Building on Our Strategic Strengths
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Building on our strategic strengths Annual Report 2006 Innovations for the success of our customers page 2 The personal commitment of our people page 12 Local strengths in a global network page 82 Stable basis for further growth page 102 2006 What we achieved: The Group improved its operating performance, increasing revenue by 35.8% to €60.5 billion and earnings by 2.9% to €3.87 billion, largely thanks to the successful integration of Exel into its logistics business and of BHW into the Postbank Group. We have combined all freight forwarding activities by air, sea and, in Europe, also over land in the LOGISTICS Division, focused the EXPRESS Division increasingly on the growing international business, and placed each segment under a central management. What we plan to achieve in 2007: At the start of 2007, the First Choice program was launched throughout the Group. Our aim is to establish customer focus within our company in such a way that it generates profitable organic growth. In the mail business, we plan to gain a foothold in important markets around the globe, relying increasingly on value-added services. The integration of Exel is to be completed as successfully as it has begun. Key figures for the Group 2005 2006 +/–% restated Revenue €m 44,594 60,545 35.8 of which generated abroad €m 22,150 35,716 61.2 Profit from operating activities (EBIT) €m 3,764 3,872 2.9 Consolidated net profit1) €m 2,235 1,916 –14.3 Operating cash flow (Postbank at equity) €m 1,715 2,178 27.0 Net debt (Postbank at equity) €m 4,193 3,0832) –26.5 Earnings per share € 1.99 1.60 –19.6 Dividend per share € 0.70 0.753) 7.1 Number of employees headcount 502,545 520,112 3.5 1) Consolidated net profit excluding minorities. 2) Adjusted for financial liabilities to Williams Lea minority shareholders. 3) To be proposed to the AGM. Title Our aim is not only to be the biggest logistics company worldwide, but also the best. We are building on our strategic strengths to achieve this. Relying on innovative offerings, the personal commitment of our employees and a global network, we are creating the basis for continued growth on the highly competitive logistics market. Please open here > The Group Deutsche Post World Net is the global market leader for logistics. Our Deutsche Post, DHL and Postbank brands stand for a wide range of services for managing and transporting mail, goods and information. Some 500,000 employees in more than 220 countries and territories provide superior logistics services to help our customers be even more successful in their markets. MAIL EXPRESS • Europe’s largest postal company • Europe’s largest provider of courier, express, and parcel services • Leading the field in quality and automation • Market leader in the Asia Pacific region and the • Business with value-added services expanded Emerging Markets www.deutschepost.com • Third largest provider of international express services in the USA www.dhl.com MAIL EXPRESS 2006 2006 Workforce1) 129,922 Workforce1) 124,280 Private customers over 39 million DHL international Business customers 3 million Countries and territories over 220 National items transported2) over 70 million Hubs 36 Transit time (D+1)3) over 95% Bases 4,700 International items transported 7,124 million Vehicles 72,000 Production facilities 129 Aircraft2) 420 DHL in Germany 1) FTEs on the reporting date. 2) Average per working day. Parcel centers 33 3) Proportion of all letters in Germany reaching their recipient the next day after posting. Packstations over 720 1) FTEs on the reporting date. 2) Operating for DHL. Cross-references and websites MAIL EXPRESS LOGISTICS FINANCIAL SERVICES SERVICES • Europe’s largest postal company • Europe’s largest provider of courier, express, and • Number one in air and ocean freight worldwide • Leading provider of financial services to private • Group-wide in-house services parcel services customers in Germany • Leading the field in quality and automation • Global market leader in contract logistics • Global Business Services • Market leader in the Asia Pacific region and the • Bank with the largest mobile sales force • Number two in European overland transport • Corporate Center • Business with value-added services expanded Emerging Markets • Technology leader in payment transactions www.dhl.com • Deutsche Post retail outlets www.deutschepost.com • Third largest provider of international express www.postbank.com services in the USA www.dpwn.com www.dhl.com MAIL EXPRESS LOGISTICS FINANCIAL SERVICES SERVICES 2006 2006 2006 2006 2006 Workforce1) 129,922 Workforce1) 124,280 Workforce1) 162,706 Workforce1) 22,570 Global Business Services Private customers over 39 million DHL international DHL Global Forwarding Customers 14.6 million Workforce1) 15,943 Business customers 3 million Countries and territories over 220 Countries and territories 220 Checking accounts 4.7 million Procurement volume €9.5 billion National items transported2) over 70 million Hubs 36 Branches 640 €bn Real estate approx. 14,000 Transit time (D+1)3) over 95% Bases 4,700 Air freight volume 4.1 million t Savings volume 58.82) Vehicle fleet, Germany approx. 50,000 International items transported 7,124 million Vehicles 72,000 Ocean freight volume 2.4 million TEUs2) Volume of brokerage accounts 10.5 Deutsche Post retail outlets Production facilities 129 Aircraft2) 420 DHL Exel Supply Chain Private loans 2.4 Workforce1) 7,929 DHL in Germany Countries and territories 220 Corporate customer loans 13.6 Retail outlets 12,628 1) FTEs on the reporting date. 2) Average per working day. Parcel centers 33 Distribution centers over 1,400 Private mortgage lending 62.3 of which own outlets 5,566 3) Proportion of all letters in Germany reaching their recipient the next day after posting. Packstations over 720 Warehouse space 3.5 million m2 of which partner outlets 7,062 1) FTEs on the reporting date. DHL Freight 2) Including mortgage savings. Weekly opening hours2) 42 hours 1) FTEs on the reporting date. 2) Operating for DHL. Countries and territories over 30 1) FTEs on the reporting date. Transport volume 40 million t per 2) Average per outlet. year 1) FTEs on the reporting date. 2) Twenty-foot equivalent units. Cross-references and websites Contents 1 The Group The Group 4 Letter to our Shareholders Once more, we succeeded in reaching important 7 Deutsche Post Stock milestones in 2006. We are focusing on improving 10 Milestones of the Year our customer orientation and achieving continued organic growth. Group Management Report 16 Business and Environment 41 Revenue and Earnings Development The Group completed the fiscal year as planned 50 Net Assets and Financial Position and as communicated to the capital markets, 60 Employees generating revenue of €60.5 billion and EBIT 63 Sustainability of €3.87 billion. 65 Risk Management 74 Further Developments and Outlook Corporate Governance 84 Report by the Supervisory Board 89 Supervisory Board and Board of We attach particular importance to achieving Management a sustained increase in enterprise value and to 92 Mandates building the trust of investors, customers, and 94 Corporate Governance Report 96 Remuneration Report employees in the company’s management. Consolidated Financial Statements 104 Income Statement 105 Balance Sheet Consolidated net profit declined to €1.92 billion 106 Cash Flow Statement as, among other things, the Group reduced its 107 Statement of Changes in Equity interest in the Deutsche Postbank Group to 108 Notes 50% plus one share. 161 Auditor’s Report 162 Glossary 164 Index 165 Events and Contacts 8-Year Review Deutsche Post World Net Annual Report 2006 Innovations for the success of our customers The Group 3 The Group RFID is a technology with which objects can be fitted with a microchip that sends information about their current whereabouts to a reading device via electromagnetic waves. Thanks to this ‘radio labeling,’ large volumes can be easily tagged and shipped. Since the mid-nineties, we have been testing a large number of applications of benefit to our customers: They reduce their warehousing needs, save time and costs and give them the reassurance of always knowing where their goods are at any one time. Delivering life Logistics services for healthcare call for particular care. Here, DHL Exel Supply Chain is a highly experienced partner. Which is why the British government has commissioned us to cover the entire supply chain of the National Health Service, leaving it to focus exclusively on the job of providing medical care. It’s a move that will save the service around one billion pounds over the next ten years. L325081_EN_K02_003_011.indd 3 16.03.2007 11:57:19 Uhr 4 Dear Shareholders, We are both the market leader and a pioneer in our industry, always a step ahead of the competition. And our next mission is not just to be the biggest logistics company in the world, but also the best. Dr. Klaus Zumwinkel, Chairman of the Board of Management We are building on our strategic strengths to achieve this goal. As well as size, global reach and our knowledge of the markets, one of these strengths is surely the perseverance with which we have pursued our mission over the years. Deutsche Post World Net faced three major challenges in 2006: firstly, the integration of Exel; secondly, the reorganization of Postbank after the acquisition of BHW and 850 Deutsche Post retail outlets; and thirdly, the expansion of our international mail business. The integration of Exel and DHL is the largest project of its kind to date in the logistics industry. Our objective was to merge both companies quickly, efficiently, and without adversely affecting business. I am proud to report that we have succeeded in this endeavor.