DHL 2014 Annual Report Download - page 99

Deutsche Post and  are in competition with other providers. Such competition
can signicantly impact our customer base as well as the levels of prices and margins
in our markets. In the mail and logistics business, the key factors for success are quality,
customer condence and competitive prices. anks to our high quality along with the
cost savings we have generated in recent years, we believe that we shall be able to remain
competitive and keep any negative eects at a low level.
Financial opportunities and risks
As a global operator, Deutsche Post  Group is inevitably exposed to nancial op-
portunities and risks. ese are mainly opportunities or risks arising from uctuating
exchange rates, interest rates and commodity prices and the Group’s capital require-
ments. Using operational and nancial measures, we try to reduce the volatility of our
nancial performance due to nancial risk.
Opportunities and risks with respect to currencies may result from scheduled or
planned future foreign currency transactions. Signicant currency risks from planned
transactions are quantied as a net position over a rolling -month period. Highly cor-
related currencies are consolidated in blocks. e identied risks are partly hedged using
derivatives. e most important planned net surpluses at the Group level are in pound
sterling, Japanese yen and Indian rupee, whilst the Czech crown is the only currency
with a considerable net decit. By osetting the net decit in  dollars with surpluses
in other highly correlated currencies, the net risk in the “ dollar block” at the Group
level is relatively balanced and thus not actively managed. e average hedging level for
the year  was approximately   as at the reporting date.
A potential general devaluation of the euro presents an opportunity for the Group’s
earnings position. Based on current macroeconomic estimates, we consider this oppor-
tunity to be of low relevance.
e main risk to the Group’s earnings position would be a general appreciation of
the euro. e signicance of this is considered low when considering the individual risks
arising from the performance of the respective currencies.
As a logistics group, our biggest commodity price risks result from changes in fuel
prices (kerosene, diesel and marine diesel). In the  divisions, most of these risks
are passed on to customers via operating measures (fuel surcharges). We only have
noteworthy hedging instruments for the purchase of diesel in the Post - eCommerce -
Parcel (PeP) division.
e key control parameters for liquidity management are the centrally available
liquidity reserves. Deutsche Post  Group had central liquidity reserves of . bil-
lion as at the reporting date, consisting of central nan cial investments amounting to
. billion plus a syndicated credit line of  billion. erefore, the Group’s liquidity is
sound in the short and medium term. Moreover, the Group enjoys open access to the
capital markets on account of its good ratings within the industry, and is well positioned
to secure long-term capital requirements.
e Group’s net debt amounted to . billion at the end of . Given our existing
interest rate hedging instruments, the share of nancial liabilities with short-term
interest lock-ins in total nancial liabilities in the amount of . billion is approxi-
mately . e fact that the European Central bank is likely to keep short-term interest
rates at a low level during  and beyond favourably impacts the risk assessment.
Deutsche Post  Group —  Annual Report
93
Group Management Report — OPPORTUNITIES AND RISKS — Categories of opportunities and risks