Deutsche Post DHL Annual Report 2012

Annual Report 2012

Seal: DHL in China

EXPRESS division

Excerpts from Deutsche Post AG's 2012 Group Annual Report.

EXPRESS division

Business Units and Market Positions

World market leader for international express services

In the EXPRESS division, we transport urgent documents and goods reliably and on time from door to door. Our network spans more than 220 countries and territories, in which some 100,000 employees provide services for more than 2.6 million customers. As a global network operator that applies standardised processes, we are well aware that the quality of our services and the satisfaction of our customers are crucial in determining our success. That is why we are constantly optimising our service to keep our customer commitments and respond specifically to customers’ wishes. It is not by accident that DHL is the world market leader in international express services.

Portfolio of time-definite products simplified and strengthened

International time-definite courier and express shipments are our core business. Our main product, Time Definite, offers delivery as fast as possible. Our premium Time Definite product with guaranteed pre-12 delivery and money-back guarantee was substantially expanded in 75 destination countries, creating more than a million additional postcode combinations where our customers benefit from our improved range of services.

Our portfolio is complemented by special industry-specific services such as Collect and Return and Medical Express. Customers in high-tech industries in particular use Collect and Return, in which critical goods in need of repair are collected from the end user, taken in for repair and then returned to the user.

DHL has also increased activities for customers in the Life Sciences & Healthcare sector. In the year under review, we began offering various types of thermal packaging for temperature-controlled, chilled and frozen contents. These types of packaging are easy to order from our regional supply centres.

In addition, we have extended our network. For example, the number of our Service Points increased to the current 36,750, 1,000 were added in emerging markets and in Africa alone. At these Service Points, customers paying directly can purchase our Express Easy product even if they do not have a customer account. This simple product with its transparent price and weight categories and recyclable packaging is gaining steadily in popularity.

To allow us to concentrate on our core business of international time-critical shipments, we are offering our Economy Select product in the Day Definite area in fewer markets than before.

Our airline – customer-centric and environmentally conscious

Our dedicated air network consists of several airlines, some of which we own 100%. With 3.0 million transported tonnes, DHL is one of the leading international freight carriers. We improve our service continuously. In March 2012, we put another around-the-world route into operation between Hong Kong and Leipzig via Los Angeles. We can now offer even more customers in Asia next-day delivery to the western United States and Canada. Customers in both these regions also benefit from collection times that are up to three hours later for shipments to Europe via our hub in Leipzig. To meet rising demand in the B2C sector, we opened a new flight route between the USA and Australia in July 2012. This increased capacity and decreased delivery time from Cincinnati to Sydney by one day.

We operate our aircraft fleet with both economical and ecological aspects in mind. In the United States, for instance, the old Douglas DC-8s were replaced with newer, more fuel-efficient Boeing 767s in the year under review. In addition, we have deployed two Boeing 747-8s on the high-frequency route between Hong Kong and Cincinnati. The Boeing 747-8, which is currently the most modern freight aircraft available, offers more room than similar models whilst using less fuel.

Market lead expanded in the global express business

DHL has succeeded in expanding its leading position in the international express business. As in the previous year, we led the international express market in all regions outside of the Americas by a wide margin.

Leading position in Europe strengthened

Although the European economy had already softened in 2011, we raised our market share in the international express segment from 38% to 41%, thus remaining the market leader. This testifies to the fact that our strategy holds firm even in difficult times.

European international express market, 2011: top 4

Increased presence in the Americas region

Our focus on the international express business has continued to prove successful in the Americas region. We succeeded in growing our presence in this market, with an increase in our share from 13% to 16% in 2011.

After having expanded our global hub in Cincinnati in 2011, in March 2012 we broke ground for an additional expansion. This will create around 280 new jobs. Given that business in the region is developing well and we see high long-term potential, we opened a new hub in Mexico in September 2012.

The Americas international express market, 2011: top 4

Market leadership solidified in Asia

Asia is an important and profitable market for us. We also solidified our leading market position in this region in 2011 with a rise of four percentage points to 40%.

Since 2012, we have also been offering customers in Asia our Collect and Return service. The completion of our North Asia Hub in Shanghai puts us in an excellent position for the future. Our customers now have faster access to international markets and benefit from earlier delivery times.

Asia Pacific international express market, 2011: top 4

Reliable partner in countries affected by political crises

Effective 1 January 2012, we aligned the structure of our regions to reflect management responsibility. We transferred Turkey as well as Russia and other Eastern European countries from the EEMEA region (Eastern Europe, the Middle East and Africa) to the Europe region. The EEMEA region was renamed MEA (Middle East and Africa). We have been growing steadily in this region for many years and we have the largest market share by far in the international express business. Since there are no studies that sufficiently cover the market in its new form, we have not included any such portrayal.

The political unrest in the Middle East posed a particular challenge for us in the reporting year. We were able to maintain service in Syria despite having to close or move branches at short notice. This was also the case in Afghanistan, Bahrain, Iran and Yemen, where we remained a reliable partner for our local customers whilst upholding all legal requirements and ensuring our employees’ safety.


Revenue and Earnings Performance

Increased revenue growth in the time-definite business

In the EXPRESS division, revenue grew by 9.3% in the reporting year to €12,778 million (previous year, adjusted: €11,691 million). The figure for the previous year still included revenue of €220 million related to the divested domestic express businesses in China, Canada, Australia and New Zealand. Excluding these divestments and positive currency effects of €513 million, revenue grew by 6.8%.

In the Time Definite International (TDI) product line, per-day shipment volumes rose by 9.4% in 2012 compared with the prior year. Fourth-quarter growth even reached the double digits. Weight per shipment increased by 3.7% in the reporting year.

In the Time Definite Domestic (TDD) business, our customers sent 9.3% more shipments each day in the reporting year than in the prior year. Here as well, growth was even more pronounced in the fourth quarter at 14.7%. In contrast, per-day shipment volumes in the Day Definite Domestic (DDD) business declined by 14.0% in the year under review, due especially to the disposals mentioned above.

Effective 1 January 2012, responsibility for the domestic less-than-truckload and part-truckload business in the Czech Republic was transferred from the EXPRESS division to the Freight business unit. The previous year’s segment reporting figures were adjusted accordingly.

EXPRESS: revenue by product
€m per day1
2012 +/– % Q4 2011
Q4 2012 +/– %
Time Definite
International (TDI)






Time Definite
Domestic (TDD)






Day Definite
Domestic (DDD)






  1. 1 To improve comparability, product revenues were translated at uniform exchange rates. These revenues are also the basis for the weighted calculation of working days.

EXPRESS: volumes by product
thousands of items per day1
2012 +/– % Q4 2011
Q4 2012 +/– %
Time Definite
International (TDI)






Time Definite
Domestic (TDD)






Day Definite
Domestic (DDD)






  1. 1 To improve comparability, product revenues were translated at uniform exchange rates. These revenues are also the basis for the weighted calculation of working days.

Encouraging rise in volumes in the Europe region

Although the economic situation in Europe was tense in 2012, revenue in the Europe region increased by 4.7% to €5,614 million (previous year, adjusted: €5,361 million). This figure includes positive currency effects of €73 million related mainly to our business activities in the UK, Switzerland, Scandinavia, Russia and Turkey. Excluding these effects, revenue growth was 3.4%. Daily shipment volumes in the reporting year grew by 9.0% in the TDI product line; in the fourth quarter, the growth was 9.1%.

Highly dynamic business trend in the Americas region

Our business trend was particularly dynamic in the Americas region, especially in the United States. Revenue increased by 20.6% to €2,276 million in 2012 (previous year: €1,887 million). This figure includes the sale of our domestic express business in Canada in the amount of €97 million and positive currency effects of €168 million. Excluding these effects, the revenue increased exceptionally by 16.9% in the region, due in particular to the good US business as well as higher revenues in Mexico. In the Americas region the daily shipment volumes for the TDI product line improved by 8.1% year-on-year. In the fourth quarter, they rose by 6.6%.

Strong growth in the Asia Pacific region continues

The express business in the Asia Pacific region performed very well during the entire financial year. Revenue increased by 15.7% to €4,301 million (previous year: €3,718 million). In the prior year, this figure still included revenues related to the divested domestic express businesses in China, New Zealand and Australia in the amount of €123 million. Excluding these disposals and positive currency effects of €256 million, revenue grew by 12.1% year-on-year.

In the TDI product line, our customers sent 11.1% more shipments per day than in the previous year. Especially noticeable were the increases in the BRIC+M countries of China (19.7%) and India (15%). In the fourth quarter, the growth was 15.0% and was therefore stronger than the trend for the entire year.

Business grows stably in the MEA region

In the MEA (Middle East and Africa) region, revenue increased by 12.3% in the reporting year to €961 million (previous year, adjusted: €856 million), despite the fact that the fourth-quarter growth trend decreased slightly year-on-year to 3.0%. The revenue figure includes positive currency effects of €40 million for the financial year as a whole. Excluding these effects, revenue growth was 7.6%. Daily shipment volumes rose by 6.6% in the TDI product line and grew by as much as 16.1% in the TDD product line.

EBIT reaches new record

EBIT for the EXPRESS division rose to €1,108 million in the reporting year and thus reached a new high (previous year, adjusted: €916 million). The increase was driven by revenue growth in all regions as well as one-time effects in the second quarter: a portion of the restructuring provisions in the United States was reassessed and reversed, resulting in a positive impact on EBIT of €99 million. Earnings were also positively impacted by deconsolidation income of €44 million from the sale of our domestic businesses in New Zealand and Australia. The additional VAT payment in Germany for past financial years had a negative effect of €30 million on EBIT for the division.

EBIT for the fourth quarter of 2012 improved from €244 million to €279 million year-on-year. Return on sales rose to 8.7% for the reporting year (previous year: 7.8%) and 8.3% for the fourth quarter (previous year: 7.9%).

Due to higher income and strict working capital management, operating cash flow amounted to €1,102 million in the year under review (previous year, adjusted: €1,132 million).