Deutsche Post DHL Group addresses challenges in PeP division and lays new foundation for sustainable growth [Integrator]
Program for Post - eCommerce - Parcel division initiated to improve productivity and indirect costs
Annual operating investment budget of EUR 100 - 150 million to continuously enhance productivity and service quality
PeP EBIT guidance for 2018 lowered to EUR 1.1 billion prior to EUR 500 million one-off charges
Group 2018 EBIT guidance lowered to around EUR 3.2 billion
2020 guidance confirmed
CEO Frank Appel: "We are very confident to reach our 2020 targets"
Deutsche Post DHL Group has today decided on a suite of measures to sustainably secure the further earnings growth in the PeP division. To counteract the decline in profitability in the Post - eCommerce - Parcel (PeP) division, which became evident in the first quarter of 2018, the Group decided on a range of measures to safeguard a positive earnings development in 2019 and 2020. The measures mainly target further improvement in productivity, indirect cost and yield management in the Post and Parcel business.
"We are fully focused on achieving our strategic and financial targets for 2020 and on positioning our business divisions for success in future years. In order to deliver long-term sustainable growth, we are now consciously accepting short-term negative effects on our earnings", said Frank Appel, CEO Deutsche Post DHL Group.
As communicated in the first quarter, the structural shift from Post to Parcel resulted in a number of challenges in 2018. In Parcel Germany, the division sees unchanged structural volume growth, but costs inflated with more FTEs and transport capacities needed in unusually tight labor and transport markets. The challenge for Post is the unchanged structural volume decline with stable stamp prices since January 2016 and a high fixed cost base. Additionally, the structural shift with mail decline and parcel growth is currently not adequately reflected in the overhead cost of the division, and the investment into the further development of operations in PeP Germany has not been sufficient over the last years.
Program to ensure long-term earnings growth of the PeP-division
In order to address these challenges, the Group has initiated a comprehensive program to improve productivity, reduce indirect costs and implement yield initiatives.
Productivity: To increase productivity, the Group will lift PeP operations onto the next S-curve through regular opex investments of EUR 100 - 150 million annually. This will include automation and digitalization, continuous improvement, increased last mile productivity and intelligent network utilization. Ultimately, these operational investments will drive better customer service and higher efficiencies, which will lead to an improvement of EUR 150 - 250 million per annum.
Indirect Cost Reduction: In order to reflect the continuous decline in letter volumes, the Group will sustainably reduce the fixed cost base mainly with an early retirement program focusing on civil servants in overhead areas. This will come with restructuring costs of EUR 500 million in 2018 and will be implemented in 2018 and 2019. The Group expects the program to lead to an annual cost reduction of at least EUR 200 million by 2020.
Yield Management: For regulated products in Post, the Group is awaiting the new regulation from the Federal Network Agency as of January 1, 2019. Price increases for unregulated larger-size shipments as of July 1 have already been announced. In Parcel Germany, the Group will focus on a balance between growth and yield. Even in a competitive market, cost inflation requires price adjustments, which will be implemented on a rolling basis upon contract renewal and signing. The future volume growth for Parcel Germany is expected to be closer to the market development of 5 - 7 percent growth.
The measures will only help in part in 2018; therefore, the PeP-EBIT prior to one-off cost is now expected to come in at around EUR 1.1 billion. This includes additional operating expenses for productivity improvements of around EUR 150 million. In addition, a restructuring charge of EUR 0.5 billion will be recognized in 2018 to implement measures.
Starting in the second quarter of 2018 the activities of the recently founded area of Corporate Incubations will be shown as part of the new line Corporate Functions together with Corporate Center/Other. The full-year result of Corporate Incubations is expected to be EUR -70 million.
Including the above described effects, the management board expects in 2018 an EBIT of around EUR 3.2 billion. The PeP division is likely to contribute at around EUR 0.6 billion to this figure while the DHL divisions are still expected to reach around EUR 3.0 billion. The Corporate Functions result is expected to be at EUR -0.42 billion, including the unchanged projection for Corporate Center/Others of a result of around EUR -0.35 billion.
The above mentioned measures result in a confirmed earnings forecast for 2020: Group EBIT is expected to reach more than EUR 5.0 billion. The PeP division is expected to contribute around EUR 1.7 billion of this and the earnings contribution of the DHL divisions is forecasted to reach around EUR 3.7 billion. Corporate Functions is forecast to reach around EUR -0.35 billion.
The reported Group Free Cash Flow for the full year 2018 - excluding the debt-financed renewal of the Express intercontinental aircraft fleet - is hence expected to exceed a minimum of EUR 1.0 billion.
Posted at 16:12 パーマリンク
New DHL Americas Innovation Center to promote future of logistics [Integrator]
DHL Innovation Center in Chicago will spearhead development of future logistics and supply chain solutions in the Americas region
State-of-the-art facility to open its doors to customers and partners summer 2019 providing an inspiring and interactive visitor experience
DHL is shaping the future of logistics, working on the technologies to drive customer-centric innovation
DHL will expand its global innovation footprint to the Americas region by breaking ground for its new Americas Innovation Center in Rosemont, Illinois, which will offer unique insights into the future of logistics. Joining the DHL Innovation Center in Troisdorf, Germany, and the Asia Pacific Innovation Center in Singapore, the Americas Innovation Center will exhibit the technologies and innovations in logistics that DHL is already implementing across the region, and will foster the development of future logistics and supply chain solutions while serving as a regional platform for collaborative innovation. The opening is planned for summer 2019.
"With our third Innovation Center worldwide, we will be able to create a platform for research and collaborative innovation between DHL customers, start-ups, academia, industry partners, and innovation experts in the Americas region," commented Matthias Heutger, SVP, Global Head of Innovation & Commercial Development at DHL. "This visionary innovation center will further promote and nurture our worldwide leading position as the logistics innovation frontrunner in one of our key markets. It will also help us to further build on successful partnerships that we have established with technology leaders and innovative start-ups in the region."
DHL's logistic innovations footprint in the Americas
As a global leader in logistics, DHL continuously evaluates its innovative customer-centric solutions, already implementing advanced technologies in all of its operations to boost productivity and serve the evolving needs of customers.
DHL Supply Chain, the contract logistics specialist within Deutsche Post DHL Group, has seen average productivity increases of 15 percent in trials of augmented reality technology in warehouses, with smart glasses that provide visual displays of order picking instructions and item locations. It has also deployed drones with surveillance cameras to ramp up security at warehousing sites in Brazil and Mexico.
Robotics, ranked the most important physical technology with 63 percent in a recent global survey by DHL of about 350 supply chain and operations professionals, also play a significant role in DHL's innovation activities. DHL Supply Chain uses collaborative robots designed to help with repetitive and precise tasks, such as picking and packing, in a number of its North American warehouses.
DHL Global Forwarding, the leading specialist in air and ocean transport, and DHL Express, the world's leading international express delivery company, also use virtual reality and artificial intelligence in countries like the United States and Chile for employee training programs and to optimize customer service.
Visions, Trends, Solutions - A physical representation of innovation in logistics
The new Americas Innovation Center will house DHL's logistic innovations and robotics, and will offer customers and partners a peek into the future of logistics, showcasing visions of what the world and its transport infrastructure might look like in 2050, as well as the latest technology trends in robotics and automation, artificial intelligence, self-driving vehicles, the Internet of Things, and virtual reality - all of which are already being tested or implemented by the Group.
"Rosemont is a central destination for businesses to meet and connect thanks to our strategic location between Chicago O'Hare International Airport and the City of Chicago, and we're thrilled to have DHL mark our Village as a new destination for technology and innovation," said Rosemont Mayor Brad Stephens. "Companies look for ideas on the newest trends in this digital era, and now they can come here to look into the future of logistics."
On a surface area of 24,000 square feet, the state-of-the-art facility can host trend and innovation events for up to 300 guests with high-tech features, futuristic designs, an impressive foyer and inspiring meeting spaces that will be available to the public.
"Inspire, connect and engage - these are the main goals we pursue with our innovation centers. While inspiring our visitors in a unique environment and connecting them with logistics and innovation experts, we aim to support strategic customer engagement that has the potential to create new business and leverage thought leadership to explore the different ways in which technological development can benefit DHL and our customers in the future. Our new Americas Innovation Center - in close proximity to some of the world's most dynamic technology and innovation hubs - will help us to shape the future of logistics," added Heutger.
Posted at 21:12 パーマリンク
DHL strengthens Latin America presence by acquiring Suppla Company in Colombia [Integrator]
Acquisition is enabling DHL Supply Chain to gain a competitive footprint in Colombia, a country with increasing competitiveness ranking and a favorable environment for foreign investment
DHL Supply Chain, the contract logistics specialist within Deutsche Post DHL Group, has acquired Suppla Group, specialized on providing logistics services in Colombia. Suppla is recognized as a premier logistics provider with local expertise and longstanding customer relationships. With an established products portfolio, including warehousing and packaging services across Life Sciences and Healthcare, Retail, Consumer, and Technology sectors, Suppla has a solid business model with experienced management, stable business principles, and structured governance.
With a longstanding expertise as a national logistics provider, Suppla has a solid local presence in five regions and coverage of 25 cities of Colombia, about 500,000 square meters of storage capacity and around 4,500 employees. This experience in local logistics market is enabling DHL Supply Chain to significantly improve its footprint in Colombia.
"The expansion into the developing Andean region in South America, specifically in Colombia, is key to achieve our Strategy 2020 targets and allows us to unlock further growth potential. With Suppla's proven business results, professional operations and a strong overlap to DHL Supply Chain's culture, products, sectors and customers, we are taking one more step to tap the potentials of a promising market environment and be ready to serve our national and international customers", says Javier Bilbao, CEO DHL Supply Chain Latin America.
DHL Supply Chain's services in Colombia currently include Service Logistics operations, supported by a recently inaugurated warehouse in Bogotá. The acquisition will allow DHL Supply Chain to strategically expand its portfolio in the market: "Colombia has ambitious investment programs in the coming years, and we are confident that this acquisition will strengthen our presence to provide integrated and customized solutions to our local and regional customers", adds Bilbao.
"Becoming part of DHL Supply Chain is spectacular news for us," says Robinson Vásquez Escobar, President for Suppla. "Since our founding in 1944, we have developed people, capabilities and geographies throughout out the country. We are looking forward to merge our local market knowledge with the resources and competencies of a global player, projecting our people in the most global logistics company and giving our customers service opportunities beyond our frontiers."
Posted at 14:58 パーマリンク
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