The EXPRESS Corporate Division operates domestic and international parcel and express delivery services, along with cross-border mail services, and is composed of the Business Divisions Express Germany, Express Europe and Global Mail. EXPRESS also has a new business division called Worldwide Express which was established with the acquisition of additional shares in DHL International Limited (DHLI).

In the year under review, DHLI was still consolidated at equity, which means that neither the revenue nor the earnings contributed by DHLI were included in the presentation of the EXPRESS Corporate Division. DHLI's earnings attributable to the Group are included in the income from associated companies item in the income statement of the Group.

Distribution market even more hotly contested
Revenue generated on the German market for courier, express and parcel services (CEP market) rose by around 5% in the past year. The increases in the parcel and courier segments were 3.4% and 3.2% respectively, which was significantly lower than the rise in the Express segment (around 8%). In order to counter increased costs, nearly all providers raised their prices in the past year. The downturn in the economy will further intensify competition in this market.

The European CEP market saw similar developments. Providers of courier, express and parcel services here are also operating under more and more competitive pressure in an environment typified by general economic decline.

The market for cross-border mail services has a volume of approximately 11 billion and grew by roughly 4% in the year under review. This above-average growth was the result of globalization and deregulation of global markets along with the increase in Internet sales.

Revenue up in the business divisions
In 2001, the EXPRESS Corporate Division increased total revenue by 399 million (6.6%) to 6,421 million, even though competition intensified on all markets. The largest increases were reported by the Business Divisions Express Europe and Global Mail.

The Business Division Express Germany saw an increase in revenue by 3.2% from 3,164 million to 3,267 million. In addition to an increase in shipping volume, price adjustments also contributed to this positive development. Increased fuel expenses in particular affected costs. In the private customer segment, sales grew slightly. At the same time, we adjusted prices for various products sold over the counter, such as parcels and small packets, and for supplementary services as of July 1, 2001. Sales of business services rose over the prior year; in contrast, the increased competitive pressure as regards prices and terms was particularly noticeable here. We are countering this development by adding additional services: for instance,we are running a pilot test of the PACKSTATION delivery service as part of our business services. Customers can pick up their parcels at machines around the clock using this service.

Compared to last year, revenue in the Business Division Express Europe rose 10.0%. This development was the result of a change in the product mix and indicates the increasing competition,which led to a slowdown in revenue growth during the course of the year. This is particularly true for France and the Benelux states.

The Business Division Global Mail saw an increase in revenue of 20.4% over the prior year. The main reason for this positive development was a rise in crossborder mail and an acknowledgement of our high-quality services in the form of increased remuneration as part of the European REIMS II agreement. Acquisitions, such as that of the internationally active Güll group, strengthened the global market position of this business division. The primary sales markets in 2001 were Europe, the USA and Canada.

Profit doubled
The EXPRESS Corporate Division more than doubled its profit from operating activities (EBITA) by 131.6% from 76 million to 176 million. This gratifying development is the result, among other factors, of pricing and cost management in the Business Division Express Germany and of positive developments in revenue and expenses in the Business Division Global Mail.

Investments
The EXPRESS Corporate Division's total investments amounted to 349 million in 2001.

In the Business Division Express Germany,we concentrated on upgrading our vehicle fleet. Express Europe's investments were focused largely on building new parcel terminals in the Benelux states and in Spain in order to expand the European network. Our investments in Global Mail set up and expanded sales structures to develop and penetrate new markets, especially in the USA. Investments here focused on optimizing logistics processes and structures and improving the degree of automation in production.

New Business Division Worldwide Express
The cooperation with DHLI resulted from a partnership which was intensified in 2001. In the year under review, our interest in DHLI amounted to 46.39%. After we received all of the authorizations required by the antitrust authorities, we acquired a majority interest in DHLI as of January 1, 2002 as planned. Our share in this company now amounts to 50.64%, and its activities are represented in the EXPRESS Corporate Division by the new Business Division Worldwide Express.

DHL is the global market leader in cross-border courier and express deliveries. DHLI's US activities have also been fully consolidated since May 15, 2001. The one exception to this is the company's airline in the US in which DHLI holds only 25% of the voting rights and 45% of the capital for legal reasons.

Network statistics

In fiscal 2001, DHLI reported revenue growth of around 5% and a positive EBITA margin (not including its US activities). One difficulty was the economic situation in the United States.After September 11, new regulations aimed at fighting terrorism were put into place, and the resulting security measures increased the costs involved in the transport business in the USA substantially. Considerable restructuring requirements also put downward pressure on the US business. This situation resulted in a loss at DHL USA in 2001. On the whole, the new Business Division Worldwide Express therefore reported a net loss in the year under review.

In 2001, we initiated a series of projects with which we aim to achieve synergies from the close cooperation between DHL and Deutsche Post World Net. Our common goal is to offer customers a portfolio of services that logically combines the services of both companies. An ideal example of this type of cooperation is our integrated offering for Fiat Auto: DHL Worldwide Express and Postbank cooperate with the Italian automaker Fiat. Their integrated finance and logistics service allows Fiat Auto to optimize its spare parts business.

Outlook
Our focus will continue to be on expanding the high-growth business-to-business segment. Products will be more specifically tailored to target groups by way of the restructuring of our business customer portfolio and additional industry-specific solutions. These developments will be helped along by additional Internet-based products and services.

We also intend to expand our international range of products and services. Moreover, we transferred the marketing, sales, production procurement, financial control and IT functions of the Business Division Express Germany into a separate subsidiary as of January 1, 2002. The aim here is to operate in a more effective and customer-oriented manner than ever before.

In the Business Division Express Europe, we will complete the integration of the companies acquired in previous years by 2002.Because of our European focus, we will now concentrate on harmonizing our production processes and services.

We will expand and optimize our global network in the Business Division Global Mail and plan to open additional sales offices in Europe, while also increasingly exploiting cross-selling potential with other corporate divisions.

The cooperation between the Business Divisions Worldwide Express and Express Europe will be intensified with regard to joint utilization of the logistical network, including warehouse and transshipment capacity. On the whole, we will eliminate existing product overlaps with DHL and at the same time use Deutsche Post World Net's marketing network for DHL products and vice versa.