The Profitability of The Mail Division of Deutsche Post: A Final Report

31 October 2006
By Dr. Richard Hern, Tomas Haug, Phillippa Lowe, Marco Schönborn, and Yves Gueron

In this report, a NERA team led by Director Dr. Richard Hern assesses the profitability of DP's mail division and updates conclusions presented in two earlier NERA reports from 2003 and 2005.

Using the most recent available data from DP's Annual Reports, the team considers estimates of profitability for 2005 and over a longer period dating back to 1998. Their estimates are based on calculations of the return on capital employed (ROCE) of the mail segment, which they compare to the cost of capital for DP's mail segment. By comparing ROCE and the cost of capital over a period of time, it is possible to assess whether investment in the company is appropriately rewarded, under-rewarded, or over-rewarded. The team concludes that while DP has faced competition in other segments, it was able to generate substantial profits in the mail division. NERA's results, which are in line with the findings of the 2003 and 2005 reports, demonstrate that DP's profits in the mail division are significantly higher than in other divisions and have been so over the whole period under investigation.

This report is also available in German.