leading suppliers of corporate information solutions. The pipeline with big new orders worth millions of Euros is well filled.
Ladies and gentlemen,
Deutsche Post is unique in the area of mail.
We have a great team: Our 150,000 employees in the MAIL division are highly motivated and are passionate about the letter business.
- A total of 80,000 carriers work six days a week to reliably and quickly deliver your mail - 70 million letters a day, no matter where you live.
- Our carriers enjoy a high level of trust among our customers - how many of you have given your carrier the key to your home?
- With us, the confidential nature of your mail is in good hands. Security is a fundamental principle of our business. Quality and security managers on site and TÜV-certified processes are a natural part of our business.
- Regular training of our carriers is a critical investment to us. A total of 1 million training hours ensure that we deliver what we promise you, our customers: quality in everything we do.
- Today, we have 12,000 postal retail outlets. By using new retail-outlet formats, we want to be nearer and more accessible to you, our customers. As a result, we are working with such partners as retailers to offer our customers additional sales outlets. In a test being conducted in Bonn and Dortmund, we are selling our highest- demand products in so-called Postpoints. In other special outlets, we are selling stamps for letters and parcels. We are getting very positive feedback from our customers. This is encouraging us to remain on this course.
- Ladies and gentlemen, there has been much discussion about six-day delivery. You even heard worries that the Post would reduce the six-day delivery schedule and no longer bring mail on Saturdays. Now I can tell you this: That is not the case. The opposite is actually true. We are considering whether and how we can deliver on Sundays to a selected group of customers in individual cases.
As you see, Deutsche Post is not only the largest company, but also the leading performer in Germany's mail market. We intend to retain this position in the future and make our strength evident to our customers. As part of this effort, you will see the Deutsche Post brand more conspicuously and frequently in the weeks and months ahead: whether it is on billboards or television, or in newspapers and mailboxes. In a broadly based brand campaign, we will clearly show that we will be everywhere for our customers in the future, delivering reliable service to them.
Now, let's turn to the EXPRESS division, which was recently put completely under the leadership of John Mullen.
At EXPRESS, we boosted revenue 2% and, in particular, increased our operating profit significantly.
In the United States, we saw revenue slip nearly 2% to about EUR 4.4 billion. This resulted primarily from developments that occurred during the first six months in the United States, particularly those involving the "Domestic Air" product. In the second half of the year, we were able to stabilize the revenue situation and achieved a positive operating result. While we were making these improvements, we also significantly boosted our quality level in the United States.
The United States is and will remain one of our most important markets. It is a crucial component in our global network. But one thing still applies: We will need a lot of patience and stamina to successfully establish ourselves in the biggest market of the world for our customers and our stockholders.
In Europe, we maintained our market leadership. And we even extended it in Asia and the emerging markets. We profited from the solid foundation that we have laid over the years. We are also well positioned in the markets of eastern Europe, the so-called "China next door". In the Russian market, for instance, we generated growth rates of more than 20%. We are the market leader and are working to expand this position.
In Asia, we continued to grow strongly and have become the largest international provider in the region. In recent years, we have invested $ 1.7 billion. As the market leader, we offer a unique network.
We are also the only international logistics provider that offers domestic services to its customers in China and India. In China, we reach 95% of the population through our network.
Ladies and gentlemen,
Construction of our European hub in Leipzig is moving along rapidly. In addition to our other sites in Hong Kong and Wilmington in the United States, Leipzig will be one of DHL's three central hubs.
Last October, we celebrated our "halfway party" with German Chancellor Merkel. Among other things, she praised our commitment to the region because DHL is creating a large number of jobs there. We are investing EUR 300 million in the site. Jobs are desperately needed in this region of relatively high unemployment. At DHL, we are directly creating 3,500 jobs. We have already received more than 41,000 applications for these positions. DHL is offering an opportunity to those very people who frequently have a hard time finding a job because they lack qualifications or have been out of work for an extended period of time. We expect that around 7,500 other jobs will be created as an outgrowth of our activities in Leipzig. An initial step is definitely the opening of a distribution center in the immediate area by the world's largest Internet bookseller - our customer Amazon.
We are happy to offer this opportunity to the people of this region. To us, this is an important contribution to our home market, Germany.
Construction of our hub is moving full speed ahead. We will begin test operations in the middle of the year. Right now, 10 to 12 planes are transporting cargo each day. In 2008, when DHL has begun full operations, 50 freight planes will take off and land in Leipzig every day. A total of 2,000 tons of freight will leave the airport bound for 120,000 destinations.
Now, let's take a look at the LOGISTICS division. Under the leadership of John Allan, this division performed exceptionally well in the past year.
As I mentioned at the start, we completed the integration quickly, professionally and efficiently. I would like to emphasize at this point that the LOGISTICS division exceeded its revenue goal of EUR 20 billion and its earnings goal of EUR 750 million despite the challenging conditions created by the integration. We are also right on target in our effort to achieve synergies of EUR 220 million. Given the importance and magnitude of the integration, this is really an extraordinary achievement by the team led by John Allan.
In this division, we have also carried out a reorganization: We removed DHL Freight from the Express division and integrated it into DHL Logistics. It is now the third business department there, joining DHL Global Forwarding and DHL Exel Supply Chain. We expect the integration of DHL Freight into the Logistics division will increase efficiency. Here, we see unexploited potential because we can bundle volume throughout all freight activities and can jointly purchase freight capacity.
We are really pleased that we were able to win major international contracts last year - in spite of the intense work on integration.
I would like to present you two examples, starting with the largest logistics contract in our company's history: The British government selected DHL Exel Supply Chain from among 65 competing providers to operate the entire supply chain of the National Health Service (NHS). The contract runs for 10 years and is worth EUR 2.3 billion. It is one of the most extensive outsourcing jobs initiated by the public sector.
DHL is responsible for procurement and logistics services covering 500,000 products. In the process, it will support 600 British hospitals and other health-care providers in England. DHL has created a separate unit (NHS Logistics) to manage this contract. It will ensure that all covered facilities are supplied with the products they need at the right time and place: whether they are linens, office supplies, patient garments or surgical equipment.
This contract reflects trust in the skills of DHL Logistics in the area of health-care management and acknowledges our experience in the public sector. Since the announcement was made about our work with the NHS, we have received numerous queries from the public sector, including many from abroad.
A second major contract, which we won last July, is in Saudi Arabia. Here, we signed a logistics contract with the world's largest oil supplier, Saudi Aramco. The contract runs for 10 years and is worth EUR 390 million. It involves managing all re-supply deliveries, all procurement and the delivery of all materials for the company in the kingdom of Saudi Arabia. By acquiring this contract, DHL Logistics has further solidified its position in the rapidly growing oil and natural-gas industry.
After taking these side trips over the Channel and to the Middle East, I would like to return to North Rhine-Westphalia. Or, to put it more precisely: to Unna.
I have come back here because DHL Logistics is not just active out in the far reaches of the world. It is also very successful here, almost right outside our front door.
DHL Logistics is extremely skilled in logistics for the consumer-goods industry. It serves as the logistics partner for many major and well-known companies in this sector. In this work, we handle the entire supply chain, from producer through all intermediate stops to store deliveries.
In an area located close to the logistics activities that we perform for Karstadt/Quelle in Unna, we are building a new complex with more than 60,000 m² of space for consumer-goods logistics. This complex is the size of 10 soccer fields.
In an initial step, we are investing EUR 46 million and creating 350 jobs. And I am certain others will follow.
For Postbank, 2006 was a significant year.
Revenue climbed by 35.3% to EUR 9.6 billion. I would like to point out that the Financial Services division also broke the one-billion barrier in terms of EBIT. This amounted to an increase of about 16%. The workforce more than doubled, from 9,240 to 21,696.
At the start of 2006, Postbank took over 850 retail outlets of Deutsche Post. At the same time, the acquisition of BHW represents a quantum leap for the company. This deal enabled us to further extend our leading position as the largest single institution in the German retail market. We are now the largest provider of private home financing in Germany. Through the acquisition, we strengthened sales in particular. We are now an optimally positioned multichannel bank that has
(1) an extensive network of its own 850 retail outlets and thousands of Post retail outlets,
(2) one of the largest advisory organizations with 4,400 mobile advisers,
(3) and a top position in telephone banking and
(4) in online banking
As I mentioned earlier, the integration process was extremely successful and was completed three months ahead of schedule.
It was recently announced that Mr. von Schimmelmann will resign from his positions as chairman of the Board of Management at Deutsche Postbank AG and as a member of the Board of Management at Deutsche Post AG on June 30, 2007. Today is his last Annual General Meeting as a board member of Deutsche Post AG, and the day after tomorrow as board chairman of Postbank.
I would like to express my sincere thanks to Mr. von Schimmelmann. Under his direction, Postbank has become the leading retail bank in Germany and a successful DAX company. A total of 15 million customers and a stock price that has more than doubled since the initial public listing in 2004 speak for themselves. That is an extraordinary performance! Dear Wulf von Schimmelmann, you have created major value for our Post stockholders and have guided Postbank to membership in the DAX 30. You have rendered outstanding service on behalf of the Post and Postbank.
Wolfgang Klein, who has been the board member responsible for product management and mobile sales within the Postbank's private customer segment, will succeed Mr. von Schimmelmann in both positions. Mr. Klein is 43, has had a successful and impeccable banking career, and has held a position of major responsibility on the Postbank's Board of Management for nearly seven years. I am certain he will continue the Postbank's successful strategy within Deutsche Post World Net.
Ladies and gentlemen,
I would now like to give you an overview of some selected issues for 2007.
Ladies and gentlemen,
Deutsche Post World Net is well positioned today. Our international revenue totals 59%. We are already generating 80% of our consolidated revenue and more than 50% of our operating profit outside the MAIL segment.
We now want to use the global network that we have built through the vigorous implementation of our strategy to grow organically and to acquire new customers.
To secure our company's success over the long term, we created First Choice as a central Group initiative at the beginning of 2006. We will improve our business processes and services that directly affect our customers, and develop a service structure that focuses even more closely on customers.
In 2006, we implemented the methods of customer-centered quality improvements in initial pilot projects and started training our employees. Many employees in 30 countries have already completed the training program. The goal is for all of our 520,000 employees to internalize a customer-focused attitude.
In the coming three years, we will use thousands of individual projects around the world to continue improving our customer service.
To show you what I am talking about, I would like to cite an example from the MAIL division. Each year, around 25 million customer comments are processed here. Up to now, individual call centers using various technical solutions have performed this job. Of course, our customers expect to be quickly connected to a skilled service representative without a long delay. By using a cross-location technology platform to which 1,100 work stations have been connected, we have created a networked alliance of individual call centers.
The benefit to the customers is measurable: Callers spend considerably less time waiting and are connected more quickly to a service representative who can provide them with the best help in the given area.
First Choice is the most ambitious strategic program we have ever introduced in our organization. The goal is: to become our customers' first choice. To this end, 520,000 people are working at Deutsche Post World Net - around the world.
Now, I would like to take a look at the current fiscal year.
For the Group, we are expecting EBIT of at least EUR 3.6 billion.
This year, the MAIL division should once again generate around EUR 2 billion and maintain its earnings level.
For EXPRESS, we expect EBIT of at least EUR 400 million. If you discount one-time special expenditures of EUR 100 million for the hub in Leipzig, the result will be an operating profit of more than EUR 500 million. This will amount to an increase of more than 50% over the previous year's figure.
The LOGISTICS and FINANCIAL SERVICES divisions will continue their successful work. We expect an increase of around 15% and 5%, respectively.
The SERVICES division is expected to finish the year with a result of minus 0.7 billion. Unlike last year, this EBIT figure does not include any major positive special effects.
First, I would like to inform you about the activities of the German Financial Reporting Enforcement Panel (or DPR) at Deutsche Post.
Under the Financial Reporting Compliance Act of Dec. 15, 2004, a two-step process has been introduced. It is designed to facilitate the orderly application of accounting standards throughout the EU.
The German national government decided to assign responsibility for the first stage of the enforcement process to the German Financial Reporting Enforcement Panel. This panel began its work on July 1, 2005.
Responsibility for the second stage is assumed by the German Financial Supervisory Authority (or BaFin).
In addition to a cause-based review, which must be initiated as a result of specific suspicions about a violation of accounting standards, the DPR has decided to examine all DAX companies within a period of four to five years on the basis of sample reviews.
Within the context of such a sample review, the financial statements of Deutsche Post AG for fiscal year 2005 have been under examination since last year.
In connection with this review, I would like to tell you that we are holding discussions with the DPR at the moment about the question of the correct balance-sheet entry for convertible bonds for Postbank shares.
At this point, I would not like to get into the details. You will find them on page 111, text section 4 of the latest annual report. I would like to stress that the entire process and its presentation in the consolidated financial statements will have no impact on the Group's earnings situation in total.
Ladies and gentlemen,
Let's now come an issue that is being intensely discussed at the moment: total liberalization of the German mail market.
Under current law, the German mail market is to be completely liberalized on Jan. 1, 2008. But competition is already a reality for us. Our competitors have a market share of about 10%, making Germany the competition leader in Europe. In terms of competitive intensity, we have even surpassed countries that completely opened their markets years ago.
And there is one other special feature in our home market that should be mentioned: More than half of our competitors' revenues are generated on the basis of special licenses. For these permits, the weight restrictions granted by our exclusive license pose no problem. In other words: Our competitors are already active in the area of our remaining monopoly for letters up to 50 grams. That is something unique in Europe.
We have always supported the creation of free markets in the postal sector. Open markets stand for more efficiency, innovation and customer orientation. Postal customers, in turn, profit from high-quality products. As the quality leader, we are not afraid of competition.
After all, one declared goal of our strategy is to offset market-share losses in our home market of Germany through market-share gains in other countries. But the most important requirement for market opening is to eliminate unfair competitive conditions.
Therefore, we urge the institutions responsible for liberalization in Europe to:
- promote parallel market opening in Europe and
- create fair competitive conditions, particularly in social standards
Last October, the commission submitted a proposal on liberalization. For the third postal directive, the proposal envisions complete market opening in 2009 and continuing provision of universal service. We expressly support both goals. In the future, we will also offer high-quality, affordable universal service across Germany.
Since then, work on the third postal directive has begun in the Council and European Parliament. As part of a complex co-decision process, both institutions must reach an agreement on a joint solution. Based on the present schedule, we can expect, at the least, the first clear indications about the future course of the decision-making process by this year's summer break.
One positive development is that our call for fair competitive conditions has gained acceptance on the European level.
The European Parliament is discussing specific recommendations for changes designed to address the minimum social standards for employees in the postal sector that we have repeatedly sought. We have made these demands because the unfavorable working conditions found at some of our competitors are in desperate need of correction in order to prevent unfair competition. Various parliamentary committees are examining the employment issue and are considering specific proposals to encourage the member countries to take action.
Various examples in Europe show that market opening does not necessarily have to lead to wage dumping and a competition over who can offer the worst working conditions. In this connection, I would like to mention Sweden. There, collective-bargaining agreements ensure comparable working conditions for employees of the Swedish postal service and its competitors. In Switzerland, regulatory officials determine whether normal sector working conditions are being followed when they issue licenses.
Despite all of the positive steps, there is still a long way to go before a third postal directive is finally approved. Parallel liberalization, creation of fair competitive conditions in the sense of a level-playing field and continued universal service are the goals to be achieved. With these fundamental conditions in place, competition will have a positive effect on customers, employees, and you, my dear shareholders.
Becoming our customers' first choice through social and environmental commitment
Ladies and gentlemen,
Let's now examine another important subject. The issue of climate change is making headlines these days.
At the beginning of February, the U.N. Intergovernmental Panel on Climate Change released its world environment report in Paris. This report drastically showed us once again that we - both as private citizens and as a company - must act. Of course, we as a logistics company contribute to CO2 emissions around the world.
Long before Deutsche Post World Net became the world's leading logistics provider, our company assumed its responsibility for the environment. To us, environmentally friendly processes, products and services form an essential component of our business. For this reason, we recently anchored "sustainability" in our seven Corporate Values.
Deutsche Post World Net was the first logistics company to set a specific goal for reducing emissions. In accordance with the Kyoto Protocol, we have made a commitment to cutting the greenhouse-gas emissions of our road fleet in Europe to 5% below 1990 baseline levels by 2012.
To reach this goal, numerous measures must be introduced. I would like to mention a few of them to you: By further optimizing route planning for letter deliveries made by car in Germany, we cut the number of driven kilometers per carrier between 2001 and 2006. We also conducted driver training for 33,000 employees that resulted in a 10% fuel savings. Since 2005, we have been increasingly using biofuels for our delivery vehicles and select, when possible, Parcel Intercity for our freight shipments.
Our special environmental projects, like our Leipzig hub, help us save more than 5,000 tons of CO2.
But, we also have to respond in terms of air freight. Along with more than 30 other companies, Deutsche Post World Net is active in the initiative 3C - Combat Climate Change.
Our recent investment of EUR 1.3 billion in 34 modern freight planes that use 20% less fuel per ton than the previous model also helps the environment.
Increasingly, our customers are also requesting environmentally friendly transport services. In response, we developed the CO2-neutral GoGreen products two years ago. Today, we are offering them to all of our customers in Europe.
One of these new products is the "GoGreen Pluspäckchen" that private customers can purchase in our retail outlets in Germany. This product enables anyone to ship in a climate-neutral manner. You will certainly ask yourself how that can be possible. After all, the parcel still has to be transported.
The idea behind climate-neutral shipping is based on the Kyoto Protocol. It involves calculating CO2 emissions and then offsetting them. Within our company, we have set up a type of bank where emissions for climate-neutral shipments are debited or deposited. We make a deposit when we do such things as expand our fleet with alternative vehicles and promote solar-power projects in India and Sri Lanka.
The next time that you go to your retail outlet and send a parcel, you can also make a small contribution to cutting CO2 emissions. In the foyer, we have set up a stand where you can learn all about this product. Have a look for yourself!
Innovation is needed beyond the area of environmental protection. Deutsche Post World Net sees itself not only as the largest member of its industry but also as a pioneer in logistics. Developing innovative solutions for our customers is a natural part of our business philosophy.
We are the first company in our sector to open a technology and innovation center. With this center in Troisdorf, we have created an important instrument to meet this need. In our "future laboratory" there, we will develop new, highly innovative and market-ready products for and with our customers. The center opened just a few weeks ago at a ceremony attended by Premier Rüttgers.
The times when customers just wanted to have a shipment moved from point A to point B are gone for good. Today's economy relies more and more on a supply chain that is constantly expanding and growing increasingly complex. There is an expanding need for professional, innovative logistics services.
We serve more than 4 million commercial customers around the world at around 4,400 locations. Operating increasingly complicated supply chains is an important competitive factor in our industry. Behind me, you see a few images from the interior of the Innovation Center: the showroom. Here, we offer our customer hands-on logistics with representative examples. One recent innovation that we can no longer live without and that has really been welcomed by our customers in Germany, is the Packstation.
I would also like to mention two very recent examples on which we are working at the moment:
Example one: the parcel robot
Together with the Bremen Institute for Industrial Technology and Applied Work Science, we have developed a robot that can unload pieces of freight that have different volumes and weights from a container. As a result, work processes that are ergonomically problematic can be automated. In other words: Workers' backs are largely spared the strain caused by this job. At this point, the development toward market maturity is largely complete.
Example two: radio frequency identification (RFID)
This is a technology that has recently generated much discussion. At our Innovation Center, we are working to make RFID useful for our customers in logistics. Something that seems so technically abstract can become very real, particularly when it is attached to the question of "Can RFID save lives?"
If diagnostic products, pharmaceutical ingredients or medications are stored in an environment that is too warm or too cold, they can lose their effectiveness. For logistics, this possibility creates the need for temperature-controlled transports that offer precise monitoring of the cold chain.
To meet this need, DHL has teamed up with a big customer from the pharmaceutical industry and IBM as a global innovation partner to set up a pilot project. In this work, a specially developed RFID sensor tag acting as a combination of temperature gauge and RFID radio chip monitors and documents the temperature of a shipment during the entire transport from a position near the product. And the shipment does not have to be opened for this to be done.
Non-usable pharmaceuticals and diagnostic products can be removed at once from the supply chain. This example represents many other things in the area of RFID. It creates numerous opportunities for use not only in the pharmaceutical industry but also for all sectors that need sensitive temperature-controlled transports.
Ladies and gentlemen, I can assure you of one thing: The subject of innovation is very high on our Group's agenda. Our identity as a leading logistics provider means developing innovative solutions to help our customers, partners and the environment, and to prepare them for the market.
Ladies and gentlemen, I would like to conclude my remarks by giving you an up-to-date overview of our alliance with the United Nations. As I reported to you last year, we contributed our logistics skills in December 2005 to a partnership with the United Nations in the area of disaster management. The first tangible result of this work is a global network of disaster response teams (DRTs) that we have formed in cooperation with the U.N. Office for the Coordination of Humanitarian Affairs. The DRTs' mission at airports in areas hit by natural disasters is to help coordinate the logistics of arriving relief supplies. Our teams distinguished themselves after the tsunami in Asia, the hurricane in New Orleans and the earthquake in Pakistan.
In September 2006, we expanded the alliance with the United Nations by creating a partnership with UNICEF. The goal of this global partnership with UNICEF is the long-term fight against child mortality. Besides providing logistics expertise and running a global fund-raising drive, we have carried out the first specific local projects.
Employees from DHL Kenya helped distribute 3.5 million mosquito nets. These nets are designed to protect children under 5 from catching malaria and reducing the mortality rate in the process. In addition, volunteers from our worldwide workforce supported a local health-care and education pilot project in Kenya.
Ladies and gentlemen, I am convinced that our company is making a long-term contribution to easing suffering when it assumes its social responsibility. We do this through - what we call "help that arrives."
Ladies and gentlemen,
You see our company has its eye on a number of important issues around the world:
- Short- and long-term value creation for our stockholders,
- Development of our global workforce and protection of our employees from unfair competition in the mail sector
- Highest-level quality and innovations for our customers and
- Our social responsibility, in particular for the environment.
Your company Deutsche Post World Net is well prepared to meet the challenges of tomorrow. But we are strong and fit. I am certain we are on the right course.
Thank you very much for your attention.