CEOInterviews.AICFO des Jahres 2021: Das Preisträgerinterview mit Melanie Kreis

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Interviewer0:08

Welcome to 'fein ins tv'. Our guest today has settled a wage dispute, earned the title 'Queen of Cash', and recently also approved a billion-euro transaction. And most importantly, our guest today was named Woman of the Year 2021. With me is Melanie Kreis from Deutsche Post DHL. Congratulations.

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Melanie Kreis0:29

Thank you very much, I'm delighted to be here.

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Interviewer0:33

Ms. Kreis, at the beginning of your career you first chose a different path and were initially at McKinsey, then you worked for the private equity investor Apax. Those are very different work environments. How big was the culture shock when you moved to a large corporation like Deutsche Post?

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Melanie Kreis0:49

Yes, that was certainly a significant cultural change. I had previously, first of all, I'm a physicist by training, so it was a huge step for me to go to a place like McKinsey. Then private equity was something completely different. And then I made the step to a large German company and also worked on model projects there. What I was used to from the private equity firm was that everything was handled quickly in a small circle, and suddenly I had to understand this corporation and its structures, the decision-making paths, and who else needed to be involved. So it was a big change, but at the same time I also saw that large companies can be very dynamic.

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Interviewer1:26

You then also had a very dynamic situation after you joined the board in 2014. You were initially responsible for personnel and were the labor director, and in 2015 there was a wage conflict that escalated into a wave of strikes. Everything was somewhat deadlocked. You then resolved it. If you had to name one decisive factor that unraveled the whole thing, how did you do it? What was the most important point?

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Melanie Kreis1:49

There were two factors. One is that we were deeply convinced that we had to make a fundamental change for the future viability of the company and thus also for the job security of our colleagues. That's why we fought so hard in this matter. But the second thing that is also important is that in the end you have to be able to build bridges and find a compromise that the other side can live with, because you can't always get your way 100 percent in life. So I think it was this combination of having a clear goal but also being willing to compromise in order to cross the finish line together.

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Interviewer2:27

That worked out quite well. You mentioned earlier that you are also a physicist by training, and that was in high demand at Deutsche Post at the beginning. There was the integration of the British company Exel, then the sale of Postbank. Those were all projects you were involved in. Then there was a relatively long period of silence in large-scale business, and this year something came up again: the logistics company Hillebrand, a specialist in sea freight, which you acquired for 1.5 billion euros without debt. Why now, at this stage, the return to large-volume business?

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Melanie Kreis2:56

Yes, I think we had a phase 20 years ago where we shaped the group in its current form. If you think back 25 years, we were a purely German company, Deutsche Post, with no international business. There was a large international logistics business, and that's why in that initial phase we made many large acquisitions like DHL and Exel, as you mentioned. And then I simply had the feeling that the basic structure of the group was in place, and it was now about all the family members achieving good operational performance, cleaning up the house. We simply felt that the time had come when all five operating divisions were on a very, very good track, and we always said that we would then also look at organic growth, but only if it is in our core business, only if it is high-quality assets, and of course only if it is at a reasonable purchase price. And then for a long time there weren't many, and we are very, very glad that we were able to acquire Hillebrand.

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Interviewer3:56

Big advantage: you didn't have to think long about how to finance it. In the first half of this year, you had liquidity of 3.8 billion euros, and you also financed very conservatively during Corona, raising another 2.25 billion euros through bonds. Looking back, would you say that maybe that was a bit too much of a good thing?

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Melanie Kreis4:18

Yes, I think we actually knew when we went out in May 2020 that we probably wouldn't need the entire volume. There was certainly a conservative safety buffer included. But I think hindsight is always 20/20, and we of course discussed it intensively with our supervisory board, and we all agreed that at that point in May 2020, it was the right decision.

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Interviewer4:45

You are expecting a record result for 2021, not least due to the developments of recent months. You have just raised the forecast again to 7.7 billion euros, about ten percent above what was previously expected. You have also strongly focused the group on profitability, and it is said that in every finance meeting, cash flow is mentioned at least once. Is that true?

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Melanie Kreis5:08

Yes, I always say that people probably can't hear it anymore, but we have very, very clear priorities. I also always say that in an organization like ours, with more than 570,000 colleagues worldwide, you have to consistently send the same messages over a long period of time so that eventually it reaches everywhere. And yes, my mantra is 'cash is king', and I think by now it has really reached everywhere. It's really nice to see when you do a business review with colleagues in Indonesia and they tell you exactly the same priorities, and then the content comes, yes, we know cash is king. Then you know that you have really carried the message to the breadth of the organization.

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Interviewer5:54

You also need a lot of cash because very large strategic investments are upcoming in the coming years. Two billion euros are to flow into digital transformation, and 7 billion euros are planned by 2030 for climate protection topics. Where do you see your specific contribution as CFO when it comes to these megatrends?

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Melanie Kreis6:12

I think with digitalization, it was relatively conventional and understandable, even for the finance organization, because with digitalization projects we see relatively good and timely returns on investment, and the finance department feels more at home with that. When we announced the next version of our sustainability strategy in March, there were interesting discussions because we said, yes, we are really putting money into it, 7 billion. That is a significant amount. At the same time, it was very important to me that we give the capital market a number so they have a rough idea. We committed to the Science Based Targets initiative, we said we want to reduce our absolute CO2 emissions by 2030. I think if you don't at least approximately say what numbers we are talking about, then it's not solid and credible. So this will be an exciting story. We are now going through the first planning process where we try to break down these 7 billion for the year 2022, both in OpEx and CapEx, and you can see that it is still a learning process for the finance organization.

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Interviewer7:25

You mentioned it earlier, you are actually a bit of an exotic because you studied physics and then did an MBA. So you are naturally a bit alone in the field between business administration and economics. Are there still points where you say that certain structures or ways of thinking from your physics studies have helped you in finance?

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Melanie Kreis7:46

I think physics is a super good foundation for many, many things, and I always try to make that clear to my daughters. It contributes to success. I think what helps me today is the ability to break down complex problems. That is something you learn very well in physics. And the other thing is a feel for numbers. You can see whether something is roughly the right order of magnitude or not. Those are things that still help me a lot today.

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Interviewer8:17

I would like to ask you our three questions to conclude, with a request for a very short answer. Question 1: The current record numbers at Deutsche Post DHL – is that a Corona special situation or can you sustain that permanently? Question 2: What gives you more pleasure – being HR director or CFO? CFO. And question 3: If you could name one project or event from your career that you are particularly proud of, what would it be?

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Melanie Kreis8:45

The timing of the sale of Postbank.

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Interviewer8:48

Great, thank you very much for your assessment. I say again, on behalf of the entire 'fein ins tv' editorial team, congratulations on the award. Let yourself be celebrated a bit. That was 'fein ins tv'. Thank you very much for watching. Take care.