DHL 2004 Annual Report Download - page 77

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The global express market is highly competitive on the one hand, while customer
demands regarding posting and delivery times are growing on the other. In order to
maintain and improve our strong position in this key market, it is vital for us to build a
new air freight hub* in Europe with state-of-the-art sorting technology. We therefore plan
to build a new hub in Leipzig. The planning, construction and implementation phase,
which is currently scheduled to last until the end of 2007, presents a great challenge,
which we are going to meet with tight project management. Operations are planned to
commence in the first quarter of 2008.
Additional risks
We recognized goodwill in the course of the expansion and internationalization of the
Group. The application of IAS 36, i.e. the implementation of impairment tests, may
require goodwill to be written down for impairment.
We revised our insurance strategy for the Group in the year under review. Risks
with a high probability of occurrence and lower loss amount can be insured via a
captive – an insurance company belonging to the Group. This is designed to allow us to
lower our overall insurance costs. Risks with a low probability of occurrence but that
could entail high losses, such as air transportation risks, continue to be handled by exter-
nal insurance companies. In this context, we either place risks directly or via third-party
insurance brokers.
As Deutsche Post World Net is a service provider and does not conduct research and
development in the narrower sense, there are no material risks to report in this area.
The volume of Deutsche Post World Net’s operating activities is linked at a general
level to the state of the economy in individual countries and to their trade relations. We
do not consider the Group as a whole to be exposed to any significant macroeconomic
risks at present.
In the past fiscal year, there were no identifiable risks for the Group that, individu-
ally or collectively, could have significantly affected the continued existence of the com-
pany. Nor are there any such risks apparent in the foreseeable future.
Successful central procurement organization
We established a central procurement organization in 2003. Corporate Procurement has
the task of procuring indirect goods and services worth around € 5.8 billion annually.
These include goods and services that are not direct components of pricing, such as
vehicles and IT. The corporate divisions are responsible for the procurement of direct
products and services; these relate primarily to transport services.
The procurement functions were radically restructured as part of STAR, with the
aim of making the procurement function and order processes more efficient. We achieved
this by bundling large procurement volumes into a total of 18 product categories, with a
category management team responsible for each one at a global level. We have also
harmonized procurement processes.
Safeguarding the Future
* These terms are explained in the Glossary 73
Group Management ReportGroup Management ReportConsolidated Financial StatementsAdditional Information