Profile: Oliver Gritz, CFO of DHL Express

Oliver Gritz, DHL CFO

Oliver Gritz, DHL CFO

Regular readers of Accountancy Age interviews will know that many
FDs are proud of upgrading and installing new accounting technology into their
business, cutting costs and producing better quality data. It clearly ticks a
box on their CV that they can get a financial IT system rolled out and

Oliver Gritz, global CFO of the €14bn (£11.2bn) business
DHL Express, openly
admits that the company was not able to fully achieve this particular aim.

But for a business that runs across 220 countries, employs several thousand
accounting staff and only came into existence in its current form in 2006, Gritz
is actually delighted with how close it came to the target.

‘It’s been a very challenging period and I want to pay tribute to finance,
which went through a tremendous period over the past 16 months – coming from
nothing to building up a robust and solid financial framework that had to be
conceptually sound and business relevant.’

The reason for Gritz’s pride is that the global transportation business is,
as he describes it, a ‘hotch-potch’ of 40 acquisitions brought together by its
owners Deutsche Post.

The group, which has long owned a share of DHL Express, took control of the
business in 2002. In 2005, it brought on board US-based Airborne, and DHL
Express – a major business – became a giant. The Deutsche Post group itself
dwarfs even DHL Express, posting e63bn in revenues for the 2007 year-end.

Strangely, DHL Express was effectively run as two businesses: the rest of the
world – of which Gritz was CFO – and EMEA.

With two boards following their own strategies, they struggled to gain
efficiencies that would normally be expected from a global business, such as in
centralising back-office functions.

‘We basically lost many of the synergies that would usually occur in a global
business – of which a combined financial system is one, but also in other areas.
We used different production equipment in our hubs, different IT systems,
different commercial processes… all synergies from a networked business managed
as one – all that was lost.’

Two become one

Reality eventually bit hard, and management decided integration would add
value. Gritz took on the global role and has spent 16 months trying to bring
together its finances. Even though the task looming was great, bringing together
the two businesses was ‘lucky timing’ for him as he had reached the limit of
what he could achieve in the previous role.

‘With two businesses with obvious conflicts, you can do only so much and you
can waste a lot of time keeping both sets of stakeholders happy, but luckily it
fell away and [my latest role] is a logical extension of the job I had before.’

Having admitted that some jurisdictions are still running on their own IT
platforms, Gritz says that decision was a pragmatic one, but did not get in the
way of the more important overall target of bringing them all onto a single
‘framework’. It needed strong enough processes to capture all the differences
that existed within the business, but flexible enough to allow each region to
continue to operate independently.

‘Everybody [ran different systems], which was overlaid by a massively complex
system geared at bringing together a set of numbers for Deutsche Post. At the
end of 2006, we found many companies providing a few numbers to the centre, but,
other than that, the entire management information system catered to local
business needs – they designed their own P&L and management reports, and
everything looked different, focusing on different KPIs, different costing
systems and so on.

‘I think we were quite successful to build a framework that was very good and
not a compromise – but a good path through this jungle of conflicting goals. We
then had to go at virtually light speed. It was a new view of looking at the
numbers from what they were used to so we had to standardise quickly.’

For Gritz the decision to resist not dragging every subsidiary and division
onto the same platform is not about compromise, but about making sure they
report into the centre in a consistent fashion.

‘They are all very much on the same standard when we look at the numbers,
whether it’s in Chile, the Philippines, UK or Germany. It looks the same
everywhere in terms of financial statements – the same high level KPIs – and
they are all standardised. But as far as bringing everyone onto the same systems
platform, then no.’

The integration work, while still not complete, puts DHL Express into a
position to drive revenues and profits forward.

Gorilla tactics

For Gritz, the focus must be on improving the company’s position in the US,
where it battles against what he describes as the ‘gorillas in the market’,
namely UPS and FedEx, which, between them, hold half the $4.6bn (£2.32bn)
market, according to research.

However, his focus on that market is clear. ‘It takes quite a bit of my time
and, other than that, Deutsche Post has had a strategy shift at the end of 2005
where it said the time of big acquisitions is over, let’s build a world-class
company out of what we have.

‘But for me it’s the US really, how to improve our efficiency in our

He cannot comment on the future of its US operation, where reports have
suggested that it is looking to work closely with FedEx.

‘All I can say it that there should be an announcement in May.’

Although revenues in emerging markets and Europe have been strong for DHL
Express, gaining leeway in the US has proved tough, although the tightening of
economic conditions might have affected competitors more than itself.

‘We know FedEx and UPS have been suffering, but perhaps that’s because of
their US businesses – the European market in general is still okay – and we have
had a tremendous management focus there on back-to-basics, with less focus on
integrating things.’

Accounting issues, thankfully with Gritz’s busy schedule, are of no great
concern. Deutsche Post insisted on subsidiaries reporting in IFRS, of which he
says his colleagues on corporate accounting ‘did a terrific job in achieving’,
and, for local jurisdictions, if they have to report in local GAAP then ‘it’s
their problem really’.

‘IFRS for the group is not an issue, it’s the primary and completely accepted
numbers for every subsidiary. Lots of the companies in Deutsche Post were big
international businesses and were already on IFRS, so to move onto a common
accounting standard was the first focal point in bringing this group together.’

Even with the future of DHL Express in flux, Gritz is delighted with the
position of the business. It is now truly a single organisation and one which he
feels is in a position to deliver.

‘We have to make a judgment call – is integration the biggest value adding
component in a certain period of time?

‘We went through that learning curve and the last five years in development
of Deutsche Post has been a huge learning experience for many – not many
experiments were left out. Everything we do now is more detailed, integrated.’

Green initiative

Deutsche Post, owners of DHL Express, has become the latest business to
launch a major ‘green’ initiative. Entitled GoGreen, the business aims to reduce
its carbon footprint for every letter mailed, every container shipped and every
square metre of warehouse space by 30% by 2020.

It describes itself as the first major company in its industry to introduce
such a plan. A big part of the project will be measuring progress in achieving
its targets, and for this Deutsche Post will introduce a carbon-accounting

About 90% of the group’s air fleet will be replaced by modern, more fuel-effi
cient aircraft. New warehouses and energy-efficient sorting centres will be
built. New technological innovations around hybrid engines and route planning
will also be implemented.

The group notes that two-thirds of its 100 biggest customers are already
pursuing their own climate protection goals. It has begun a staff awareness
programme for its 500,000 employees, which includes encouraging them to be more
aware of their carbon footprint at both work and home, through re-training
drivers and providing energy-saving classes.

‘Our organisational approach to GoGreen is very much a collective strategy
with each individual playing a part. Of course, in my position as CFO of DHL
Express, I am able to influence decision making on investments,’ says Oliver

‘DHL will also set up a comprehensive carbon-accounting system and the
finance department will occasionally be involved in the data gathering process.’

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