- Deutsche Post DHL Group
Transcription
- Deutsche Post DHL Group
Strengthening DHL in the Americas Capital Markets Presentation; November 2003 Agenda DHL Americas Strategy Growth through Acquisition Integration Progress The New DHL 2 Agenda DHL Americas Strategy Growth through Acquisition Integration Progress The New DHL 3 Scale drives profitability in the U.S. U.S. U.S. ROS/RMS ROS/RMS 25% Operating Margin 1,000M UPS 15% Airborne 5% FedEx DHL 2000 -5% DHL 2001 0.01 0.02 0.05 0.1 0.2 0.5 1 2 5 Relative Market Share (By Volume) DHL DHL must must increase increase scale scale substantially substantially (5-10x (5-10x pre-merger) pre-merger) 4 Increasing scale requires share growth across the domestic product set US US Express Express Shipping Shipping Market Market (2002) (2002) Other DHL 100% Other 16.0 USPS 80% 60% ABF UPS 10.5 21.1 ABF Other USPS FedEx FedEx 2.9 Other ABF USPS UPS UPS DHL 40% 20% Total = $50.5B ABF UPS FedEx USPS FedEx 0% Domestic overnight (1) Domestic deferred (2) Ground Export (3) (1) Incl. envelops/ letters and packages (2) Packages only (3) Packages and Documents 5 We considered the full range of strategic options in early 2002 Wingspan Summary Stabilize Stabilize U.S. U.S. business business May provide moderate savings but does not remedy the U.S. strategic weakness in express − Coordination with Danzas − Outsourcing of Air linehaul Retrench Retrench Not viable; Would undermine the strategic viability of DHL globally Aggressively Aggressively grow grow Express Express Invest & compete Buy Global Global Merger Merger Highly attractive, but not achievable today Airborne Airborne due due diligence diligence was was pursued; pursued; but but put put on on hold hold in in 2001 2001 Decision Decision was was made made to to proceed proceed with with the the “make” path “make” path −− Terra Terra approved approved by by DPWN DPWN in in July July 2002 2002 Lateral Lateral growth growth Attractive growth adjacencies exist − E.g., logistics But does not address the issue of express business scale −− New New product product offering offering successfully successfully launched launched Airborne Airborne deal deal returned returned in in early early 2003 2003 −− Deal Deal closed closed in in mid-August mid-August 6 We are now executing on our strategy 4 Broadening the Platform Current Priority 3 Focused acquisitions 2 Protection & growth of Express 1 Strengthening of base 2001-2004 2002-2005 Leveraging our integrated capabilities Expansion of logistics offering Improved financial results Basis for future growth Loomis Loomis in in Canada Canada Airborne Airborne in in the the USA USA Additional growth Improved product portfolio Project Project Terra Terra Mexico Mexico 2X 2X Stabilization of core business Cost reduction by economies of scale 2002-2005 2004-2006 PIP PIP Programs Programs STAR/Danzas STAR/Danzas 7 We have taken numerous actions over the past year to strengthen our business Senior Senior Mgmt. Mgmt. Hired Hired three three new new executives executives to to support support the the new new DHL DHL (Marketing, (Marketing, Human Human Resources, Resources, Integration Integration Management) Management) Airborne Airborne Airborne Airborne returned returned in in early early 2003 2003 Acquisition Acquisition closed closed mid-August mid-August Terra Terra Successful Successful business business launch launch of of ground ground network network and and domestic domestic bundled bundled product product set; Drove us to address key operational gaps (e.g., salesforce capabilities, set; Drove us to address key operational gaps (e.g., salesforce capabilities, customer customer IT IT solutions, solutions, C-view) C-view) Danzas Danzas On On track track to to achieve achieve substantial substantial savings savings next next year year Canada/ Canada/ Loomis Loomis Loomis Loomis integration integration on on schedule; schedule; DHL DHL now now #3 #3 in in Canada Canada LatAm LatAm Upgraded Upgraded management management team team in in Mexico Mexico Completed Completed LatAm LatAm Five Five Year Year Plan Plan 8 Agenda DHL Americas Strategy Growth through Acquisition Integration Progress The New DHL 9 Airborne acquisition rationale DHL is committed to building a sustainable #3 position in the U.S. market The U.S. market is big and it’s growing Global customers need DHL to serve them here Global competitors are increasingly dominant here While DHL is strong in international, it is subscale in domestic products Lack breadth and depth of domestic products and services The Airborne acquisition provides DHL with the opportunity to gain scale in the domestic market 10 The acquisition allows DHL US to improve margins with greater scale U.S. U.S. ROS/RMS ROS/RMS 25% Operating Margin 1,000M UPS 15% DHL/Airborne Airborne 5% FedEx DHL 2000 -5% DHL 2001 0.01 0.02 0.05 0.1 0.2 0.5 1 2 5 Relative Market Share (By Volume) 11 The acquisition provides DHL US with a complementary product set Large customer annual revenue 100% $1.9B $420 M Domestic 80% 60% Domestic International 40% 20% International 0% Airborne DHL 12 Significant cross selling opportunities exist in the largest accounts Shared National/Global Accounts 3Com Chevron GM Proctor & Gamble TRW AT&T CocaCola GSK Proquest Co UBS Warburg ABN AMRO Compaq Hoffman La Roche Raytheon Co AMEX Dell IBM Reed Elsevier Union Bank of California Amtrex Dupont Schering Plough Apple Eagle USA Airfreight Lucent Technologies B of A Eastman Kodak Merck & Co Seagate Technologies Bank of NY EDS Merril Lynch Siemens United Technologies Bausch&Lomb First Data Mettler Toledo Solectron Baxter Fluor Daniel Corp Microsoft Sprint Verizon Ford NCR Symantec Bertelsmann Fortune Brands Nestle USA Prudential Boeing GE PPG, Palm Thermo Electron Wells Fargo Carlson Geologistics Services Perkin Elmer Time Warner Xerox Pfizer Toyota Bear Stearns United News & Media VIA Xerox Wachovia 13 Agenda DHL Americas Strategy Growth through Acquisition Integration Progress The New DHL 14 There are six key sources of value New New Organization Organization Commercial Commercial Opportunity Opportunity Capture Capture Put in place top-level Build a combined organization design product offering (Level 1, 2 and 3): Harmonize pricing − Structure strategies and − Decision rights and discount structures processes Build a coordinated − Job descriptions channel strategy Layout plan to migrate Bring together two to new org design salesforces and Identify candidates upgrade capabilities for top positions and Create integrated leadership supply customer service Manage transition to a common culture Minimize customer defection during integration Integrate leadership team and strengthen combined organization Drive growth from combined customer base and product portfolio Ground Ground Operations Operations Rationalization Rationalization Network Network Optimization Optimization IT IT Integration Integration Corporate Corporate Services Services Develop strategy for Design near-term (2 year) network company employee optimized for vs. contracted courier aggregated volume force (and future growth) Rationalize Determine short-term Combine G&A system “workorganization and arounds” to support processes combined operations − Finance for next 6-12 months − Legal − HR Map out top-level overlapping PUD Design new IT − Real estate migration plan to and Service Center organization and take − Procurement combine two networks network market-byout redundant costs − Other market Integrate air linehaul Build long-term plan to Capture scale ops, gateways and Design integrated migrate to common purchasing benefits in links to cooperating ground operations platform and apps procurement airlines − Set processes and (where appropriate) procedures Manage facility Integrate ground − Agree on metrics closures and transition linehaul ops, including and targets regional sub-hub operations Realize scale-driven cost savings and service improvements Build a world-class, low cost network platform for future growth Upgrade smoothly to integrated IT platform Upgrade support functions while leveraging scale 15 DHL Americas executive team COO, DHL Air & Ocean, NA Hans Toggweiller CEO, DHL Americas John Fellows COO, DHL Air & Ocean, LA Samuel Israel EVP Sales Randy Clark EVP Marketing Dick Metzler EVP Bus. Dev. Rich Corrado EVP Operations Fred Beljaars EVP Finance & CFO Mary Wood EVP HR Scott Northcutt SVP Latin America Rafael Couttolenc General Counsel Dave Anderson SVP Corp Services Doug Turner SVP Integration Dick Bostdorff EVP IS & CIO Steve Bandrowczak 16 Temporary "Shadow Organization" CEO – DHL Express America John Fellows Sales Mktg Bus Dev Ops CFO HR IT Clark Metzler Corrado Beljaars Wood Northcutt Bandrowczak Sales function lead Mktg function lead Bus Dev function lead Ops. function lead Finance function lead HR function lead IT function lead CEO - DHL Air & Ocean NA Hans Toggweiller Corp Services Turner Corp. Services function lead Legal IMT Anderson Bostdorff Int. function lead IMT core team 17 Cross-functional integration team is mobilized 185+ dedicated employees working across function teams with an additional 50 employees assisting in expert capacity 60%/40% mix of DHL to Airborne participation 100% 51 80% Airborne 31 30 30 15 Sales Bus. Dev. IS HR Total= 185+ 14 11 3 60% 40% DHL 20% 0% Operations Corp. Mktg. Intl. Serv. Fin. Note: Includes only resources >=50% committed for >= 3mths. 18 Commercial opportunity is being captured Launched national account retention program (which covers 50% of the combined company revenues) Integrated Field and National Account Sales management Multiple customer wins Customer DHL/ABF/Joint Annual Revenue Dell ABF $ 100M Tl‘l/$25M New RR Donnely ABF $ 30 Million Carnival Joint $ 8 Million West Marine ABF $ 7 Million Zales ABF $ 6 Million Icon Labs Joint $ 3 Million NuSkin DHL $ 3 Million Underwriter Labs Joint $ 2 Million Precise Mailing DHL $ 1 Million 19 Ground Operations is capturing cost savings Pickup and Delivery integration will result in $50-70M annual savings Temp 300 Customer Service Var Supplies 250 $237M 200 Other Ops PPUD Vehicle $237M Mapped to IC 150 Additional IC Costs ($47M) 100 Couriers Mapped to CO 50 0 $150M $50-70M annual savings By Function By Service Center Type CO couriers ($103M) Future Note: Savings calculations are based on current average Airborne IC costs; expected marginal costs will provide even greater savings 20 Americas Data Center is supporting growth, integration Expanded, consolidated Americas Information Services Data Center Global eCommerce Development Center Worldwide Communications Control Center Short-term Short-term IS IS milestones milestones on on track track Salesforce C-view SFA tool Pricing approach PC-based shipping solution Single pricing SwiftShip approach shipping solution (zones, tools, processes, etc.) Air/Ground Network Single ground network Customer service contact Website Single phone Single number website offering full Two air networks functionality and hubs; (e.g., coordinated traffic track/ trace) and data flow Invoice/ bill Single invoice Multiple billing systems feeding single A/R system 21 Three things typically go wrong in failed integrations Core Core business business performance performance deteriorates deteriorates Management team distracted by the deal Customers defect due to competitor action or deteriorating service Focus on obtaining cost savings leads to revenue declines Lose Lose key key management management Acquiring company tends to one of two extremes in handling new people: Transition Transition process process fails fails Overly complex, lengthy process − Blizzard of details − Hands-off approach, with little communication leading to anxiety and uncertainty Key value drivers not clearly recognized or emphasized − Aggressive intervention, with wholesale replacement of acquiree’s people by “trusted” staff IT doesn’t deliver on time/on spec Key risk factors not identified Widespread departure of top performers can occur under both scenarios Maintain Maintain relentless relentless focus focus on on base base business business revenue revenue Retain Retain key key executives executives and and managers managers Focused, Focused, swift, swift, disciplined disciplined integration integration 22 Integration roadmap “Day 1” “Day 100” I. Mobilize Duration: II. Design the New Company III. Make it Happen Oct-Dec ~1 Year September Key Clarify integration Activities: initiatives and plan Identify key leaders & organize top mgmt Complete new org structure and announce “Top 100” leadership Create detailed integration plans to capture synergies Finalize cost synergy targets and Develop synergy build into annual plan estimates & set targets Rapidly implement “Quick Wins” Scope, resource & (target $20+M savings in 2003), e.g.: launch initiative teams Manage & track base business Set the Stage − PUD Combine organizations Execute against detailed integration plans Accelerate synergy savings & share growth Articulate progress towards new vision − G&A Plan the Integration & Start Acting Capture the Value 23 CVG Hub core outbound weight CVG CVG Hub Hub Core Core Outbound Outbound Weight Weight (Weekday) (Weekday) Avg. Lbs/Day 1,400,000 Previous Year Most Recent Year 1,200,000 1,000,000 800,000 -2.3% -4.8% -2.6% 1.5% 6.3% 8.8% 8.7% 9.9% 11.6% 9.2% 13.8% 11.4% 600,000 400,000 200,000 0 Nov 01- Dec 01- Jan 02- Feb 02- Mar 02- Apr 02- May 02- Jun 02Nov 02 Dec 02 Jan 03 Feb 03 Mar 03 Apr 03 May 03 Jun 03 Jul 02- Aug 02- Sep 02- Oct 02Jul 03 Aug 03 Sep 03 Oct 03 24 29-Jul Prior Year Current Year 15% 10% 5% -5% 0% -10% -15% -20% -25% 13-Jan 6-Jan 30-Dec 23-Dec 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16-Mar 3-Feb 10-Feb 17-Feb 24-Feb 2-Mar 9-Mar 16-Mar 27-Jan Five Day Rolling Average (Year/Year % Change) 20-Jan 20% 27-Jan Core + Transcon 20-Jan 13-Jan 6-Jan 30-Dec 23-Dec 9-Dec 16-Dec Average Q-T-D 1,184,625 1,063,868 11.4% 16-Dec 2-Dec 25-Nov 18-Nov 06-Nov-03 9-Dec 2-Dec 25-Nov 11-Nov 4-Nov 28-Oct Average M-T-D 1,169,005 1,053,095 11.0% 18-Nov 11-Nov 4-Nov 21-Oct 14-Oct 7-Oct 30-Sep 23-Sep Same day 1,206,572 1,078,346 11.9% 28-Oct 9-Sep 16-Sep Avg Last 4 21-Oct Current Year 14-Oct 7-Oct 30-Sep 23-Sep 2-Sep 26-Aug 19-Aug 12-Aug 5 Day Avg 1,169,896 1,053,095 11.1% 16-Sep 9-Sep Prior Year 2-Sep 26-Aug 5-Aug 29-Jul 22-Jul Today 1,169,518 1,052,200 11.1% 19-Aug 12-Aug 5-Aug 25% 8-Jul % CHG 15-Jul 2003 2002 22-Jul 1-Jul 24-Jun 17-Jun 10-Jun 3-Jun 27-May 20-May 13-May 6-May 29-Apr 22-Apr 15-Apr 8-Apr 1-Apr Pounds Sort Date: 15-Jul 8-Jul 1-Jul 24-Jun 17-Jun 10-Jun 3-Jun 27-May 20-May 13-May 6-May 29-Apr 22-Apr 15-Apr 8-Apr 1-Apr Percent CVG Hub core outbound weight CVG Hub Core Outbound Weight Average Calendar Y-T-D 1,090,588 1,010,111 8.0% 1400000 Five Day Rolling Average 1300000 1200000 1100000 1000000 900000 800000 700000 Core + Transcon 25 0 20.2K 21.2K 19.0K 19.1K 29.9K 27.6K 25.6K 23.0K 18.8K 18.7K 21.1K 17.7K 16.0K 17.2K 15.7K 23.0K 26.3K 30 16.7K 19.3K 20 14.6K 12.9K 11.4K 13.5K 10.5K 10.1K 9.4K 9.4K 8.6K 8.3K 8.2K 6.8K 6.8K 5.7K 10 Week Ending 3/29 4/5 4/12 4/19 4/26 5/3 5/10 5/17 5/24 5/31 6/7 6/14 6/21 6/28 7/5 7/12 7/19 7/26 8/2 8/9 8/16 8/23 8/30 9/6 9/13 9/20 9/27 10/4 10/11 10/18 10/25 11/1 Oct Targ. Nov Targ. Average daily packages 40K 37.2K 600 500 400 300 200 100 0 Number of shipping customers Ground volume trend – Represents One Time Release Volumes not Ongoing Note: Number of customers is maximum number of customers shipping ground on any day of the week 26 Revenue statistics 9/6 9/13 9/20 9/27 10/4 10/11 10/18 10/25 Avg. Bus. Case lbs/package 10.2 12.0 11.9 11.5 12.5 12.3 12.2 11.1 11.7 12.0 Revenue/pkg $6.36 $6.50 $6.55 $6.60 $6.46 $6.35 $6.39 $6.05 $6.39 $5.70 Revenue/lb $0.62 $0.54 $0.55 $0.57 $0.52 $0.52 $0.53 $0.54 $0.55 $0.48 lbs/package 11.0 10.6 10.0 11.2 10.8 10.4 11.5 10.4 10.8 8.0 Revenue/pkg $16.79 $16.04 $15.63 $16.58 $15.97 $16.44 $17.08 $16.16 $16.33 $10.08 Revenue/lb $1.52 $1.52 $1.56 $1.47 $1.48 $1.59 $1.48 $1.56 $1.52 $1.26 GROUND 2ND DAY 27 Agenda DHL Americas Strategy Growth through Acquisition Integration Progress The New DHL 28 Loomis acquisition made DHL #3 in Canadian domestic market Canpar Total = US$ 2,765M Same Day ROW ICS Courier Midland Canada Post TNT US Same Day $533M $174M ROW Others Others ICS Courier Tiger Courier Same Day Right-O-Way Midland Courier Percent of Revenue per Lane (2001) ICS Courier $2,058M 100% Others Canpar (4%) UPS (8%) 80% DHL/Loomis (9%) 60% 40% 20% FedEx (12%) Past (99-01) Growth Rate: Estimated (01-03) Growth Rate: DHL/ Loomis (20%) Canada Post (20%) FedEx (47%) Purolator (30%) (owned by Canada Post) 0% Revenue split - Air vs. Ground: TNT (10%) Purolator (11%) UPS (20%) UPS (22%) DHL/Loomis (3%) Domestic Air 16% USA Ground 84% 4.3% 4.2% Air 50% Ground 50% 5.1% 6.2% FedEx (35%) Int'l Air 100% Purolator (6.2) Note: Market share in parenthesis Source:Infobase Marketing: Canadian Next Day or Later Delivery Market Study, 03/02; DHL Canada 04/02; Canpar Company Information, 03/02; Loomis Annual Report 05/02 and Individual Company Interviews, DHL SD 29 US Market – Three Become One Founded Founded in in 1969 1969 Presence Presence in in more more than than 220 220 countries and territories countries and territories 71,000 71,000 employees employees 17,000 17,000 vehicles vehicles 226 226 gateways gateways World’s World’s No. No. 11 in in international international express express market market Founded Founded in in 1946 1946 27,000 27,000 employees employees and and dedicated contractors dedicated contractors 15,000 15,000 vehicles vehicles 330 330 shipping shipping depots depots 19% 19% express express market market share share in in US US Focus Focus on on Fortune Fortune 500 500 companies companies Founded Founded in in 1815 1815 Active Active in in 150 150 countries countries 44,000 44,000 employees employees 430 430 terminals/ terminals/ warehouses warehouses Market Market leader leader in in global global airfreight and TOP airfreight and TOP 33 market market position position in in ocean ocean freight freight 30 Strength of Future Portfolio + Excellence in International product offering + Strength in Domestic products and services Leader in worldwide Freight and Logistics solutions 31 U.S. Market Opportunity The new DHL will be a strong competitor in the expedited door-to-door delivery of small packages and documents Combined entity has scale and resources to compete more effectively Will bring stronger competition through improved services and a stronger brand DHL U.S. will target the under-served medium-sized business segments previously not targeted by Airborne U.S. U.S. Air Air Express Express Delivery Delivery Market* Market* (Shipments) (Shipments) FedEx 46% DHL 21% UPS 33% *Source: Colography Group U.S. Domestic and Export Air Traffic and Yield Analysis for 3QYTD 2002 (1) Incl. International Express freight 32 An expanded product offering to fulfill all our customers shipping needs 1 2 3 4 Overnight Overnight Deferred Deferred Ground Ground Export Export Domestic Domestic Services Services Domestic Domestic Services Services −− Same Same day day −− Guaranteed Guaranteed next next day day delivery delivery by by 8:30 8:30 am, am, 10:30 10:30 am, am, noon, noon, and and 3:00 pm 3:00 pm Transport Transport −− Guaranteed Guaranteed 2nd 2nd day delivery by day delivery by 3:00 3:00 pm pm and and 5:00 5:00 pm pm Transport Transport Domestic Domestic 1-5 1-5 business business days days (depending (depending on on distance) distance) Transport Transport Delivery Delivery originating originating from from the the U.S. U.S. to to international international destinations destinations Transport Transport −− Primarily Primarily air air −− Air Air −− Ground Ground −− Ground Ground Cheapest Cheapest option option (vs. Overnight (vs. Overnight & & Deferred) Deferred) −− Air Air −− Ground Ground * DDA&O services include: Air Freight, Ocean Freight, Domestic Heavyweight, Industrial Projects, Customer Program Management, Warehousing, Distribution and Logistics Outsourcing 33 DHL facilities throughout the nation Gateway (Seattle, WA) Hub (Prov., RI) Gateway (NY, NY) Hub (Allentown, PA) Gateway (Chicago, IL) Gateway (San Francisco, CA) Main hub/Gateway(Cincinnati, OH) Main hub (Wilmington, OH) Hub (South Bend, IN) Hub (Roanoke, VA) Hub (Fresno, CA) Hub (Columbia, MO) Gateway (Los Angeles, CA) Americas information services (Scottsdale, AZ) Customer relations center (Tempe, AZ) DHL facilities Former Airborne facilities Hub (Atlanta, GA) Hub (Waco, TX) National billing center (Houston, TX) Hub(Orlando, FL) Corp. office (Ft. Laud., FL) Gateway (Miami, FL) * DDA&O has 79 facilities and 10 distribution centers in the US 34 DHL is increasing its brand awareness 35