Economic Viability Strategies
In financial year 2016, Deutsche Post DHL Group increased EBIT to €3.5 billion. All divisions contributed to the increase. The measures implemented in the prior year served to make the Group more efficient and led to significantly higher margins. In the Post - eCommerce - Parcel (PeP) division, the dynamic growth recorded in the parcel business more than compensated for the decline in revenue in the Post business unit. In the DHL divisions, the growth trend in the international Express business remained intact and the turnaround measures implemented in the Global Forward- ing, Freight division in particular are taking effect. Consolidated revenue remained below the prior-year level, due in part to negative currency effects. Capital expenditure increased. Excluding the further funding of pension obligations, free cash flow registered a positive development. From the perspective of the Board of Management, this testifies to the continuing sound financial position of the Group.
Cash and liquidity managed centrally
Limiting market risk
The Group uses both primary and derivative financial instruments to limit market risk. Interest rate risk is managed exclusively via swaps. Currency risk is additionally hedged using forward transactions, cross-currency swaps and options. They pass on most of the risk arising from commodity fluctuations to their customers and, to some extent, use commodity swaps to manage the remaining risk. The parameters, responsibilities and controls governing the use of derivatives are laid down in internal guidelines.
Flexible and stable financing
The Group covers its long-term financing requirements by
means of equity and debt. This ensures their financial stability and also provides adequate flexibility. Their most important source of funds is net cash from operating activities.
They also have a syndicated credit facility in a total volume of €2 billion that guarantees them favourable market conditions and acts as a secure, long-term liquidity reserve. The facility matures in 2020, and does not contain any covenants concerning the Group’s financial indicators. In view of their solid liquidity, the syndicated credit facility was not drawn down during the year under review.
As part of their banking policy, they spread their business volume widely and maintain long-term relationships with the financial institutions They entrust with their business. In addition to credit lines, they meet their borrowing requirements through other independent sources of financing, such as bonds and operating leases. Most debt is taken out centrally in order to leverage economies of scale and specialisation benefits and hence minimise borrowing costs.
They also have a syndicated credit facility in a total volume of €2 billion that guarantees them favourable market conditions and acts as a secure, long-term liquidity reserve. The facility matures in 2020, and does not contain any covenants concerning the Group’s financial indicators. In view of their solid liquidity, the syndicated credit facility was not drawn down during the year under review.
As part of their banking policy, they spread their business volume widely and maintain long-term relationships with the financial institutions They entrust with their business. In addition to credit lines, they meet their borrowing requirements through other independent sources of financing, such as bonds and operating leases. Most debt is taken out centrally in order to leverage economies of scale and specialisation benefits and hence minimise borrowing costs.
Corporate Responsibility
Conservative Tax Strategy
By paying
taxes and other duties to federal, state and local authorities in many different
countries, the Group also helps finance the maintenance and expansion of
infrastructure. is responsibility is the basis for their conservative tax
strategy. As a global company, they also have subsidiaries in so-called
“low-tax” countries; they do not regard these as tax optimization
opportunities, but as companies that support their business activity.
With the help
of their global team of tax experts, they en- sure that taxation risks can be
recognized and counteracted, that national and international tax-related
compliance requirements are met and, as a result, that the commercial
activities of the Group are properly taxed in the respective countries.
Rewarding Investor Trust
DHL rewards
the trust placed in them by their investors with a stable share price. In the
reporting year, they paid out €1,027 million in dividends for fiscal year 2015,
pumping this money back into the economy.
Staff Costs at Prior-Year Level
With
approximately 510,000 employees DHL is one of the world’s largest employers. In
the reporting year staff costs amounted to €20 billion – more than one-third of
Group revenues. These costs include wages, salaries and compensation as well as
all other benefits paid to Group employees for their work during the fiscal
year, including social contributions. They also offer defined benefit and/or
defined contribution- based pension plans, which accounted for approximately
€600 million of total staff costs in 2016.
Investments In Technological Development
Source: DHL Annual Report 2016 & DHL Corporate Responsibility Report 2016
