Analyst Call, Q2 2016 results
Lawrence Rosen – CFO DPDHL
03 August 2016
Q2 2016 HIGHLIGHTS
Strong EBIT growth reflects continued good operating performance as well as prior year strike effect
 PeP EBIT strongly up, driven mainly by Parcel growth and stamp price
increase while international parcel network investments continue
 Express EBIT growth reflects continued strong TDI volume
development and yield management, offsetting FX headwinds
 DGFF: further operating improvements driven by turnaround measures
while market growth remains subdued
 Supply Chain with further attractive new business wins while
continuing to invest in its restructuring agenda
 Strong Q2 cash flow performance. Net debt increase reflecting usual
timing of dividend payment as well as pension funding
Key growth trends intact and delivering, 2016/20 EBIT guidance confirmed
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 2
GROUP P&L Q2 2016
EUR m
Revenue
Q2 2015
Q2 2016
Chg.
Management comments
Reflecting negative FX, lower fuel prices and the new NHS contract structure.
Excluding these effects, Group revenue is +4.1% above LY
14,700
14,190
-3.5%
537
752
+40.0%
Strong increase reflects continued good growth in Parcel and Express, DGF
turnaround as well as prior year one-off effects
t/o PeP
75
247
>100%
Best PeP Q2 EBIT since Q2 2008. Strong increase reflects very good operating
performance in Post and Parcel as well as prior year strike effect
t/o DHL
535
591
+10.5%
Continued growth path in Express and turnaround in DGF; Supply Chain as
planned with further restructuring charges
-101
-78
+22.8%
Reflects lower interest cost on provisions and positive FX effects
Taxes
-65
-94
-44.6%
Increase due to higher EBIT, tax rate 14% as expected
Cons. net profit1)
326
541
+66.0%
Net profit and EPS increase as a result of strong EBIT growth and improved
financial result
EPS (in EUR)2)
0.27
0.45
+66.7%
EBIT
Financial result
1) Attributable to Deutsche Post AG shareholders; 2) Undiluted
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 3
FREE CASH FLOW Q2 2016
Pension funding of EUR 1bn affects OCF and FCF; strong operating cash generation
Q2
2015
Q2
2016
Pension
funding
Q2
2016
adj.
Cash from operating activities
before changes in Working
Capital
335
-205
-1,000
795
Changes in Working Capital
-69
44
-
44
Net cash from operating activities
after changes in Working Capital
266
-161
-1,000
839
-382
-412
-
-412
Net M&A
219
0
-
0
Net Interest
-36
-27
-
-27
2015 disposal proceeds of Sinotrans stake (DGF) and King´s
Cross development stake (DSC) were recognized in net
M&A
67
-600
-1,000
400
FFO/Debt at 25.2% (March 31: 26.5%)
EUR m
Net Capex
Free Cash Flow
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
OCF is lower as a result of EUR 1bn pension funding which
flows through the change in provisions (while proceeds from
debt financing are not recognized in FCF)
Excluding this effect, OCF significantly improved driven by
EBIT increase as well as lower provision utilization and
positive working capital contribution
Cash out for Capex increasing as planned
PAGE 4
NET DEBT (-)/LIQUIDITY (+)
Q2 net debt increase sees usual Q2 pattern with annual DPDHL dividend payment of EUR 1.027bn as
well as an increase due to pension funding and start of share buyback program
-1,093
648
-1,021
-32
-956
Inc. EUR -1 bn
pension
funding effect
-1,027
Net debt
(Dec 31, 2015)
OCF before
change in W/C
Changes
in W/C
Net
capex
Net
interest
in EUR m
Incl. return of
cash
collateral from
EU state aid
EUR 378m
and EUR
-190m for
share buy
back program
Dividend
Paid
-27
Net Other
effects
incl. M&A
-3,508
Net debt
(Jun 30, 2016)
N.B: Net pension provision down to EUR 6.092 bn (from EUR 6.6 bn at end of Q1) reflecting EUR
1 bn funding and discount rate decline during Q2 (funding ratio now at 67% vs 62% at end of Q1)
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 5
PeP: STRONG OPERATING PERFORMANCE IN ADDITION TO BASE
EFFECTS
Mail Communication revenue
EUR m
EUR m
+3.9%
1,518
Dialogue Marketing revenue
+1.0%
1,577
Q2 2016
Q2 2015
503
508
Q2 2015
Q2 2016
Parcel Germany revenue
EUR m
Parcel Germany volumes
m units
+15.3%
1,141
990
Q2 2015
Q2 2016
Parcel Europe revenue1)
255
286
Q2 2015
Q2 2016
DHL eCommerce revenue2)
EUR m
EUR m
+12.2%
+8.5%
+18.1%
209
293
318
177
Q2 2015
Q2 2016
Q2 2015
Q2 2016
Business Highlights
 German Post and Parcel yoy comparison
distorted by base effect from strike in Q2 15 and
three additional working days. Mid-term Mail
Communication volume guidance unchanged for
2-3% decline p.a.
 Letter price increase continues to more than
compensate related elasticity effects
 Parcel Germany with continued strong growth in
volume and revenue
 Expansion of international parcel activities
continues to deliver strong growth contribution
with organic growth of 20% in Europe and 11% in
DHL eCommerce
 Postbus business sale effective as of Oct 31st
1) Parcel Europe ex Germany; 2) Parcel outside Europe
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 6
DHL PARCEL: LARGEST PARCEL CENTER IN GERMANY JUST OPENED
Cementing German Parcel market leadership
Obertshausen highlights
 Sorting capacity of 50,000 parcels per hour
 37,000 square meters of indoor floor space
 >6 kilometers of sorting and conveyor lines
 >400 sorting terminal points
Additional service benefits for both senders and
recipients
 Rapid throughput allows later cut-off, supporting
even more flexible delivery options and times
 Even more detailed shipment tracking and
shipment information
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 7
DHL PARCEL: SAME-DAY B2C SERVICE SINCE 2012; TIME-WINDOW
OFFERING EXPANDED
SAME-DAY
Established market leader
 Same-Day service launched in 2012
 Available to 30m consumers in
metropolitan areas today
 Attractive niche with broad customer
base
 Monday-Saturday delivery, incl.
temperature-controlled service
 NEW: desired time-window starting
as early as 10am
NEXT-DAY
Evening time-window delivery (6-9pm), with recipient notification with 30 minute accuracy
 NEW: extension of time window delivery to nationwide coverage throughout Germany
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 8
PeP – DIVISIONAL RESULTS Q2 2016
EUR m
Q2 2015
Q2 2016
Chg.
Management comments
Strong revenue increase due to growing German and international parcel
business, stamp price increase, last year’s strike effect as well as 3
additional working days. Growth excl. FX was +8.1%
3,712
4,000
+7.8%
75
247
>+100%
Even adjusting for last year’s Q2 strike effect of ~EUR -100m, strong EBIT
increase driven by Post & Parcel in Germany
70
248
>+100%
Besides strike base effect, growth is driven by parcel business, stamp price
increase and three additional working days
5
-1
n.a.
As expected, international investments offsetting strong topline growth
(+12.1%) and underlying profitability
Operating Cash Flow
169
-601
n.a.
Reflecting change of provisions from EUR 1bn pension funding, underlying
improvement strong due to higher EBIT and good working capital
management
Capex
127
113
-11.0%
Revenue
EBIT PeP
t/o Germany
t/o International
eCommerce - Parcel
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
Capex lower due to timing effects, still primarily oriented towards Parcel
network expansion in Germany and Europe
PAGE 9
EXPRESS: STRONG, BROAD-BASED TDI GROWTH CONTINUES
Time Definite International (TDI)1)
Revenues per day in EUR m
Business Highlights
+4.3%
43.8
42.0
Q2 2015
Q2 2016
Time Definite International (TDI)
Shipments per day ‘000s
+8.2%
820
758
Q2 2015
Q2 2016
 Continued strong TDI volume growth of 8.2% as
global B2B growth driven by our unparalleled
international footprint and market share gains is
supplemented by strong growth in cross-border
B2C
 Volume growth continues to be supported by all
regions: Americas (+9.0%), Europe (+8.9%),
Asia/Pacific (+6.9%) and MEA (+6.6%)
 Growth in revenue/day remains well below
volume/day due to significantly lower fuel
surcharges yoy. Yield management initiatives
continue to bear fruit, including additional
countermeasures to manage FX headwinds
1) Currency translation impacts are eliminated. Data aggregated with same currency rate
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 10
EXPRESS – DIVISIONAL RESULTS Q2 2016
EUR m
Revenue
Q2 2015
3,455
Q2 2016
3,523
Chg.
Management comments
+2.0%
Strong TDI volume increase continues to drive Express growth. Revenue up +7.2%
when adjusting for FX and lower fuel surcharges
EBIT
376
420
+11.7%
Strong EBIT growth driven by continued TDI volume growth as well as yield and cost
initiatives. EBIT margin increase to a record level of 11.9%, supported by the low
reported revenue growth
Operating
Cash Flow
262
400
+52.7%
Reflecting good EBIT performance and working capital improvements
Capex
154
205
+33.1%
Acceleration in line with planned investments into international hub and gateway
infrastructure upgrade
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 11
GLOBAL FORWARDING, FREIGHT: FOCUS REMAINS ON TURNAROUND
Business Highlights
Air freight gross profit
Air freight ‘000s Tons
-4.7%
EUR m
-4.5%
933
889
246
235
Q2 2015
Q2 2016
Q2 2015
Q2 2016
Ocean freight ‘000s TEU1)
Ocean freight gross profit
EUR m
+14.2%
+3.1%
750
773
Q2 2015
Q2 2016
155
177
Q2 2015
Q2 2016
 Air freight volume continues to decline as we
retained our selective stance in overall subdued
market
 Ocean volume growing close to market, showing
some improvement in both Asia and Europe
(import and export)
 Selective focus on profitable volumes continued to
pay off with divisional GP up +1.4%
 Turnaround measures continue to drive improving
performance on GP and EBIT level
1) Twenty Foot Equivalent Unit
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 12
DGFF: TURNAROUND CLEARLY VISIBLE, BUT STILL MORE TO DO
DGFF: EBIT margin and EBIT / GP conversion
2013/14: NFE implementation and organizational
change
3.2%
2.0%
2.0%
13.2%
1.2%
8.4%
2013
2014
Q2 15: turnaround initiated; Q3 15: NFE write-down
1.5%
4.9%
6.0%
2015
(excl. one-offs)
Q1 2016
7.6%
Q2 2016
2016: Turnaround delivering; new IT plan launched
EBIT Margin
EBIT / GP conversion
DGF performance trough in H1 2015; since then turnaround measures are delivering expected first benefits:
- Restructuring measures taken in Q2 15 have lowered fixed cost base
- NFE roll-back in pilot countries accomplished, operating performance improving but still well below historic highs
- Revamped organization structures have lead to improved cost/service performance, although further improvement targeted
New IT roll-out combines upgrade & simplification of existing IT landscape with new off-the-shelf TMS
- Combined roll-out will be gradual over 2016-19e with expected EUR ~60m opex and EUR ~10m capex p.a
Mid-term: back to 2013 historic divisional margins – long term: close EBIT/GP conversion gap
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 13
GLOBAL FORWARDING, FREIGHT– DIVISIONAL RESULTS Q2 2016
EUR m
Revenue
Gross Profit
EBIT
Operating
Cash Flow
Capex
Q2 2015
Q2 2016
Chg.
Management comments
3,778
3,425
-9.3%
Revenue decrease driven by lower freight rates, volume decline and FX effects.
Decline of -3.1% if adjusted for FX and lower fuel prices
897
910
+1.4%
Selective stance drives slight increase in GP despite volume decline in AFR
40
69
+72.5%
EBIT increase driven by turnaround measures and GP focus
125
102
-18.4%
Continued good conversion of EBIT into OCF
34
12
-64.7%
Decrease due to expected yoy lower IT spend and timing of planned 2016
investments
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 14
SUPPLY CHAIN: STEADY BUSINESS PROGRESS AND ORDER INTAKE
New signings, EUR m1)
Business Highlights
283
296
Q2 2015
Q2 2016
 Changed accounting treatment of renewed NHS
contract lead to EUR 480m of revenue no longer
recognized in Q2 16 vs Q2 15 – basis effect to
lapse as of Q4 16
1) Annualized revenue
Revenue by sector Q2 2016
Others
Retail
Financial Services
Engineering & Manufacturing
Life Sciences & Healthcare
4%
5%
9%
25%
10%
11%
 Order intake slightly up yoy driving H1 intake on
par with 2015. Main orders in Q2 signed in
Automotive and Consumer sectors
 Gains from King´s Cross stake sale (EUR 63m in
Q1 2016) as planned used for further
restructuring expenses (Q2 16: EUR 16m, Q1 16:
EUR 25m)
23%
Technology
13%
Consumer
Automotive
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 15
SUPPLY CHAIN – DIVISIONAL RESULTS Q2 2016
EUR m
Revenue
Q2 2015
4,045
Q2 2016
3,541
Chg.
-12.5%
Growth of +4.4% adjusted for FX, fuel and the change in revenue recognition of the
NHS contract; reflecting new business wins
Q2 2016 EBIT includes EUR 16m restructuring costs. Adjusted performance on par
with previous year as restructuring benefits and base business growth was offset
by yoy lower real estate gains
EBIT
119
102
-14.3%
Operating
Cash Flow
-34
155
>+100%
63
84
+33.3%
Capex
Management comments
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
Overall improvement in WC plus adverse phasing effects in previous year
Capex increased in connection with new customer contracts
PAGE 16
GUIDANCE CONFIRMED FOR 2016/ 2020
EUR bn
2016
2020
PeP
> 1.3
~ 3% CAGR 2013-20
DHL
2.45-2.75
~ 10% CAGR 2013-20
CC/Other
~ -0.35
< 0.5% of group revenue
Group
3.4-3.7
> 8% CAGR 2013-20
FY 2016:
Free Cash Flow (excl. EUR 1bn pension funding recognition) to exceed dividend payment (FY15 dividend)
Tax rate ~14%
Gross Capex of around EUR 2.2bn
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 17
WRAP UP
Strong H1 2016 sets the stage for delivery of 2016 guidance
 E-commerce megatrend continues to drive PeP and Express volume and revenue growth
 Continued progress in operational and margin recovery at DGF
 Good FCF development; unchanged finance policy
Clear agenda driven by our long-term strategic and financial goals:
Leveraging growth in e-commerce and emerging markets, based on
unrivalled, diversified business portfolio
Clear roadmap for margin and profit improvement
Flexible balance sheet and improving cash generation underpin investments
and payout policy
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 18
CAPITAL MARKETS TUTORIAL WORKSHOP
London, Oct 7th, 2016
Hosted by
Presented by
MelanieKreis (Group CFO)
Thomas Ogilvie(Group Head of Corporate Development)
Achim Dünnwald (CEO DHL Parcel)
Katja Herbst (CSO DHL Parcel)
John Pearson (CEO DHL Express Europe)
Charlie Dobbie (EVP Global Net Op´s, IT&Aviation DHL Express )
DPDHL GROUP | Q2 2016 RESULTS | 03 AUGUST 2016
PAGE 19