Deutsche Post AG

M&A Activity • May 28, 2008

News Details

Ad-hoc | 28 May 2008 14:01

Deutsche Post AG:Deutsche Post World Net to restructure U.S. Express business with new airlift partner and substantial cost savings initiative

Deutsche Post AG / Strategic Company Decision

Release of an Ad hoc announcement according to § 15 WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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Deutsche Post World Net to restructure U.S. Express business with new
airlift partner and substantial cost savings initiative

• DHL Express U.S. to work with UPS for North American airlift
• Network restructuring to remove excess capacity in U.S. Express
• Continued strong U.S. presence with no changes to product range or
service commitment; less than 4 percent of shipments affected
• Annualized cost savings in U.S. Express of about $1 billion (640 million
euros); underlying EBIT to improve by around $800 million in 2010 and
around $1 billion in 2011
• EXPRESS Corporate Division 2008 Underlying EBIT now seen at 400 million
euros; Group EBIT guidance adjusted slightly to 4.1 billion euros

Deutsche Post World Net today announced a plan to restructure its DHL U.S.
Express business by working with UPS for airlift capacity and reducing
costs in its ground infrastructure. Under the plan, DHL and UPS have agreed
to develop a contract whereby UPS will provide air uplift for DHL Express
U.S. domestic and international shipments within North America. In
addition, DHL will align its U.S. Express infrastructure to existing
shipment volumes by redesigning its ground linehaul network to better match
capacity with customer requirements. The impact on service levels will be
minimal with less than 4 percent of shipments affected. DHL remains focused
on delivering international and domestic Express products, offering an
attractive alternative for U.S. customers and keeping a strong commitment
to the U.S. market.

The restructuring plan will lead to sustainable improvements in financial
performance and provide a sound starting point for a more efficient and
customer-oriented business in the future. In 2008, the company expects an
underlying EBIT loss of $1.3 billion in U.S. Express. Through the expected
cost savings of around $800 million in 2010 and around $1 billion in 2011,
underlying EBIT will improve accordingly. First positive effects of the
plan will start showing already in 2009. The company expects to spend up to
$2 billion to finance the restructuring plan. Due to the uncertain economic
situation in the U.S., Deutsche Post World Net is reducing its guidance for
underlying EBIT in the EXPRESS Corporate Division in 2008 to around 400
million euros from around 500 million euros. Subsequently, the Group’s
full-year guidance before non-recurring effects and restructuring costs
will be reduced slightly by 100 million euros to around 4.1 billion euros.

DHL is taking action both in its infrastructure network and in aviation
with a restructuring plan that focuses on three main elements:
1. Reducing infrastructure network capacity by approximately 30 percent
through the following detailed measures:
o Consolidating and closing smaller sorting facilities into modernized,
larger stations, resulting in reductions of approximately 34 percent
o Rationalizing pickup and delivery routes by 17 percent, including new
courier routing plans to enable better route planning and avoiding peaks in
the operation, as well as making changes to staffing plans
o Ground linehaul network rationalized by 18 percent through improved
capacity utilization and footprint reductions in some remote areas.
2. A proposed contract between DHL and UPS whereby UPS will provide air
uplift for DHL Express U.S. domestic and international shipments within
North America
3. Reduction in overhead and other administrative costs

As one central part of its restructuring activities, DHL and UPS will
pursue a contract to provide air uplift, creating a single airline partner
for DHL Express in the U.S. DHL will continue to operate its courier and
ground network as well as pickup and delivery services to its customers
across the country. The proposed agreement, in character and scope
representing an efficient model in the express industry, will extend for 10
years. The commencement of UPS service into the DHL network is expected to
begin later this year. The proposed contract provides both DHL and UPS
substantial economic benefits in the U.S. Express market, which remains one
of the most challenging marketplaces worldwide in light of the current
economic downturn. DHL will continue to compete in the U.S. market under
its own brand, offering attractive value to customers. The restructuring
action in no way diminishes DHL’s commitment to retaining a significant
presence in the U.S. market, which is key to DHL’s global network.

DHL’s strategic priorities in the U.S. will be to continue to provide
record service reliability, and accelerating growth in more profitable
segments of the market through leveraging innovative sales channel
strategies like the recently announced Walgreens partnership. In addition,
DHL will be more selective in accepting business from a small number of
scarcely populated areas and take advantage of capacity and cost reductions
to grow a leaner and more focused ground business.

Contact:
Martin Ziegenbalg
EVP Investor Relations
Tel: 0228-182-63000

28.05.2008 Financial News transmitted by DGAP

Language: English
Issuer: Deutsche Post AG
Charles-de-Gaulle-Straße 20
53113 Bonn
Deutschland
Phone: +49 (0)228 182 - 63 100
Fax: +49 (0)228 182 - 63 199
E-mail: ir@deutschepost.de
Internet: www.dpwn.de
ISIN: DE0005552004
WKN: 555200
Indices: DAX
Listed: Regulierter Markt in Berlin, Frankfurt (Prime Standard),
Hannover, Düsseldorf, Hamburg, München, Stuttgart;
Terminbörse EUREX

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