Deutsche Post DHL Annual Report 2012

Annual Report 2012

Seal: DHL in China

Opportunities and risks

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


Opportunities arising from market trends and our market position

Our business is impacted by a variety of external factors that offer us numerous opportunities.

We believe that the global market will grow. Advancing globalisation means that the logistics industry will continue to grow much faster than the individual national economies and the world economy as a whole. This is especially true of Asia, where trade flows will continue to increase both within the continent and to other regions. As the market leader, our benefit from this increase will be above average based on our DHL divisions. This also applies to regions such as South America and the Middle East, which continue to see robust growth. We are likewise well positioned in the emerging economies of Brazil, Russia, India, China and Mexico (BRIC+M) and plan to take advantage of arising opportunities in these markets.

The sustained trend towards outsourcing presents an additional opportunity for our Group. Especially in times of economic uncertainty, companies need to reduce costs and streamline business processes. This is why firms outsource activities that are not part of their core business. Supply chains are therefore becoming more complex and more international but are also more prone to disruptions. For this reason, customers want stable, integrated logistics solutions, which is what we provide with our broad-based service portfolio. We see growth opportunities and a clear competitive advantage in this area, in particular due to the close co-operation of the DHL divisions.

The booming online marketplace represents another opportunity for us in that it is creating demand for transporting documents and goods. TheB2C market is experiencing double-digit growth, particularly due to the rapid rise in digital retail trade. This has created high growth potential for the national and international parcel business, which we intend to tap into by expanding our parcel network.

Finally, greater environmental awareness on the part of our customers brings opportunities for above-average growth. Customers want to improve their carbon efficiency, which is why they are increasingly requesting energy-efficient transport and climate-neutral products. We lead our sector in this area, offering carbon-neutral mail, parcel and express products plus air and ocean freight transport.

Opportunities in the divisions

In the strategic focus section, we have described the market opportunities we see in the various divisions and the strategies and goals we are pursuing to take advantage of these opportunities.

Overall Assessment of Risk Position

No foreseeable risk to the Group

International economic output has a significant impact on the performance of the logistics market and thus generally affects our revenue and earnings. However, the strengths of our business model are coming to the fore in the current volatile environment. Deutsche Post DHL is well positioned in terms of its operations. Strategically, the Group is positioned to benefit from momentum on the markets. In previous years, we further improved our cost structures and made them more flexible. In Germany, our future corporate profits could be affected by changes in the regulatory conditions pertaining to the domestic mail market. This assessment is also reflected in the credit ratings awarded by the ratings agencies.

To assess the overall risk, we evaluate scenarios for the individual risks and opportunities. We take the sum of the best case and worst case scenarios to calculate the total spectrum of results for each Group division. The sum of the expected cases of occurrence indicates the result currently estimated by those in charge. The Monte Carlo simulation additionally takes the probability distribution of the individual opportunities and risks into account.

On the whole, based on the Group’s early warning system and in the estimation of the Board of Management of the Group, in the past financial year there were no identifiable risks for the Group which, individually or collectively, cast doubt upon the Group’s ability to continue as a going concern, nor are any such risks apparent in the foreseeable future.