CEOInterviews.AIThe Future of Logistics: Deutsche Post DHL Group CFO Melanie Kreis

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Tom Mackenzie0:03

Before the Covid pandemic upended business logistics, the industry was often taken for granted. That changed due to the turbulences of the last four years. Customers now realize how important a reliable logistics partner is. Logistics and supply chain has become a household name.

Revenue, profitability, and investor interest for Deutsche Post DHL Group created an opportunity to build on momentum and set ambitious goals.

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Melanie Kreis1:09

When you look at our footprint, we are the most international logistics company. We want to become more digital and much more sustainable than we have been.

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Tom Mackenzie1:22

DP DHL US revenue has soared since 2020, with full-year profit nearly doubling in 2021. CFO Melanie Kreis is a key leader of the team that delivered these results and views her role as much more than just number crunching.

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Melanie Kreis1:36

Unfortunately, the cliché that finance is boring and just bean counting persists. To be successful, you need financial expertise but also must be a credible business leader to impact the business and steer the direction.

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Frank Appel1:56

She is extremely smart and bright. You need someone who can digest a lot of information quickly and distinguish what is important. She has tremendous skill, and she is not afraid to call people out in a very nice way. She helps me tremendously in steering the company because she is highly regarded by my colleagues. Typically, if they have a problem, they share it with her first before coming to me.

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Melanie Kreis2:31

When I think about my conversations with Frank, the shortest part is about the analysis and facts. The real debate is about what the options are and what we can do. My role is to say in three sentences what is working well, where we have challenges, and what we should do going forward.

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Tom Mackenzie3:04

Deutsche Post DHL Group consists of five divisions: Express, Germany's Post and Parcel Service, Global Forwarding and Freight, Supply Chain, and e-commerce Solutions. Each segment has seen revenue growth in the last four years.

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Melanie Kreis3:21

E-commerce is a very structural and fundamental growth driver for us. What we saw during the pandemic was a structural acceleration that brought us forward to a point in e-commerce penetration that would have taken three years under normal circumstances.

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Tom Mackenzie3:47

The company's strategic plan recognized e-commerce as a growing trend, but no one could have forecast the speed and breadth of the transformation.

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Melanie Kreis3:59

We are now seeing that not only domestic e-commerce has seen faster growth, but also cross-border e-commerce. We see that clearly in our express network and our e-commerce solutions division.

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Tom Mackenzie4:15

What are the other big structural shifts you see on the horizon? Is it e-commerce B2B or increased trade as globalization restructures?

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Melanie Kreis4:26

We believe there will be a huge growth opportunity there. Our customers realize that being dependent on just one supplier in one country is not a good idea, so they want to build more resilience into the supply chain. Our international footprint and global strengths are something we can leverage for our customers.

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Tom Mackenzie4:57

Another factor in the company's favor is its balance sheet. Since Melanie Kreis became CFO, cash flow has improved significantly.

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Melanie Kreis5:06

One of my priorities over the last year has been to focus the whole organization on better cash generation. It's not just a finance job. Making sure that revenue converts into cash is the responsibility of the whole organization.

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Tom Mackenzie5:46

Spell out for us the longer-term priorities in terms of putting that cash to use.

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Melanie Kreis5:56

The first priority is organic growth. We have a CapEx budget of 12 billion euros for the next three years. We are focused on regular dividend payments. If there is something left, we will think about inorganic opportunities and other means to allow shareholders to participate. That is why we are currently running a two billion euro share buyback program.

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Tom Mackenzie6:37

Does Melanie ever turn around and say no when you are pushing for a particular package of spending?

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Frank Appel6:42

Yes, she does, quite often. She is risk averse, which is great because the business is always too optimistic. She might be too pessimistic, but that is a very healthy discussion. If we jointly come to the same conclusion after debate, we are probably in the right spot.

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Tom Mackenzie7:07

How often do you find yourself saying no to divisional heads?

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Melanie Kreis7:11

When I was promoted to CFO, my team gave me a stamp that says 'Rejected'. It sits on my desk. The fact that people know it's there creates discipline. By the time a proposal reaches me, it has gone through many iterations and is normally of high quality, so I don't need to use it too often.

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Tom Mackenzie7:44

CEO Frank Appel has expressed a commitment to service quality and confidence that customers will accept higher prices. If you are too expensive you will be out of business, but if you don't provide quality you will be out of business as well. DHL aims to be the premium provider, not the cheapest.

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Frank Appel8:11

Inflation is having a huge impact on the logistics industry. There have been substantial price increases, and I do not see that changing. It might level out a bit, but it's not going away.

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Tom Mackenzie8:45

Logistics companies may have pricing power, but their stock prices haven't been robust. The increase in interest rates has made everyone rethink inventory levels.

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Frank Appel8:55

The issue is that the increase in interest rates has made everyone concerned about inventory and disruption.

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Tom Mackenzie9:21

With more than half its revenue from Europe, investors may see DHL as more exposed to recession risk. The company insists it can meet revenue targets in a downturn, counting on diversification as a cushion.

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Melanie Kreis9:42

I am not pessimistic that a deep recession is at our doorstep. Our portfolio is very balanced. We are everywhere in the world, and the world will not go entirely into recession.

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Tom Mackenzie9:53

Would it be a stretch to suggest DP DHL is recession proof?

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Melanie Kreis10:02

I wouldn't go as far as recession proof, but we are very well positioned to deal with different recession scenarios due to the breadth of our portfolio. That gives us a lot of resilience against any headwind.

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Tom Mackenzie10:18

Coming up, a look at DP DHL's investments in action. Melanie Kreis shows me around the company's state-of-the-art logistics center.

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Melanie Kreis10:27

What I love about this building is that it solves the big megatrends that form our strategy 2025.

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Tom Mackenzie10:35

This is Bloomberg.

That's the CFO of one of the world's largest logistics companies. Melanie Kreis has made her mark in global business, but that's not what she originally intended to do.

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Melanie Kreis10:56

I really wanted to go into research. I wanted to become a physicist. During my studies, friends went into management consulting. I did an internship and learned more in two months than in four years at university.

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Tom Mackenzie11:30

She started her career at McKinsey, then spent four years at Apax Partners in London before joining Deutsche Post DHL Group in 2004.

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Melanie Kreis11:41

I was brought in to do international M&A. We were building the company, acquiring logistics companies. I then moved into mainstream finance, became CFO of the Express division, and eventually group CFO.

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Tom Mackenzie12:10

Melanie Kreis now heads a finance team of around 11,000 employees. Success in this role is as much an art as a science.

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Melanie Kreis12:19

If you do great analysis but can't convey the message and convince the organization to move in a certain direction, it's useless.

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Tom Mackenzie12:34

DP DHL is sending a consistent message with its investments. The company spent 123 million euros to upgrade its logistics center at the Cologne Bonn Airport.

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Melanie Kreis12:48

This building solves the big megatrends of our strategy 2025: globalization, e-commerce, sustainability, and digitalization. It has solar panels and is very sustainable.

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Tom Mackenzie13:19

How did the team pitch this investment to you, and how quickly did you say yes to 123 million euros?

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Melanie Kreis13:28

All of us have to ensure we have the right capacity for growth. They presented the case and convinced us. When Covid hit and volume surged, we needed that capacity.

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Tom Mackenzie14:09

Does this automation mean there will be less need for labor?

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Melanie Kreis14:22

You still see people here. Technology supports people. In customs, lights guide workers to the right shipments. We anticipate that digitalization might reduce some jobs, but our company will be 50 to 100 percent bigger, so we will have more jobs overall.

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Tom Mackenzie15:14

The Cologne hub also showcases DP DHL's aviation fleet, with over 320 dedicated cargo aircraft.

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Melanie Kreis15:27

We own the biggest chunk of our aircraft but also have short, medium, and long-term leases to support growth.

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Tom Mackenzie15:39

We've talked about investing in sustainable fuel. How significant is that, and is it just window dressing for a carbon-intensive business?

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Melanie Kreis15:54

Two-thirds of our CO2 emissions come from aviation. Sustainable fuel is key. We are willing to spend billions, and we hope supply picks up.

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Tom Mackenzie16:16

The company has pledged 7 billion euros towards sustainable technologies and fuels by 2030, with a goal of climate-neutral logistics by 2050.

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Frank Appel16:51

We had a long debate about whether to commit to investing 7 billion. Melanie and I concluded that it was the right number. We convinced our colleagues, and that's why we are seen as committed. Not many companies have quantified their future investment.

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Tom Mackenzie17:25

Still ahead, how one of the business world's most influential women is working to strengthen gender equality within her company.

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Melanie Kreis17:34

The great thing is that across finance and the group, we have role models showing young female talent that everything is possible.

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Tom Mackenzie17:43

This is Bloomberg.

CFO Melanie Kreis is often named to lists of the most powerful women. The number of female CFOs at major U.S. companies has risen to an all-time high.

I asked Melanie if she encountered obstacles as a woman rising through the executive ranks.

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Melanie Kreis18:40

I haven't had many negative experiences. In physics, there weren't many women, so I was used to it. Being the only woman in the room can be an advantage — the boss remembers your name. For me, the bigger challenge was balancing my own expectations around family and career.

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Tom Mackenzie19:35

How do you use that experience to advance the role of women in this organization?

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Melanie Kreis19:44

We have role models. Our share of women in management is 32%, ahead of the group average. We want to reach 35% by 2025. For every vacancy, I want at least one woman on the shortlist. The best person should get the job.

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Tom Mackenzie20:19

CEO Frank Appel says Kreis sets an example for the entire organization. She has proved she is an outstanding CFO and a role model.

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Frank Appel20:32

What I like about her is that she is still a very warm and nice person. You can get to that level without compromising your personality. She is a great role model.

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Tom Mackenzie20:57

Melanie Kreis is fully engaged in guiding DP DHL into the future.

What do you see as the biggest opportunities for DP DHL over the next 10 years?

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Melanie Kreis21:16

We have a fantastic portfolio. We just have to leverage growth opportunities in e-commerce and traditional B2B. The key differentiators will be digitalization, sustainability, and our people.

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Tom Mackenzie21:33

What are some of the challenges that keep you up at night?

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Melanie Kreis21:40

You have to keep focus and the ability to adjust in an agile way. People create the impression you can preplan everything, but that's not the case. Based on the last 24 months, I am optimistic we can cope with whatever comes next.

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Tom Mackenzie22:11

How do you see your role changing in the years ahead?

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Melanie Kreis22:15

It is changing rapidly, which is great because it never gets boring. Digitalization and sustainability are hugely relevant for finance. It's like learning a new language. It's a fascinating opportunity to make a difference.

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Tom Mackenzie22:45

What skill sets will be essential for a future CFO?

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Melanie Kreis22:55

The two most essential skills are lifelong learning — especially in digitalization and sustainability — and being a great team player. You can't know it all, so you have to work strongly with your team.

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Tom Mackenzie23:31

What advice would you give to someone who has just been appointed CFO?

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Melanie Kreis23:36

Be curious and ask as many questions as you can. Learn as much as possible, not just in finance but close to the business. Understand the fundamental profit drivers. Only then will you be a great CFO.

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Tom Mackenzie23:57

I'm Tom Mackenzie. This is Bloomberg.