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Global ShippersGDP Growth from Developing Nations & the Rise of E-Commerce will
Stimulate Demand for Courier & Delivery Services
Introductions
Adam PotvinAnalyst, Shipping & Logistics
• Worked as an Analyst Intern at Desjardins Capital Markets
• Worked as an Analyst Intern at Yellow Point Equity Partners
Nina SysoevaAnalyst, UPS
• Worked as a Junior Accountant for GableCraftHomes
• Case competitor for SFU JDC West’s Finance team
Jordan RaiAnalyst, FedEx
• Worked as a Summer Intern for Ernst & Young
• Case competitor for SFU JDC West’s Accounting team
Marielle ColombAnalyst, Deutsche Post
• Worked at Crédit Agricole(French bank)
• French exchange student
Agenda
1. Industry Overview
2. UPS Analysis
3. FedEx Analysis
4. Deutsche Post Analysis
5. Final Rankings
6. Appendix
Industry Overview
Overview UPS FedEx Deutsche Post
Overview UPS FedEx Deutsche Post
Global Shippers In a Nutshell
Logistics companies provide delivery services of parcels, documents and packages by air, water, and land to customers, who are mostly businesses. Sophisticated distribution and information networks are required so that transportation and delivery is as efficient is possible. Global shippers often own or lease large aircraft and vehicle fleets. This industry does not include national post services, such as Canada Post, nor does it include commercial airlines.
Source: IBIS World
Overview UPS FedEx Deutsche Post
Historical Performance: S5AIRFX (GICS—S&P 500)
Trailing 12 Months Last Five Years
Since Inception of Industry Classification (~27 Years)Last 10 Years
Source: Bloomberg; returns assume dividends reinvested into index
Annualized Return: - 4.05%
Annualized Return: 7.26%
Annualized Return: 4.49%
Annualized Return: 9.20%
Overview UPS FedEx Deutsche Post
Current Industry Valuation & Performance
Modest Multiples Reflect Modest Growth Expectations
P/E P/Sales P/FCF P/Book EV/EBITDADividend Yield
19.8x 0.8x 34.2x 9.1x 7.1x 2.10%
Deutsche Post 18.8x 0.5x 22.2x 2.6x 6.3x 3.55%
FedEx 14.3x 0.8x 62.5x 2.6x 5.5x 0.70%
TNT Express 0.6x 1.9x
UPS 18.6x 1.6x 18.1x 36.4x 9.5x 3.08%
Yamato Holdings 27.3x 0.7x 1.7x 1.06%
Industry Players Have Struggled
Source: BloombergNote: Multiples are on a TTM basis, except EV/EBITDA which is on a forward 12M estimate
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2015-03-15 2015-06-15 2015-09-15 2015-12-15 2016-03-15
TNT Express UPS Yamato Holdings FedEx Deutsche Post
Overview UPS FedEx Deutsche Post
History of Logistics: 2700 B.C. – 700 A.D.
~2700 B.C.
~300 B.C.
~700 A.D
• The Egyptians needed to transport the massive building blocks for the Great Pyramid of Giza. To do so, they needed transport/hoisting equipment. Technology in material handling started at this point as multi-ton stones were transported and assembled on-site.
• The Greeks developed rowing vessels, which greatly bolstered intercontinental trade. This would later benefit Greek armies led by Alexander the Great who needed to incorporate large and sophisticated logistics systems to travel (along with their weapons and families) as far as India.
• The construction of the famous Mezquita Mosque in Spain required the use of procurement logistics to ensure that pillars arrived in Spain in a timely manner. These pillars were sent from all around the Islamic Empire during the Umayyad dynasty.
Source: DHL Website
Overview UPS FedEx Deutsche Post
History of Logistics: 1200 – 1800
~1200
~1500
~1800
• Hamburg, Germany was founded as a place to make sea travel more secure and as a node for shipment of fur pelts and other business goods from other nations. Hamburg was a node within the Hanseatic League, which was an international network of trading partners.
• The first postal service that operated under clearly defined transit times is developed. Letters were delivered from Paris to Spain to Vienna.
• The invention of vehicles, railroads, ships and the use of the steam engine meant that goods could be transported faster and more efficiently than ever. This new economic era presented a world of opportunity in the realm of logistics
Source: DHL Website
Overview UPS FedEx Deutsche Post
History of Logistics: 1940 – 1980
~1940
1956
1970-1980
• Military logistics had been refined since WWI. During WWII, logistics was a vital link for troops to receive their supplies, rations, weapons and equipment
• The sea container is invented by Malcom McLean, which changed methods of productions and consumer habits. The sea container could be used to ship goods abroad which acted as a significant boon for international trade and helped create a more efficient and free market and brought about increased globalization.
• Just-in-time logistics is introduced by Japan’s Toyota Motor Company. The purpose was to link logistics to other functions of the operation, with an emphasis on procurement.
Source: DHL Website
Overview UPS FedEx Deutsche Post
History of Logistics: 1990 – Present Day
~1990
Today
Today
• Quick Response (QR) and Efficient Consumer Response (ECR) technologies are developed and applied by retailers and wholesalers. Now, distribution centres are responsible for transporting goods instead of merely storing them. This means that companies can now better react to market fluctuations and act more nimbly.
• Supply chain management has evolved to the point where it is now vital to the business processes that link the supplier to the vendor to the end user. Supply chain management is interactive and requires constant monitoring of competing objectives.
• As globalization increases, using logistics to strengthen international supply chains has increasingly become a way for companies to distinguish themselves in a globally competitive environment.
Source: DHL Website
Overview UPS FedEx Deutsche Post
Point-to-Point Model
Source: DHL & Southwest Airlines Websites
Point-to-Point Model
• Was the dominant method of transportation for both the airline and logistics industries until the 1970s
• The protocol is to ship from one node to another directly without needing to be rerouted
• Due to the complexity of handling larger volumes and the inefficient nature of transporting goods on half-empty planes, this delivery model has fallen out of favour for large logistics companies
• Today, this method is primarily used by smaller logistics companies and budget airliners that handle smaller volumes with fewer nodes to consider
• The point-to-point concept is used in a variety of different contexts, including in telecommunications and in computer networking (i.e. peer-to-peer file sharing)
Overview UPS FedEx Deutsche Post
Hub and Spoke Model
Source: DHL Website
Hub and Spoke Model
• In 1955, Delta Air Lines pioneered the hub and spoke model • When the airline industry was deregulated in 1978, this model became
common practice in the airline industry• FedEx would be the first logistics company to adopt this model in the
mid 1970s• The protocol is to ship goods from all nodes to a central location (hub)
where the goods are re-sorted and then shipped to its destination • Hubs can vary in scale; there can be regional hubs and a central global
hub—this is done by UPS for instance• Is the dominant method of transporting goods used today by most
large logistics companies due to the efficiency of the model• Companies in other industries have also implemented the
model, including Lowe’s and Wal-Mart
Overview UPS FedEx Deutsche Post
Point-to-Point
Point-to-Point Versus Hub and Spoke
Advantages Disadvantages
Reduces travel time between nodes Reduces risk of lost shipments Fuel (and subsequent greenhouse gas emissions) is lower per unit
shipped
Hub and Spoke
Company can concentrate and downsize its workforce by having goods sorted at one central location instead of multiple locations—this reduces labour costs
Ensures that flights or vehicle trips are at or near capacity when delivering goods, ensuring greater efficiency and reduced fuel costs
Spokes can easily be created within the model
Advantages Disadvantages
X There is a limit to the number of nodes that can be adequately and efficiently connected
X Has been proven to be a costlier method of transportation for larger logistics companies due to greater overall travel leading to higher total fuel costs and the need for goods to be sorted at each node, leading to higher labour costs
X Any disruption at the hub can cause delays throughout the entire system
X Efficiency of model depends on the capacity of the hubX Route scheduling may be complicated X Requires longer journeys for goods to arrive at their destination
Sources: Global Logistics: Mangan, Lalwani & Butcher; Aviation Knowledge
Overview UPS FedEx Deutsche Post
Market Segments
Who Uses Courier & Delivery Services?
1. Business servicesUsed primarily by bankers, bureaucrats and lawyers, this market segment relies on speedy and reliable B2B service for time-sensitive package delivery. This market segment has risen in importance since the latest financial recession as business spending increases.
2. Retailers and wholesalersThis market segment includes businesses in various sectors including consumer goods, fashion and electronics. A retailer/wholesaler would use a courier to transport raw materials between business locations, for instance. Amazon has contributed a large share of revenue for this segment, as it uses FedEx and UPS for a majority of shipments.
3. HouseholdsSelf-employed individuals may use couriers to delivery various packages. Due to the rise in popularity of e-commerce, individuals/households are increasingly likely to use courier services to trade items in the years to come.
4. OtherThis includes third-party logistics and supply chain management companies that are excluded from the business services segment.
Source: IBIS World
Overview UPS FedEx Deutsche Post
Geographical Markets
Where do Courier Service Companies Make Their Revenue?
1. North AmericaHome to the two biggest names in the industry, UPS & FedEx, the U.S. market accounts for 90% of North American revenue and is mainly focused around the express segment.
2. EuropeOperators in the European segment rely heavily on road and rail transportation. Recently, some European nations have relaxed national post systems and have removed various barriers relating to customs, which have opened the door for companies to take advantage of new markets. This is especially true for countries that were previously part of the Soviet Union.
3. North AsiaMore than half of the revenue in this market is from Japan, which has one of the most advanced courier systems in the world, largely attributable to the customer-oriented model that exists there. South Korea and Japan both have high internet penetration, making e-commerce extraordinarily popular. The manufacturing industry for electronics has also led to increased exports via courier from South Korea. While China has potential due to its massive manufacturing base, strong competition, and stifling regulation around letter delivery and road transportation has pushed out some large shippers from the country and has made it difficult for local small operators to expand. China’s express segment is made up mostly of local operators, with China Post as the biggest player in this segment.
4. Other RegionsIndia only accounts for 2.1% of industry revenue, despite it having 15% of the global population—this is largely due to poor transportation infrastructure in the country. However, a growing middle class should eventually overcome this and lead to significant future growth. Southeast Asia and South America have both been exceptional drivers of recent industry demand. Africa still has an undeveloped economy and poor infrastructure, thus its courier industry is served locally.
Source: IBIS World
Overview UPS FedEx Deutsche Post
Revenue Breakdown
Revenue by Market Segment Revenue by Continent
55%29%
10%
6%
Business Services Retailers & Wholesalers Households Other
North America36%
Europe23%
North Asia19%
South East Asia9% South
America6%
Africa & Middle East3%
India & Central Asia2%
Oceania2%
Source: IBIS World
Overview UPS FedEx Deutsche Post
Segments as a Percentage of Industry Revenue
Revenue Segments
Express Courier Services
• Refers to services that are conducted over a relatively short period of time• This means same-day, overnight, or next day delivery
• This relies on cargo aircraft• Relies on the hub system; all freight is transported a central “hub”
where it is sorted and then rerouted to destination• This segment of the industry has become more dominant over the last
five years• This segment is dominated by the big players (i.e. UPS & FedEx)
Service Couriers & Messengers
• Includes ground transportation that and is typically conducted over a longer period of time than the express segment• This usually means that this service is cheaper for customers
• Many operators in this space are relatively small and serve single, local urban markets
• This segment relies more heavily on labour and thus more employees work in this segment than in express
• However, as a portion of revenue, this segment has declined relative to the express segment
56.2%
43.8%
Express Courier Surface Courier & Messengers
Source: IBIS World
Overview UPS FedEx Deutsche Post
Revenue Growth
Historical Performance Total Industry Revenue Expected to Grow
• Industry has experienced stagnant growth since the financial recession• Developed nations, especially those in Europe, have contributed
greatly to the industry’s struggles• Industry experienced rapid growth between 2009 – 2011 with greater
activity in emerging economies• Emerging economies have recently experienced a slowdown however,
which has dampened industry growth• Increasing number of people with internet access has also helped
industry grow• However, internet access has acted as a double-edged sword;
many now scan documents electronically instead of shipping documents
Forecasted Performance
• Expected to grow at a modest rate, due to increased global e-commerce and increased emphasis on quick delivery times for manufacturers, such as just-in-time delivery
• Consumer spending expected to rise, but will be partially offset by a continued slowdown in emerging markets
Source: IBIS World
Overview UPS FedEx Deutsche Post
Barriers to Entry
• There is little resistance to entry for small operators who wish to serve small, niche markets, especially where only road transportation is required, from both regulatory and investment points of view
• It is difficult to gain significant market share internationally, given the need for capital investment in aircraft fleets, large delivery trucks, etc. that are required to cover large geographical regions
• There is also much more regulation regarding aircraft fleets
Industry Competition
20.9%
18.4%
13.8%4.2%3.2%
Other: 39.5%
Market Concentration
• The shipper market is neither fragmented nor concentrated• The large and developed markets (N.A., Europe & Japan) are
dominated by the large players• Similarly, the large players are primarily focused on serving
these developed markets• The economic slowdown in Europe caused large players were hurt,
while the growth in emerging markets, which are served by local couriers, helped smaller players; these two factors combined to make the industry less concentrated over the last five years
• However, increased merger activity in the coming years should lead to greater concentration
Factors Affecting Competition
• The rise of technology stresses the importance of developing solid information management systems and a strong e-commerce platform
• Countries with nationalized post systems see relatively low competition• Bigger companies can operate at higher margins• Long-term contracts are an important source of revenue; for instance,
electronics companies may choose one company to exclusively deliver its products
• The advantages of signing documents online as opposed to having a physical copy shipped presents an external threat
Major Players
Source: IBIS World
Overview UPS FedEx Deutsche Post
Revenue Stability
• Because of the diversity of clients that operators serve, revenue is stable in this industry
• Increasingly liberalized international trade and the strength of e-commerce has provided downside protection for revenue
• Industry revenue fluctuates about 2% a year
Operating Conditions
Labour Intensity
• Industry operators are expected to invest a mere $0.10 in capital expenditures for every $1.00 that is expended on labour• However, capital intensity has increased recently as companies
have been investing in more efficient aircraft, trucks and technology
• Capital intensity is higher for larger companies as efficient equipment reduces the need for labour
• For owner-operators (those who both own and operate the daily operations of the business—typically smaller logistics companies), work long hours, adding to the labour intensity on the smaller end of the spectrum
Technological Advancement
• There is reasonable change in technology in this industry• The rise of e-commerce has led to enhanced customer service• Bar coding technology has reduced the burden of the truck driver
concerning labels and information that used to be dealt with manually by paper
• Improved tracking systems has meant that customers can track parcels in real-time
• The use of the digital pen is now often used for customers to sign when receiving packages and allows for more efficient data transfer
Source: IBIS World
Overview UPS FedEx Deutsche Post
Cost Structure
Industry Cost Structure Factors Affecting Costs
Purchases: Fuel represents the largest purchase—the lower the price of crude, the lower the cost. Some of the bigger players actually hired “fuel managers” to hedge against rising fuel prices. Purchases can also include transportation costs for smaller companies who don’t own aircraft fleet.
Other: Includes insurance, cleaning, landing fees, among others.
Wages: Increased automation and a higher share of employment from developing nations with lower wages have led to a decline in wages as a percentage of revenue.
Rent & Utilities: These are costs of renting distribution centres, warehouses, and terminal spaces at airports.
Depreciation: Includes the depreciation of aircraft fleet and vehicles as well as communications equipment and computer software and hardware.
Profit Margins: Margins have increased from 6.3% in 2011. Operators in the express courier space see higher margins due to premium pricing for time-sensitive delivery.
Source: IBIS World
Overview UPS FedEx Deutsche Post
Supply Chain
Economic Drivers
Demand IndustriesSupply Industries Global Shippers
• Number of Internet users• Price of crude oil• Consumer spending & trade
• Internet service providers• Computer hardware manufacturing• Aircraft and automobile
manufacturing
• Wholesale and retail trade• Manufacturing • Business activities
Source: IBIS World
Overview UPS FedEx Deutsche Post
Economic Drivers: Number of Internet Users
Internet Commentary
• As alluded to earlier, increased internet access has the negative side-effect of reduced need to courier or deliver items that can otherwise be sent electronically
• However, the positive of increased access to online retail outweighs this negative side-effect• Therefore, # Internet users = $ industry revenue
Internet Penetration by Continent
29%
71%
Africa
With Internet No Internet
40%
60%
Asia
With Internet No Internet
74%
27%
Europe
With Internet No Internet
56%
44%
Latin America / Caribbean
With Internet No Internet
88%
12%
North America
With Internet No Internet
Internet Users by Continent
1.6
0.60.3 0.3 0.3
0.0
0.5
1.0
1.5
2.0
Asia Europe Latin America /Caribbean
Africa North America
Inte
rnet
Use
rs (
bill
ion
s)Source: IBIS World
Overview UPS FedEx Deutsche Post
Economic Drivers: Price of Crude Oil
How Crude Affects Shippers
• Given that the primary activity of the industry is transporting goods, a major cost driver (second only to perhaps wages) is fuel
• Fuel costs are largely the result of the price of crude oil; crude oil is refined into various refined products: diesel, gasoline, etc.
• When fuel costs are high, large shipping operators are able to pass a large portion of this increase onto its customers, which leads to decreased volumes and ultimately, reduced profitability
• Small shipping operators are unable to pass on fuel cost increases to its customers and thus profit margins would shrink
• Price volatility represents a threat to the industry
Crude Oil Commentary
Recent Volatility in Crude Oil Price
$40
$50
$60
$70
$80
$90
$100
$110
Cru
de
Oil
Pri
ce (
US$
/bar
rel)
• Clearly, skyrocketing oil prices from 2009 – 2011 was not correlated with high industry growth over this time
• It is possible that consistent high oil prices between 2011 – 2014 slowed industry growth
• Recent drastic downturn in oil price should benefit industry profitability
• Today’s price of crude: ~$40/barrel
Source: IBIS World
Overview UPS FedEx Deutsche Post
• The industry is heavily reliant and is quite correlated with global consumer spending
• More specifically, the industry is strongly tied to discretionaryspending and is a function of consumer confidence
• Global consumer spending will likely have increased at an annualized rate of 2.6% from 2011 – 2016E
• However, consumer spending decreased in Europe due to the Eurozone crisis, which offset emerging market growth
• Of particular note is consumer spending in durable goods, given the nature of shipping goods
Economic Drivers: Consumer Spending & Trade
US Consumer Spending By CategoryConsumer Spending
17.40%
16.80%
31.20%
21.70%
13.20%
Housing Services Healthcare Services
All other Household Services Non-durable Goods
Durable Goods
International Trade
• Many emerging countries have relaxed their trade barriers, creating an opportunity for stronger demand in the industry concerning internationally-shipped products
• Free trade agreements and the notion of globalization benefit the industry
• Foreign exchange risk is a threat to some players in the industry; the recent appreciation of the US dollar has hurt shippers whose customers reside outside of the US
Source: IBIS World
Overview UPS FedEx Deutsche Post
Industry Trends: Mergers and Acquisitions
Why Have Mergers Become Prominent in the Shipping Industry?
1. Mergers have become prominent in the developed world (Europe and N.A.) because companies wish to expand the services they offer, like bolstering e-commerce platforms, and acquisitive growth is often perceived as the best way to achieve this
2. Merger activity, including joint ventures, have increased in developing nations where a monopoly on courier services had once existed—offering better service and pricing to previously uncompetitive environments has proven attractive
C.H. Robinson Acquires Freightquote.com (2015)
• C.H. Robinson (market cap: $10.4 billion) acquires privately-held, internet-based American freight broker for $365 million
• Rationale behind acquisition was Freightquote’s proprietary e-commerce platform, allowing shippers to better access lower rates
FedEx Acquires GENCO (2015)
• FedEx (market cap: $39.6 billion) acquires large logistics firm (sales of $1.6 billion) that specializes in handling product returns—handles more than 600 million returns a year
• GENCO’s leadership in “reverse logistics” provided the rationale for the deal
• Price of acquisition: $1.4 billion
Source: Canadianshipper.com
Overview UPS FedEx Deutsche Post
• Number of establishments (physical locations) and enterprises (separately managed divisions) have both dropped off about 10% over the last 8 years due to increased consolidation in the industry• Large players expanded into emerging markets through
acquisition of smaller companies here• Large industry operators have also cut capacity in developed nations,
which has also contributed to the decrease in enterprises and establishments
• Robust growth in developing economies will offset industry consolidation in Europe and N.A. and is projected to lead to a 1.3% annual growth rate in establishments over the next five years
Industry Trends: Employment and Establishments
Employment Trends Degree of Industry Consolidation
Global Workforce Expected to Increase
2.00
2.10
2.20
2.30
2.40
2.50
2.60
2.70
2.80
2.90
3.00
Emp
loym
ent
Un
its
(in
mill
ion
s)
Historical CAGR = -0.53%Forecasted CAGR = 1.87%
• Increased company restructuring and the exit of some industry players (the smaller companies), in addition to increased automation, have led to a decreased workforce despite modestly growing industry revenue
• Currently, global workforce stands at around 2.5 million workers (includes part-time, temporary, & full-time employees)
• Workforce expected to increase at a rate slightly below the industry growth rate
578,155
Number of Establishments
558,315
-15%
-10%
-5%
0%
5%
Number of Enterprises
Source: IBIS World
Overview UPS FedEx Deutsche Post
Pertinent Regulations – US & Europe
Air Operations Ground Operations
• The U.S. Department of Transportation (“DOT”) regulates the economic aspects of air transportation, including insurance and pricing• International operations subject to bilateral agreements
between U.S. and foreign governments• The Federal Aviation Administration (“FAA”) regulates the safety
aspects of air transportation, including the transportation of hazardous materials and maintenance
• The Transportation Security Act (“TSA”, 2001) regulates security aspects of air cargo transportation
• The Federal Motor Carrier Safety Administration (“FMCSA”) regulates ground transportation as it relates to safety, insurance, and the transportation of hazardous materials
• The Postal Accountability and Enhancement Act (2006) oversees aspects of the U.S. Postal Service (created in 1970)• Has authority over postal rates, product offerings and service
standards• The Motor Carrier Act (1980) deregulated the trucking industry in
easing entry restrictions, and limiting the ability for agencies or collections of companies to set rates
• The U.S. Department of Homeland Security regulates cargo security
Environmental
• Various federal, state and local environmental regulations oversee regulations regarding proper storage, handling and disposal of waste, management of stormwater, underground storage tank, adherence to clean air laws, emissions standards, responding to spills, among others
• The Environmental Protection Agency (“EPA”) assists in governing aircraft noise in the US and there are noise regulations in foreign countries
European Regulations
• The European Union does not allow monopolies in the mail handling industry, which has allowed private carriers to more easily enter that market
• England has decreased its limit on the average weekly hours a truck driver can work from 55 to 48
• Air Carriers must follow International Civil Aviation Organization (“ICAO”) guidelines, which oversee environmental, safety, and security standards
Source: UPS Website
Overview UPS FedEx Deutsche Post
Customs, Tariffs & Industry Associations
Customs Industry Associations
• Custom laws in various countries regulate the import and export of shipments
• The Bureau of Customs and Border Protection oversees customs brokerage (a customs broker “clears” goods through customs) and freight forwarding (an entity that organizes shipments from a manufacturer to a market)
Tariffs
• There are no tariffs imposed on the industry per se, but there are tariffs on the products shipped by industry operators
• The overall lowering of tariffs has led to a surge in outsourcing and offshoring for production of goods
• The Messenger Courier of Association (created in 1997) represents ~500 courier companies in the US and abroad• This not-for-profit promotes the common interests of the courier
industry• The European Express Association represents the courier industry in
Europe• It is divided into committees that deal with competition and
markets, customs, transport and environment, and security
Source: IBIS World
Overview UPS FedEx Deutsche Post
Domestic, 1,309
International, 2,622
Atlantic, 557
Pacific, 799
Latin America, 129
Trailing 12M Freight Statistics
-6%
-4%
-2%
0%
2%
4%
6%
8%
North America Asia Pacific Europe
Total Freight YoY Cargo Revenue Ton Miles Distribution (Millions)
Source: Bloomberg
• A Cargo Revenue Ton Mile is a ton of cargo multiplied by the number of miles it travels
• This data is for the month of December, 2015• Total ton miles traveled for 2015: ~65 billion
Overview UPS FedEx Deutsche Post
130
132
134
136
138
140
142
120
125
130
135
140
145
150
155
150
155
160
165
170
175
125
130
135
140
145
150
Inbound Asia Price Index
Trailing 12M Price Trends
Inbound Europe Price Index
Outbound Asia Price Index
Source: Bloomberg
Outbound Europe Price Index
Overview UPS FedEx Deutsche Post
Trailing 12M Price Trends
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
80
82
84
86
88
90
92
94
96
98
100
102
East-West Price Index: USA Shanghai to New York: USD/kg
Source: Bloomberg
Overview UPS FedEx Deutsche Post
Revenue Metrics
Revenue Growth YoY Revenue per Employee
Source: CSI MarketNote: As of Q3-2015
Overview UPS FedEx Deutsche Post
Margins
Gross Margin EBITDA Margin
Source: CSI MarketNote: As of Q3-2015
Overview UPS FedEx Deutsche Post
Return on Balance Sheet Items
Return on Equity Return on AssetsReturn on Investment
Source: CSI MarketNote: As of Q3-2015
Overview UPS FedEx Deutsche Post
Stakeholder Growth Trends
Free Cash Flow Growth YoY Operating Income Growth YoY
Source: CSI MarketNote: As of Q3-2015
Overview UPS FedEx Deutsche Post
Balance Sheet Metrics
Capital Expenditure Growth YoY Quick Ratio
Source: CSI MarketNote: As of Q3-2015
Overview UPS FedEx Deutsche Post
Net Income & Dividend Payout Ratio
Net Income Growth YoY Dividend Payout Ratio
Source: CSI MarketNote: As of Q3-2015
Overview UPS FedEx Deutsche Post
United Parcel Service, Inc. (UPS)
Overview UPS FedEx Deutsche Post
Stock & Company Overview
Overview UPS FedEx Deutsche Post
Stock Information
Exchange: NYSETicker: UPS US Equity
20
40
60
80
100
120
Stock Performance Since IPO Key Metrics
Current Price 101.29
Day's Range 100.48-101.60
Bid/Ask 100.10/101.00
52-week Range 87.30 - 107.32
Market Cap 89.5 B
Net Debt 9.6 B
Enterprise Value 99.1 B
Dividend Yield 3.09%
Average Volume (3-month) 3.5 M
Shares Outstanding 883.7 M
P/E (ttm) 18.93
EPS (ttm) 5.35
P/B (ttm) 36.33
Beta 0.94
Next Earnings Date 28-Apr-16
All prices in USD as of 3/14/2016Source: Yahoo Finance
Overview UPS FedEx Deutsche Post
Stock Information
40
50
60
70
80
90
100
110
120
2011-03-31 2012-03-31 2013-03-31 2014-03-31 2015-03-31
5-Year Stock Performance
Overview UPS FedEx Deutsche Post
Stock Information
80
85
90
95
100
105
110
1-Year Stock Performance
Exchange: NYSETicker: UPS US Equity
2015 Financial Highlights
Revenue 58.4 B
FCFF 5.05 B
Net Income 4.8 B
Adjusted Net Income 4.9 B
Deluted EPS 5.35
Dividends Declared (per share) 2.92
Dividend Yield 3.0%
All prices in USDSource: UPS 2015 Annual Report
Overview UPS FedEx Deutsche Post
Stock vs. Industry Performance
SECTORINDUSTRIALS
INDUSTRYTRANSPORTATION
SUB-INDUSTRYCOURIER SERVICES
-20%
-15%
-10%
-5%
0%
5%
10%
2015-03-20 2015-05-20 2015-07-20 2015-09-20 2015-11-20 2016-01-20
1-Year Performance
UPS US EQUITY NYA: NYSE CompositeBIXPRSGT: Global Express & Courier Top Peer Index TRAN: Dow Jones Transportation Average
Overview UPS FedEx Deutsche Post
SECTORINDUSTRIALS
INDUSTRYTRANSPORTATION
SUB-INDUSTRYCOURIER SERVICES
-15%
-10%
-5%
0%
5%
10%
2015-03-20 2015-05-20 2015-07-20 2015-09-20 2015-11-20 2016-01-20
1-Year Performance
UPS US EQUITY BIXPRSGT: Global Express & Courier Top Peer Index
Stock vs. Industry Performance
Overview UPS FedEx Deutsche Post
Company Overview
World’s Largest Package Delivery Company Vision Guided by 4 Transformative Strategies
1. Deploying technology-enabled operations
2. Providing unique and industry-specific customer solutions
3. Expanding global network
4. Serving the needs of end consumers around the world
• Founded in 1907 as a private messenger and delivery service
• Currently headquartered in Atlanta, Georgia, U.S.
• The largest in terms of revenue and volume
Deliver packages each business day for 1.5 million shipping customers to 7.9 million receivers
Operate in over 220 countries and territories
In 2013, delivered 16.9 million pieces per day worldwide, or a total of 4.3 billion packages
Overview UPS FedEx Deutsche Post
Company Overview
Self-Defined Competitive Strengths
• Integrated global network backed by sophisticated optimization system
• A leader in developing technology to enable customers to optimize their shipping & logistics business processes
• Cross-selling small package, supply chain and freight services across customer base – an important growth mechanism
• Strong brand equity and distinctive culture with employee stock ownership tradition dating back to 1927
Industry Focus
• Aerospace & Defense
• Automotive
• Consumer Services
• Government Agencies
• Healthcare
• High Tech
• Industrial Manufacturing & Distribution
• Professional Services
• Retail
Overview UPS FedEx Deutsche Post
Company Overview
Quick Facts
Source: UPS 2015 Annual Report
Overview UPS FedEx Deutsche Post
Fleet as of December 31, 2015
• A global ground fleet of 110,000 package cars, vans, tractors and motorcycles• Ground support fleet of 33,000 pieces of equipment designed to support aircraft fleet,
ranging from nonpowered container dollies and racks to powered aircraft main deck loaders and cargo tractors
• 33,000 containers used to transport cargo in our aircraft
Aircrafts
Vehicles
Overview UPS FedEx Deutsche Post
History & Management
Overview UPS FedEx Deutsche Post
History Timeline
1907-1913
Creating a Messenger
Service
• In 1907, two teenage entrepreneurs created what would become the world's largest package delivery service
• Starting in a Seattle basement with a $100 loan, Claude Ryan & Jim Casey opened the American Messenger Company
• The company fulfilled a range of tasks, from running errands and carrying notes on foot or on bicycle, to making home deliveries for drugstore customers
1913-1918
Retail Beginning
• A merger with Evert McCabe's competing package delivery business helped the company redefine its primary charge
• In 1913, the company shifted its focus to delivering packages from grocery and drug stores to customers' homes, changing its name to Merchants Parcel Delivery
• In 1918, 3 of Seattle's leading department stores became customers, abandoning their own internal delivery efforts, and turning over business to Merchants Parcel Delivery
1918-1930
Entering the Common Carrier
Era
• In 1919, the company expanded beyond Seattle to Oakland, California, becoming United Parcel Service
• In 1922, acquired common carrier service in Los Angeles (manufacturer distributor)
• In 1924, introduced an innovative conveyor belt system used for package handling
• In 1929, began to offer air service through private airlines for the next 2 years, until the economic downturn
• Moved headquarters to New York City
• Jim Casey in the 1920s gave staff the opportunity to purchase company shares
Overview UPS FedEx Deutsche Post
History Timeline
1930-1975
Expansion
• UPS grew throughout the 1930s and early 1940s by acquiring delivery responsibilities for department stores in Chicago, Cincinnati, Milwaukee, Minneapolis, and Philadelphia
• Reintroduced air service, offering two-day delivery to major East and West Coast cities in 1953
• Over the course of 30 years, UPS pursued more than 100 applications for additional operating authority
1975-1990
International Growth & UPS
Airlines
• In 1975, the corporate headquarters moved from New York City to Greenwich, Connecticut
• UPS went abroad, expanding its service throughout the Americas and Europe
• In 1989, purchased IML, a British delivery company, expanding to the Middle East, Africa, & the Pacific Rim
• Deregulation of the airline industry allowed new opportunities for UPS, it started creating its own fleet
• In 1988, UPS won approval from the Federal Aviation Administration (FAA), launched UPS Airlines
1990-1999
Consistent Innovation
• In 1994, to improve cost efficiencies moved headquarters to its current home – Atlanta, Georgia
• Since the late 1990s, UPS invested billions in technology development and infrastructure
• Delivery Information Acquisition Device (DIAD), was developed to upload information to the UPS network
• New services included transportation and distribution for larger shipments via road, rail, air, and ocean
• In 1998 created UPS Capital, financial services unit; bought First International Bank, for commercial lending
• In 1999, UPS offered 10% of its stock to the public for the first time (IPO)
Overview UPS FedEx Deutsche Post
History Timeline
1999-2010
Global Commerce & Evolution
• Full-service business, with UPS Supply Chain Solutions (logistics, global freight, financial, and mail services)
• In 2001, UPS ventured toward retail business – acquired Mail Boxes Etc.
• Opened air hubs in Louisville, Kentucky, and Cologne, Germany
• In 2003, UPS issued its first Corporate Sustainability report
• In 2005, launched the first non-stop delivery service between the U.S. and Guangzhou, China
• In 2005, acquired the interest held by its joint venture business partner in China, giving it access to 23 cities that cover more than 80% of the country's international trade
• Growth through acquisitions in Latin America, North America, U.K., and Poland (air carriers & freight)
2010-2016
The New Logistics
• DIAD V is rolled out to speed package tracking detail between UPS and its customers
• Acquired Brussels-based Kiala and launched UPS Access Point, an alternative to home delivery, allowing UK consumers to purchase goods over the Internet and choose convenient delivery locations
• In 2013, became the first global express delivery company to be wholly-owned in Vietnam
• UPS expanded into the healthcare market, with facilities in China, Hungary, Australia, Italy and North America
• ORION, On-Road Integrated Optimization and Navigation, reduces miles driven by optimizing driver routes will be completed by 2017
Overview UPS FedEx Deutsche Post
History: Takeaways
1. Vertical integration and technological enhancements drive efficiency
2. Growth by acquisitions across different geographies create economies of scale
3. Expansion into markets other than parcel delivery add new revenue streams
4. Employee ownership creates incentives and promotes the culture
5. Regulations across business units affect operations & expansion plans
6. Environmental regulations and CSR are becoming the areas of increasing concern
7. E-commerce and new technology drive competition & growth CAPEX
Overview UPS FedEx Deutsche Post
Management Committee
David Abney, UPS Chairman and Chief Executive Officer• Unanimously appointed by the Board of Directors as Chairman in 2016• Appointed CEO in 2014 (11th CEO in the 108-year history of UPS)• Began his UPS career in 1974 in a small facility in Greenwood, Mississippi, while attending Delta State University• BBA from Delta State University• 2007-2014: chief operating officer at UPS, overseeing logistics, sustainability, engineering and all facets of the transportation
network• 2002-2007: president of UPS International, was involved in a number of global acquisitions• Earlier served as president of SonicAir, a same-day delivery service that signaled UPS's move into the service parts logistics sector
Richard Peretz, Chief Financial Officer• Joined UPS Customer Service in 1981 while attending college at the University of Texas at San Antonio• BBA from University of Texas San Antonio; MBA from the Goizueta Business School at Emory University• Was a member of the team that managed UPS’s Initial Public Offering in 1999• In 2013, became Corporate Controller, and in 2014 expanded his role to include Corporate Treasurer• In 2008, responsible for corporate finance and accounting• In 2003, became International Chief Financial Officer and helped to open operations in China and expand in Poland, Japan and the
United Kingdom• In 1989, was promoted to district controller in the Americas Region as part of the development team for Mexico and Latin America• Serves on the board of the American Red Cross Metropolitan Atlanta Chapter
Overview UPS FedEx Deutsche Post
Management Committee
Jim Barber, President, UPS International• President of UPS International since 2013• Began his UPS career in 1985• Degree in Finance from Auburn University• 2011-2013: president of UPS Europe• Prior served as a UPS District Manager, Region & District Controller, Accounting Manager, and Billing Supervisor
David Barnes, Chief Information and Global Business Services Officer• Prior to being named CIO, Barnes was UPS's vice president, Application Portfolios• Began his UPS career in 1977 as a part-time package loader in St. Louis, Mo.• BBA from the University of Missouri• Held key positions during UPS's global expansion efforts in the late 1980s and early 1990s• Served on numerous technology company advisory boards and non-profit boards including two terms as a member
of the National United Way Board of Trustees; currently serves on the Board of Directors of Ingram Micro, Inc.
Myron Gray, President, U.S. Operations• Began his UPS career in 1978 as a part-time package handler in the Tennessee District while attending college• Completed advanced management programs at INSEAD in Fontainebleau, France and the Yale School of Business• In 2010, he led a strategic transformation of the company's U.S. small package business• Served as the president of the Americas Region, covering Canada, Mexico, Central America, South America and the Caribbean• Held various positions of increasing responsibility in industrial engineering, human resources, business development and operations• Sits on the boards of the Atlanta Police Foundation, the National Urban League, the Federal Reserve Bank of Atlanta
Overview UPS FedEx Deutsche Post
Management & Board Analysis
ESG Scores: 5-Year Horizon Independency of the Board
-
10
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Environmental Disclosure Score Social Disclosure Score
Governance Disclosure Score Total ESG Disclosure Score
75%
82%83%
80% 80%
82%83%
85% 85%
80%
0
0.5
1
1.5
2
2.5
3
70%
73%
75%
78%
80%
83%
85%
88%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
% of Independent Directors Political Donations
1. The Board of Directors is largely independent with only 3/15 dependent members2. A decrease in the Governance score in 2012 is due to a decline in political donations
Overview UPS FedEx Deutsche Post
Management & Board Analysis
Share Ownership Top 5 Insiders
90%
4%3% 2% 1%
Investment Advisor
Others
Pension Fund (Erisa)
Government
Bank
Holder Name Title PositionPosition Change
Market Value
Ownership
Eskew Michael Former CEO 250 82 25,158 0.04%Mcdevitt John Former SVP HR 103 10,433 0.02%Finley Teresa SVP Global Mkt 43 4,318 0.01%Nichols Mitch Former Eng SVP 38 3,878 0.01%Barber James SVP & President 27 2,720 0.00%
In Thousands of USD Unless Otherwise SpecifiedSource: Bloomberg
1. Insiders own a low percentage of shares: 0.07% in total, with a large market value at $46.5 million2. Current CEO & CFO do now own a significant stake, former management tends to be insider owners3. The majority of the shares is owned by investment advisors
Overview UPS FedEx Deutsche Post
Share Ownership: Top 10 Shareholders
Holder Name Position Position Change Market Value Ownership Report Date Country
Blackrock 45,973 17 4,635,009 6.66% 2016-03-10 USA
Vanguard Group 43,153 865 4,350,734 6.25% 2016-01-31 USA
Wellington Management 29,550 -642 2,979,191 4.28% 2015-12-31 USA
State Street Corp 26,030 -63 2,624,348 3.77% 2015-12-31 USA
Sun Life Financial I 22,896 -184 2,308,341 3.32% 2016-01-31 CANADA
FMR LLC 18,369 -1,399 1,851,974 2.66% 2015-12-31 USA
Bank Of America Corp. 11,069 -1,574 1,115,986 1.60% 2015-12-31 USA
Franklin Resources 10,505 -420 1,059,079 1.52% 2015-12-31 USA
Wells Fargo & Company 9,673 168 975,203 1.40% 2015-12-31 USA
Northern Trust Corp. 8,891 -1,099 896,439 1.29% 2015-12-31 USA
In Thousands of USD Unless Otherwise SpecifiedSource: Bloomberg
Overview UPS FedEx Deutsche Post
Management: Takeaways
1. Top executives are appointed internally & have been with UPS for decades
2. Management has business background – shareholder friendly
3. The Board of Directors is largely independent at 80%
4. Some of the former executives are insider owners at 0.07%
Overview UPS FedEx Deutsche Post
Financial Analysis
All Financial Statements are in Millions of USDSource: UPS 2015 Annual Report
Overview UPS FedEx Deutsche Post
Selected Income Statement
2015 was a strong year for UPS:
1. Total Revenue slightly up/flat• Caused by increase in the
U.S. Domestic Package• Continued growth in
e-commerce & retail• Offset by a decline in
International Package
2. Total Operating Profit up 54%• Caused by increase in the
U.S. operating profits
Overview UPS FedEx Deutsche Post
Revenue Streams
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Rev
enu
e in
bill
ion
s o
f U
SD
Change in Revenue Proportion: 10-Year Horizon
U.S. Domestic Package International Package Supply Chain & Freight
4.3% 1.8% 1.8%
5-Year Total Revenue Growth: CAGR = 3.3%Highest Growth Segment: U.S. Domestic Package
Largest Segment by Absolute Revenue: U.S Domestic Package
By Service Segment
63%
21%
16%
2015 Revenue Distribution
U.S. Domestic Package
International Package
Supply Chain & Freight
$37 B
$12 B
$9 B5-Year CAGR:
Overview UPS FedEx Deutsche Post
Revenue Streams
78%
22%
2015 Revenue Distribution
United States International
70%
73%
75%
78%
80%
20%
23%
25%
28%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Change in Revenue Proportion: 10-Year Horizon
International United States
By Geography
UPS attempted to reshape its revenue streams, expanding internationallyIn 2015, International Revenue declined in its proportion to total & in the absolute terms ($14B $13B)
While expanding abroad, UPS still earns 78% of revenues from the U.S.
Overview UPS FedEx Deutsche Post
1. U.S. Domestic Package Operations
Overview UPS FedEx Deutsche Post
2. International Package Operations
Overview UPS FedEx Deutsche Post
3. Package Operations
Overview UPS FedEx Deutsche Post
Segments: TakeawaysVolumes in all segments – Next Day Air, Deferred, and Ground (83% of total) – were up, allowing to leverage transportation network and leading to improved productivity.
This was slightly offset by higher pension and healthcare costs, contractual union wage increases and the negative impact of fuel. Margin was stronger.
U.S. Domestic Packaging
International Package Operations Volumes were up on 3.2% increase in Exports, slightly offset by 0.3% decrease in Domestic (58% of total). Strong demand from healthcare and diversified vehicles & parts segments.
Operating profit & margin were positively affected by base rate increases, modifications to the fuel surcharge indices and the net impact of fuel. Margin was stronger.
Total revenue within the segment was up, driven by forwarding & logistics sub-segment (62% of total).
Combined operating profit for this segment was up, primarily due to higher operating profit at UPS Capital and our service contracts with the U.S. Postal Service. Margin was stronger.
Supply Chain & Freight Operations
Overview UPS FedEx Deutsche Post
Package Yield Analysis
U.S. Domestic Package:In the past 3 years, yield has largely
stayed flat
International Package: In the past 3 years, yield has declined at an average of 5%
Conclusion:Revenue growth comes from
increasing volumes, not prices
Revenue per Package % Growth (Yield)
-20%
-15%
-10%
-5%
0%
5%
10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U.S. Domestic Package International Package
Overview UPS FedEx Deutsche Post
Margins Analysis
0%
5%
10%
15%
20%
25%
30%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Gross Margin EBITDA Margin Profit Margin
Company Margins
• Fluctuate over time
• Recovered since 2012
• Improved in 2015
Consolidated Margins
Overview UPS FedEx Deutsche Post
Margins Analysis
The most profitable business:International Package
U.S. Domestic Package business contributes 63% of total revenue:Important to keep higher margin
Operating Margin (EBIT Margin) by Service Segment
0%
3%
5%
8%
10%
13%
15%
18%
20%
2009 2010 2011 2012 2013 2014 2015
International Package US Domestic Package Supply Chain & Freight
Overview UPS FedEx Deutsche Post
Ratios: DuPont Analysis
Historical Returns ROE Decomposition
Pro
fit
Mar
gin
X
Ass
et T
urn
ove
r
X
Equ
ity
Mu
ltip
ler
=
Ret
urn
on
Eq
uit
y
2015 8.3% 1.6 15.4 202%
2014 5.2% 1.6 16.4 139%
2013 7.9% 1.5 5.6 65%
2012 1.5% 1.5 8.2 18%
2011 7.2% 1.6 4.9 54%
2010 6.7% 1.5 4.2 43%
0%
50%
100%
150%
200%
250%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ROE ROA
2015 Metrics:WACC = 7.5% ROE = 202% ROA = 66%
Overview UPS FedEx Deutsche Post
Cost Structure
Operating Expenses: Snapshot
Overview UPS FedEx Deutsche Post
Cost Structure
Operating Expenses: Distribution
-
10,000
20,000
30,000
40,000
50,000
60,000
2011 2012 2013 2014 2015
In M
illio
ns
of
USD
Salaries, Wages & Employee Benefits Purchased Transportation
Other Operating Expenses Transportation Fuel
Depreciation and Amortization Transportation Maintenance Expense
Occupancy/Rent Expense
Overview UPS FedEx Deutsche Post
Ratios: Credit& Liquidity
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Debt/Capital Total Debt/Total Assets
Historical Debt Ratios
Debt has been increasing in the past, since UPS pursues growth through acquisitionsUSP has the highest debt/capital ratio when compared to its close competitors
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0%
100%
200%
300%
400%
500%
600%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Mu
ltip
le
% L
evel
Total Debt/Equity Net Debt/EBITDA
Overview UPS FedEx Deutsche Post
Debt Analysis
Debt Schedule
Overview UPS FedEx Deutsche Post
Free Cash Flow
Historical Free Cash Flow Generation
-5
0
5
10
15
20
-2,000
0
2,000
4,000
6,000
8,000
10,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
In U
SD (
per
sh
are
amo
un
t)
In m
illio
ns
USD
Axis Title
Free Cash Flow to Firm Free Cash Flow to Equity Free Cash Flow per Basic Share
Overview UPS FedEx Deutsche Post
Dividend Payout
Source: UPS Investor Relations Shares Outstanding: 883.7 M
Overview UPS FedEx Deutsche Post
Cash Flow Takeaways
1. In 2015, the company generated strong cash flow from its operations,
primarily driven by higher incomes and depreciation expense
2. Cash was reinvested in acquisitions, facilities’ upgrades, and investments in
marketable securities
3. $5.1 million in debt is due to repayment in 2016, the dividend payout has
been historically on the rise
4. Average FCFF generated is around $5B annually, debt due in 2016 is $5.1B,
with those levels, dividend payout ratio seems high
Overview UPS FedEx Deutsche Post
Comparable Companies
PriceShares
Outstanding
Dividend
Yield (%)
Operating
Margin (%)
Profit
Margin (%)
Market
CapNet Debt
Enterprise
Value
Debt to Cap
(%)
United Parcel Service Inc 101.42 883.70 3.08 13.14 8.30 89,625 9,608 99,233 85.19
FedEx Corp 143.07 275.62 0.70 3.93 2.21 39,432 3,505 42,937 32.65
Deutsche Post AG 26.56 1,212.75 3.55 4.05 2.60 32,210 1,292 33,502 30.91
Yamato Holdings Co Ltd 21.54 425.16 1.06 4.94 2.69 9,158 (934) 8,224 19.16
TNT Express NV 8.64 548.90 nm 0.55 (0.72) 4,745 (262) 4,483 9.20
Overview UPS FedEx Deutsche Post
Comparable Companies
EBITDA EV/EBITDA EPS P/E
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
United Parcel Service Inc 9,745 10,420 10,953 10.2x 9.5x 9.1x 5.29 5.77 6.24 19.2x 17.6x 16.3x
FedEx Corp 6,905 7,592 8,315 6.2x 5.7x 5.2x 8.91 10.55 11.92 16.1x 13.6x 12.0x
Deutsche Post AG 4,333 5,437 5,792 7.7x 6.2x 5.8x 1.82 2.15 2.34 14.6x 12.4x 11.3x
Yamato Holdings Co Ltd 973 1,008 1,037 8.4x 8.2x 7.9x 0.82 0.86 0.95 26.3x 25.0x 22.8x
TNT Express NV 239 335 594 18.8x 13.4x 7.5x 0.18 0.26 0.39 47.0x 33.1x 22.0x
Median 8.4x 8.2x 7.5x 19.2x 17.6x 16.3x
Mean 10.3x 8.6x 7.1x 24.6x 20.3x 16.9x
Min 6.2x 5.7x 5.2x 14.6x 12.4x 11.3x
Max 18.8x 13.4x 9.1x 47.0x 33.1x 22.8x
25th Percentile 7.7x 6.2x 5.8x 16.1x 13.6x 12.0x
75th Percentile 14.5x 11.4x 8.5x 36.6x 29.0x 22.4x
Overview UPS FedEx Deutsche Post
Consolidated Balance Sheet: Assets
Goodwill:In the U.S. Domestic Package segment was related to the acquisition of Coyote
In the Supply Chain & Freightsegment was related to acquisitions of Poltraf, Parcel Pro, and the Insured Parcel Services division of G4S International Logistics
Overview UPS FedEx Deutsche Post
Consolidated Balance Sheet: Liabilities & SE
Overview UPS FedEx Deutsche Post
Statement of Consolidated Income
Overview UPS FedEx Deutsche Post
Statement of Consolidated Comprehensive Income
Overview UPS FedEx Deutsche Post
Statement of Consolidated Cash Flows: CFO
Overview UPS FedEx Deutsche Post
Statement of Consolidated Cash Flows: CFI & CFF
FCIAcquisitions: Poltraft Sp. in Poland, and Parcel Pro and Coyote Logistics Midco in the U.S.Marketable Securities:Purchases & sales of marketable securities due to rebalancing of investments
CFFAdditional Debt:Consisted of euro-denominated senior notes and facility bonds associated with Pennsylvania airport, and commercial papersShare Repurchase Program:Extended to $10.0 B with no expiration date
Overview UPS FedEx Deutsche Post
Valuation Results & Recommendation
0 25 50 75 100 125 150 175 200 225 250
2016 P/E Method
2016 EV/EBITDA Method
2016 P/CF Method
Analyst Concensus
52-Week Range
Share Price
Football Field Diagram Valuation Summary
2016 P/E Method 111.14
2016 EV/EBITDA Method 73.56
2016 P/CF Method 93.30
Analyst Consensus 107.00
Average $ 96.25
Downside given average projected price:
5.0%Upside given analysts consensus:
5.6%
1) Does not incorporating dividend yield2) As of 3/14/20163) Current Share Price = 101.29
Recommendation: HOLD
FedEx Overview
Overview UPS FedEx Deutsche Post
Overview UPS FedEx Deutsche Post
Financial Snapshot
Overview UPS FedEx Deutsche Post
1 Year Performance
Overview UPS FedEx Deutsche Post
5 Year Performance
Overview UPS FedEx Deutsche Post
10 Year Performance
Overview UPS FedEx Deutsche Post
P/E Ratio
Overview UPS FedEx Deutsche Post
FedEx Vs. S&P/TSX Composite
Overview UPS FedEx Deutsche Post
Company Profile
• Frederik W. Smith started Federal Express in 1971 to bring innovation to the shipping industry
• Provides a diverse portfolio of transportation, e-commerce, and business solutions
• Air, ground, and sea networks span over 220 countries and territories
• Headquartered in Memphis, Tennessee
Overview UPS FedEx Deutsche Post
Mission
FedEx Corporation will produce superior financial returns for its shareowners by providing high-value-added logistics, transportation, and related business
services through focused operating companies.
Overview UPS FedEx Deutsche Post
Growth Strategies and Long Term Goals
Growth Strategies
1. Grow core package business
2. Grow internationally
3. Grow our supply chain capabilities
4. Grow through e-commerce &
technology
5. Grow through new services &
alliances
Long Term Goals
1. Achieve 10%+ operating margin
2. Increase EPS 10%-15% per year
3. Grow profitable revenue
4. Improve cash flows
5. Increase ROIC
6. Increase returns to
shareowners
Overview UPS FedEx Deutsche Post
FedEx Express
Provides rapid, reliable, time-definite delivery to more than 220 countries and territories, connecting markets that comprise more than 90 percent of the world’s gross domestic product within one to three business days
Strategic Goals• Efficiency of Staff Functions and
Processes• Modernizing our Air Fleet• U.S. Domestic Transformation• International Profit
Improvement• Targeted Growth and Yield
Management
Overview UPS FedEx Deutsche Post
FedEx Express
Overview UPS FedEx Deutsche Post
FedEx Ground
FedEx Ground is a leading North American provider of ground small-package delivery services, providing service to the U.S. and Canada.
Includes:
• FedEx Home Delivery
• FedEx SmartPost
Strategic Goals• Maintain Industry-Leading
Operating Margins by Leveraging Our Seven Core Strengths
• Offer Superior Service through Innovation
• Invest in Technology and Automation
• Manage Yields• Expand the Network
Overview UPS FedEx Deutsche Post
FedEx Ground
Overview UPS FedEx Deutsche Post
FedEx Freight
FedEx Freight is a leading U.S. provider of less-than-truckload (LTL) freight services across all lengths of haul.
Includes:
• FedEx Custom Critical
• FedEx Multimodal
Strategic Goals• Provide Superior Service and
Options for Customers• Improve Speed• Invest in Technology and
Automation• Become the Most Profitable
LTL Carrier
Overview UPS FedEx Deutsche Post
FedEx Freight
Overview UPS FedEx Deutsche Post
Frederick W. Smith
• Chairman, President, and CEO
• Responsible for providing strategic direction for all FedEx Corp. operating companies, including FedEx Services, FedEx Express, FedEx Ground, and FedEx Freight.
• Education• Bachelor’s Degree – Yale 1966
• Founded FedEx in 1971
Overview UPS FedEx Deutsche Post
Alan B. Graf Jr.
• Executive Vice President and CFO
• Responsible for all aspects of the corporation’s global financial functions, including financial planning, treasury, tax, accounting and controls, internal audit, investor relations, and corporate development
• Member of the five-person Executive Committee
• Education• Bachelor of Business Administration –
Indiana University• Masters of Business Administration –
Indiana University
• Joined FedEx in 1980
Overview UPS FedEx Deutsche Post
Christine P. Richards
• Executive Vice President, General Counsel and Secretary
• Responsible for ensuring that FedEx Corporation’s global activities are in compliance with international, federal, state and local government regulations, and is responsible for international and domestic legal, security and government affairs for the corporation and its subsidiaries.
• Education• Bachelor’s Degree - Bucknell
University 1976
• Joined FedEx in 1984
Overview UPS FedEx Deutsche Post
Robert B. Carter
• Executive Vice President, FedEx Information Services, and CIO
• Responsible for setting the technology direction of the FedEx applications, infrastructure, networks, and data centers that provide around-the-clock and around-the-globe support for FedEx product offerings
• Serves as co-CEO and CIO of FedEx Corporate Services
• Member of the five-person Executive Committee
• Education• Bachelor’s Computer and Information
Science – University of Florida• Master’s Degree – University of South Florida
• Joined FedEx in 1993
Overview UPS FedEx Deutsche Post
T. Michael Glenn
• Executive Vice President, Market Development and Corporate Communications
• Responsible for all marketing, sales, customer service, and retail operations functions for all FedEx companies
• Serves as president and co-CEO of FedEx Corporate Services
• Member of the five-person Executive Committee
• Education• Bachelor’s Degree - University of
Mississippi• Master’s Degree – University of
Memphis
• Joined FedEx in 1981
Overview UPS FedEx Deutsche Post
Future Outlook
• Enhanced retail network
• Increasing locations
• Increased services
Customer Convenience
• Improving margins
• Add flexibility to domestic and international operations
Fleet Modernization
• TNT Express
• GENCO
• BongoAcquisitions
Overview UPS FedEx Deutsche Post
Business Risks
Business Risk
Capital Intensive
Intense Competition
Regulatory Environment
Oil Prices
Overview UPS FedEx Deutsche Post
Financial Analysis
Overview UPS FedEx Deutsche Post
Balance Sheet (Assets) 10Q
Overview UPS FedEx Deutsche Post
Balance Sheet (Liabilities) 10Q
Overview UPS FedEx Deutsche Post
Balance Sheet (Assets) 10K
Overview UPS FedEx Deutsche Post
Balance Sheet (Liabilities) 10K
Overview UPS FedEx Deutsche Post
Income Statement 10Q
Overview UPS FedEx Deutsche Post
Comprehensive Income Statement 10Q
Overview UPS FedEx Deutsche Post
Income Statement 10K
Overview UPS FedEx Deutsche Post
Comprehensive Income Statement 10K
Overview UPS FedEx Deutsche Post
Cash Flow (Operating) 10K
Overview UPS FedEx Deutsche Post
Cash Flow (Investing) 10K
Overview UPS FedEx Deutsche Post
Cash Flow (Financing) 10K
Overview UPS FedEx Deutsche Post
Cash Flow (Operating) 10Q
Overview UPS FedEx Deutsche Post
Cash Flow (Investing) 10Q
Overview UPS FedEx Deutsche Post
Cash Flow (Financing) 10Q
Overview UPS FedEx Deutsche Post
Stock Forecast
Overview UPS FedEx Deutsche Post
Stock Forecast
Overview UPS FedEx Deutsche Post
Recommendation
Deutsche post DHL Trading sign : DPW : GR
Trade on Xetra Stock market in Frankfurt
Created in 1924
International since late 1990s
Net sales : € 59 bn
480,000 employees in over 220 countries and territories
Headquarter in Bonn, Germany
Overview UPS FedEx Deutsche Post
Deutsche Post American Depository Receipt
Overview UPS FedEx Deutsche Post
Overview UPS FedEx Deutsche PostOverview UPS FedEx Deutsche Post
1Month Performance DHL : DPW : GR
Market cap : 28.5 Bn €
Dividend indicated Gross Yield : 3,55%
Shares outstanding : 1,213 M
One year return : - 16,01%
P/E : 19.27
EPS : 1,22€
Overview UPS FedEx Deutsche Post
1-Year Performance
Overview UPS FedEx Deutsche Post
5-Year Performance
Overview UPS FedEx Deutsche Post
History
1490
• Franz von Taxis in considered the founder of the modern postal system. By the mid-16th century, his successors had set up a courier network covering all of Western Europe.
• Post stations became crucial focal points in the development of village and cities
1646
• Elector Friedrich Wilhelm issues postal regulations establishing regular postal service between Berlin, Munster, Osnabrück, Kleve and Konïgsberg(Thirty Years’ War)
• The decree grants private individuals (merchants) the right to have their mail transported by the electoral postal system.
1815• Foundation of Danzas by a lieutenant in Napoleon’s Grande Armée in Alsace : the postal company could deliver mails within 24 hours by 1885.
• Danzas became a part of Deutsche Post in 1999.
1874
• An international agreement on reciprocal transport of mail is signed by 22 nations in 1878 which will become a UN specialized agency in 1948 : Universal Postal Union.
• Approximately 6 million postal employees in over 700,000 postal facilities around the world currently provide more than 6 billion people withsome 440 billion postal shipments per year
• In 1876, Chancellor Bismarck united the post and telegraph administration of the German Empire into one top-level administrative body
Overview UPS FedEx Deutsche Post
History
1969
• DHL is founded by Adrian Dalsey, Larry Hillblom, and Robert Lynn.
• First, they transported cargo documents from San Francisco to Honolulu by plane.
• Creation of a new sector of industry : international air express service that is to say rapid transport of documents and cargo papers by plane
• DHL became a wholly owned subsidiary of Deutsche Post in 2002
1971• DHL expands its network at high speed. Following expansion in the Far East and in the Pacific Rim (1971), DHL also begins offering services in
Japan, Hong Kong, Singapore and Australia (1972) and later in Europe (1974), Latin America (1977), the Middle East and Africa (1978).
1979• DHL adds parcel delivery to its list of services. Until this time, the company offered delivery of documents only.
1986• DHL enters into a joint venture with the People’s Republic of China, making it the first express company to operate inside of China.
Overview UPS FedEx Deutsche Post
History
1989• Law concerning the structure of Posts and Telecommunication of July 1, 1989 : organizational and regulatory changes
• 1990 : East German Deutsche Post in incorporated into Deutsche Bundespost
1995
• Three companies emerged from Deutsche Bundespost (among them, Deutsche post) and they are converted into stock companies underprivate law. Gradually shares are offered for sale (from the federal government) to private shareholders.
• Deutsche post started to innovate its distribution process.
1999
• Two strategic acquisitions : Air Express International ( international airfreight) and Danzas (logistics provider). Deutsche Post acquires a dense transport network and an impressive of value-added services
• 2000 : Deutsche Post AG goes public.
• Progressively, Deutsche Post acquires DHL from Lufthansa Carga (1998-2002)
• 2002 : STAR program : value creation and integration became the guilding principle across all functions, units, locations and employees
2004
• DHL is launched in America and in the Asia-Pacific region.
• 2005 : European relaunch
• 2005 : acquires Exel for 5.5 bn € (110,000 employes in 13 countries)
• 2006 : acquires Williams Lea (document management and mail services)
2010• Launching of its digital letter the E-postbrief (reliable as a letter and as fast as a e-mail).
• 2012 : expansion in Asia.
• 2013 : entry into the German long-distance bus market
Overview UPS FedEx Deutsche Post
Recent Acquisitions
No acquisitions in 2015Two acquisitions in 2014 In 2015, Deutsche Post has 139 subsidiariesin Germany and 658 abroad
Overview UPS FedEx Deutsche Post
Corporate Strategy 2020: Focus. Connect. Grow
Presented in April 2014
Defines the group’s strategic priorities for the coming years
Goal : become the company that defines the logisticsindustry
- Focus : Continued expansion of logistics services in the world’s emerging markets (85 % of revenue coming fromlogistics business by 2020) and secure letter business in Germany
- Connect : training for all employees, internal exchange of know-how (customer-oriented strategy), increasequality
- Grow : Expansion in growth markets (emerging markets) and segments (parcel business, e-commerce) by organicGrowth (30 % of revenue stemed from emergingmarkets by 2020)
Connect
Grow
Focus
Overview UPS FedEx Deutsche Post
Corporate Responsibility
• Corporate responsability report since 2003
• Deutsche Post publishes its first Environmental Report under the title “Naturally networked.”
• Greenhouse gas efficiency as a key indicator : in 2015 improved to 25 index points
• 2004 : Deutsche Post presents the first Human Resourcesand Social Report in the company’s history, entitled “The Individual, Creative Force of the Company”.
• It focuses on the content and goals of the Group’s humanresources strategy as well as the tasks and accomplishments of its employees.
• Employee opinion survey as a key performance indicator : active Leadership achieves an approval rating of 72 %
Overview UPS FedEx Deutsche Post
Shareholder Structure
KfW Bankengruppe is a public bankwhose capital is held for 80 % by the Federal Republic of Germany and for 20 % by the Länder.
Overview UPS FedEx Deutsche Post
Products Being Produced
Deutsche Post DHL
26%
SupplyChain
25,7%
Global air, ocean and
road freight
25,7 %
Express
22,4%
Corporate0,1 %
Four services on a equal basis in percentage of sales Deutsche Post’s strategy : • Develop international segments
• Sold of fashion logistics business in France (2013)
• Sold of Exel Direct and Llano Logistics(US) (supply chain division)
• Concentrate on fast-growth areas• Offer specialised, Full-line solutions for supply
chain• Wine to China • Concentrate on niche areas
(pharmaceuticals logistics)• Multi-hub strategy for the asia pacific region
• In 2007, moved from Manila to Hong Kong.
• Focused on its facility in Shanghai• Invest in facility expansion
Overview UPS FedEx Deutsche Post
Mail : Post, E-commerce, ParcelPostal services :
61 million letters delivered every working day (Europe’s largest postal company)
• Deliver physical, hybrid and electronic letters and merchandise
• Special services : cash on delivery, registered mail, insured items, E-POST
• 62 % of market volume (market : €4,4bn)
Targeted and cross-channel advertising :
- Dialogue marketing services to allow advertisers to efficiently reach specific customer target groups (end-to-end services : advertising mail, telephone and e-mail marketing).
- 13,1% of market (market : €16,5 bn)
Sending mail and merchandise internationally :
- International dialogue marketing services
- Mail and light-weight merchandise shipments (B2C)
- 15% of market (market : €6,6bn)
Worldwide portfolio of parcel and e-commerce services :
- Offer a dense network of parcel acceptance points in Germany (Parcelcopter and car drop delivery services, parcel box units for apartment building to send and receive)
- Marketplace : Allyouneed.de and AllyouneedFresh.com, DHL Multibox (online grocery shopping segment)
- 2-Mann-Handling service for sending larger and heavier items ordered online
- 43,7% of market (market : €9,5 bn)
Overview UPS FedEx Deutsche Post
Express
• In more than 220 countries and territories
• 2,5 million customers
• Pre-defined delivery service : Time DefiniteInternational
• Industry-specific services (Medical Express transport solution with thermal packaging for temperate-controlled, chilled anf frozen content), collect and return (high tech industries)
• One of the latest innovation : in 2015, DHL introduced the LifeTrack App, the first cold-chaintracking mobile app designed for the pharmaceutical industry
Overview UPS FedEx Deutsche Post
Global Forwarding, Freight
DHL Global Forwarding:
- By air :
weak market environment
Strong competition
DHL still Air freight leader
- By ocean
Slight grow and low freight rates (surplus capacities)
Second global actor (behind Kuehne + Nagel)
DHL Freight:
mostly concentrated in Europe
The European road freight market stagnant in 2015(low oil price no longer supporting market growth,volume increase due to the slight economic upturnin Europe)
Second-largest provider behind DB Schenker
Responsible within the Group for air, ocean and overland freight transport : two distinct services :
Overview UPS FedEx Deutsche Post
Supply Chain
• Customised logistics solutions for clients• Including warehousing, transport and value-
added services, even recycling• All-inclusive services• Standardised solutions and local knowledge• DHL is the global market leader (Europe and
North America) : hold 7,4 % of contractlogistics market (2014) (market value : €176 bn)
• Market really segmented : top ten playersrepresent 20,3 % of the market
• Some industries concerned with supply chainservices : life sciences & healthcare sector, automotive sector.
Overview UPS FedEx Deutsche Post
Fleight
European Air Transport Leipzig is DHL’s Airline (100% subsidiary of DHL express).
EAT has :
• 11 Boeing 757
• 14 Airbus 300-600 freighter aircraft
• More than 750 pilots, maintenance engineers and specialists
The total DHL fleet capacity is of more than 250 aircrafts (170 dedicatedjet aircrafts and more than 80 feeder aircrafts). It serves over 500 airportsvia 20 regional hubs and three global hubs in Leipzig, Cincinnati and Hong Kong.
What’s more, they use third-party providers to expand the capacity of the fleet as demand requires.
Deutsche Post develops new means of transportation more eco-friendly(Iveco Electri Daily lorry).
Overview UPS FedEx Deutsche Post
Revenue by Operating Division
1
2
3
4
Overview UPS FedEx Deutsche Post
Firm Cost Structure and Revenue Composition
EBIT margin by segment Unit : % of EBIT over sales, weightedaverage 2011-2013
DHL has spent 3% of its consolidatedrevenues to improve its service.
Nevertheless, Express and Mail are the most profitable segments (8% EBIT margin). They altogether represent 48,4% of DHL sales.
Each segment representapproximatively 25 % of sales
Overview UPS FedEx Deutsche Post
Capital Expenditure by Segment and Region
Capex breakdown by segmentUnit : % of share, weightedaverage 2011-2013
Capex 2015 : € 2,02 bn (+7,9%) • € 1,800 in property, plant and
equipment (€54 million in aircraft, €109 million in IT equipment, € 179 million in transport equipment)
• € 224 million in intangible assets(excluding goodwill)
Deutsche Post is mostly investing in Germany (domestic market)
Deutsche post invest a lot in SupplyChain, then Global air, Ocean and Road Freight (purchase of new aircraft or trucks)
Overview UPS FedEx Deutsche Post
Geographic Sales
Germany31%
Americas17%
Europe32%
Asia Pacific 16%
Other regions
4%
Percentage of sales (geographicallyspeaking)
Geographic sales : • Deutsche post is focused on Europe
(63% in Europe)• Starts to develop other regions and
products segment. ( due to Europe crisis)
Overview UPS FedEx Deutsche Post
Costs:
Revenue 2015 : € 59 230 M
Flexibility has a price …Just-in-time services (maintenance, …)
Overview UPS FedEx Deutsche Post
Corporate Structure
DHL is a German stock corporation.
Deutsche Post has a dual management and supervisory structure.
In the supervisory board :
• Shareholders’ Representatives : 10 persons
Among them :
- Werner Gatzer, Federal Ministry of Finance
- People from Danone S.A, Deutsche Lufthansa, Deutsche Postbank …
• Employees’ Representatives : 10 employees
- Among them, 6 women
Overview UPS FedEx Deutsche Post
Management
Board of Management are appointed by the SupervisoryBoard and are responsible for the management of the company. The Board of Management currently consists of six members.
Observation about the Board of Management:
- Management fully committed to DHL (Long termorientation)
- Management in its fifties
- One woman only
- 2 members came from McKinsey&Co, one from Booz (consulting experience)
Overview UPS FedEx Deutsche Post
Management- Board of Management
Dr Franck Appel
Chief Executive Officer.
- Born in 1961
- CEO since Feb. 2008 until Oct. 2017
- Msc in Chemistry (University of Munich) in 1989
- PhD. Neurobiology, ETH
- McKinsey & Co from 1993 until 2000
- Started as a Managing Director in Deutsche Post in 2000
Overview UPS FedEx Deutsche Post
Management- Board of Management
Ken Allen
- Born in 1955
- Member from Feb. 2009 until July 2020
- In charge of the EXPRESS Division subdivided in regions (Europe, Americas, Asia Pacific and MEA).
- Diploma in accountancy
- A lot of experience abroad
- Entry into DHL express in 1985
Overview UPS FedEx Deutsche Post
Management- Board of Management
Jürgen Gerdes
- Born in 1964
- Member since July 2007 til June 2020
- In charge of post, eCommerce and Parcel.
- University degree in Administration with Deutsche Post in 1987 (Münster University)
- Joined Deutsche Post AG since 1984
Overview UPS FedEx Deutsche Post
Management- Board of Management
John Gilbert
- Born in 1963
- Member since March 2014 until March 2017
- In charge of Supply Chain
- Bachelor in Operations Management, Syracuse University, NY in 1985
- MBA George Washington University in 1990
- Worked for Booz, Allen & Hamilton (6 years), DCB & Company (2 years).
- In DHL since 1994
Overview UPS FedEx Deutsche Post
Management- Board of Management
Mélanie Kreis
- Born in 1971
- In charge of Human Ressources
- Member since October 2014 until October 2017
- Graduated from the State University of New York at Stony Brook with a master’s degree in Physics in 1984
- Got a diploma in Physics, in the University of Bonn, Germany
- Got a master of business administration for Insead, France
- Worked in McKinsey & Company, Inc, Germany for 1997 until 2000and for Apax Partners & Co, Germany and Uk.
- IN Deutsche Post DHL from 2004 until today
Overview UPS FedEx Deutsche Post
Management- Board of Management
Lawrence A. Rosen
- Born in 1957
- Member from Sept. 2009 until Aug 2017
- In charge of Finance and Global business services
- Graduated from the University of michigan in 1981
- Got a Bachelor in Business Administration of the University of NY in1979
- Started to work in the USA, then Germany, France…
- In Deustche Post since 2009
Financial Analysis€m Assets 2015 Liabilities 2015
Non-currents Assets 16,901 Equity 14,979
Currents Assets 16,952 Provisions 5,490
Prepaid expenses 200 Liabiities 13,546
TOTAL 34,053 34,053
Overview UPS FedEx Deutsche Post
Overview UPS FedEx Deutsche Post
Selected Key Figures SELECTED KEY FIGURES
2013 2014 2015
Revenue €m 54 912 56 630 59 230
Profit fromoperating activities (EBIT) €m 2 865 2 965 2 411
Return on sales1% 4,6 5,2 4,1
Consolidated net profit for the period2 €m 2 211 2 071 1 540
Free cash flow €m 1 669 1 345 1 724
Net debt3€m 1 499 1 499 1 093
Return on equity before taxes % 26,7 26,3 19,7
Earnings per share4€ 1,73 1,71 1,27
Dividend per share € 0,80 0,85 0.855
Number of employees6 479 690 488 824 497 745
Overview UPS FedEx Deutsche Post
Financial Statements
Overview UPS FedEx Deutsche Post
Financial Statements
Overview UPS FedEx Deutsche Post
Financial Statements
Looking closer to liabilities : - 3 M of bonds (22% of liabilities)- 8 M of liabilities to affiliated companies
(65%) - Low level of debt due to banks (< 0,1%)
Overview UPS FedEx Deutsche Post
Income Statement
Compared to an annualdividend of 0,85€
Overview UPS FedEx Deutsche Post
Cash Flow Statement
Overview UPS FedEx Deutsche Post
Recommendation
BUY
Final Rankings
Rankings
None of the three companies are particularly attractive for a growth investor, however we find them all to be large, durable businesses.
1. FedEx: FedEx’s foray into Europe through acquiring TNT Express will likely help it keep its market share growth momentum alive. It’s continuing to replace its airfleet with younger planes and its cost-cutting measures, which began in 2012, have made this a turn-around success story.
2. Deutsche Post: Deutsche Post is dealing with possibility of stolen market share from Amazon as the e-commerce retailer contemplates building distribution centres on DHL’s home turf in Germany. There are also mixed reviews on the company’s work environment. However, the company’s currently strong foothold in Europe, solid management team, and what was arguably their best operational quarter in Q4-15 make this a (reluctant) buy.
3. UPS: UPS will no longer enjoy the economies of scale it had over its primary competitor, FedEx, what with FedEx’s TNT acquisition. As well, UPS’s operating statistics, particularly EBITDA, have proven to be volatile relative to FedEx—it’s current EV/EBITDA is also the highest in the sector.
Deutsche Post - Appendix
Overview UPS FedEx Deutsche Post
Overview UPS FedEx Deutsche Post
Cost structure and revenue compositionFree cash flow and capital expenditureUnit : billion euros; %
FCF have been volatile last five years. The capex ratio has been between2,2% and 3,2% of sales.
Total equity increased
Overview UPS FedEx Deutsche Post
German Stock Corporation – how does it work ?
Overview UPS FedEx Deutsche Post
How to fill a DHL plane up
Overview UPS FedEx Deutsche Post
Firm cost structure and revenue compositionFree cash flow and capital expenditureUnit : billion euros; %
FCF have been volatile last five years. The capex ratio has been between2,2% and 3,2% of sales.
Total equity increased
Overview UPS FedEx Deutsche Post
German Stock Corporation – how does it work ?
Overview UPS FedEx Deutsche Post
How to fill a DHL plane up
Overview UPS FedEx Deutsche Post
Ratings
Fictch Ratings : BBB+
Moody’s Investors Service : A3.
Less :
- Exposure to global macroeconomic trends in the logistics businesses
- Structural mail volume decline in the Post- eCommerce- Parceldivision
- Huge competition
Overview UPS FedEx Deutsche Post
Sales Growth and Margins
Consolidated EBIT and EBIT margin.
Overview UPS FedEx Deutsche Post
FinancialsFree cash flow and capital expenditureUnit : billion euros; %
FCF have been volatile last five years. The capex ratio has been between2,2% and 3,2% of sales.
Total equity increased
Overview UPS FedEx Deutsche Post
German Stock Corporation Structure