[ Continuing Reorlentation of the Danzas Group Corpor.. ]

Continuing Reorlentation of the Danzas Group Corporate Strategy Target
s Further Profitability Improvement

The action taken over the past two years to change the Danzas Group’s
direction starts to take effect. Clearly improved net income is expec
ted for the 1997 business year. Under its long-term program to boost t
he Group’s net worth with a new market and customer-oriented philosop
hy, Group management is now embarking on a five-year strategy built on
the foundations already laid. Danzas is determined to strengthen its
leading position in the market and keeps improving profitability. With
the implementation of the new strategy, Danzas is aiming at an operat
ing return on sales(ROS) of 3% to 4% and a return on capital employed(
ROCE) of 10% to 13% by the year 2002.

1997 Results Confirm Success to Date

The rebuilding of the Danzas group initiated two years ago is proceedi
ng vigorously and, with the new five-year corporate strategy, is point
ing the way into the next millennium. “Group management wants to cont
inue the uncompromising realignment of the Group to suit changing mark
et and customer needs”, declares CEO Peter Wagner. Following sharply
improved results in the first half of 1997, the full business year is
expected to show further sales growth and clear income inprovement ove
r 1996. The new corporate strategy continues the process by which the
Danzas Group has been transforming itself over the past two years from
a classic freight forwarder to a provider of IT-supported, integrated
logistics services.
Concentration on core competencies, restructuring into the three Divis
ions Eurocargo, Intercontinental and Logistics, and the appointment of
new people to key executive positions have had a palpable effect. Tog
ether with action taken under the “Eurofit” cost reduction program,
they have improved the Group’s results.

The New Strategy

The new corporate strategy defines four distinct thrusts designed to a
chieve a marked increase in pro fitabillity and, ultimately, in shareh
older value;
1. Expansion of business in the growth market of customized logistics
solutions: To an increasing extent, the Danzas Group wants to offer -
in addition to existing freight servrces - customized business solutio
n to complex global logistics requirements supported by information an
d communication technology. Such solutions offer Danzas the opportunit
y to add significant value to their customers. Within Danzas, two new
Business Units will be created: 「Consumer Solutions」 will essentiall
y embrace the activities of the present 「Logistics」 Division, for in
stance for the food or beverages industries. 「Industry Solutions」 wi
ll handle all contract services in the area of procurement and distrib
ution logistics for manufacturers, within industries such as pharmaceu
ticals and car manufacturers. The formation of these two separate Busi
ness Units will enable Danzas to meet the distinct requirements in the
two areas more dffectively.
2. Continued expansion of the intercontinental business: Today the 「I
ntercontinental」 Division generates about 45% of Group sales. Over th
e past two years the Division outpaced the rest of the Group in terms
of both growth and profitability. Project business is gaining in impor
tance: Danzas puts together customized logistics solutions for transpo
rting entire industrial plants and infrastructure projects.
Streamlining the sales organization and the opening up of new geograph
ical areas, together with accompanying internal and external growth, w
ill provide the basis for becoming a global leader in the intercontine
ntal freight market.
3. Futher optimization of European freight consolidation services: The
market for consolidated freight services in Europe continues to be pl
agued by severe erosion of prices and margins. The resulting unsatisga
ctory profitability of the 「Eurocargo」 Division necessitates further
restructuring measures. Despite some noteworthy successes, the requis
ite freight volumes and strong market presence are lacking in some imp
ortant markets. Along with ongoing efforts to optimize this business,
Danzas is currently reviewing various options for boosting the Divisio
n’s profitability. These include alliances or joint ventures with com
plementary enterprises and the divestiture of loss-making activities.
4. Creation of a firmly market and performance oriented organizational
structure: The four Business Units will be established as autonomous
profit centers. Two of them will concentrate on specific customer segm
ents (「Consumer Solutions」 and 「Industry Solutions」), two on speci
fic products (「Intercontinental」 and 「Eurocargo」). In addition, ad
ministrative functions will be aligned with the Business Units as well
as managing global and regional service centers.

Financial Goals

With the implementation of the new strategy, Danzas is aiming at an op
erating return on sales(ROS) of 3% to 4% and a return on capital emplo
yed(ROCE) of 10% to 13% by the year 2002. Net liquidity will be used f
or acquisitions in the 「Intercontinental」 business as well as in 「C
onsumer Solutions」 and 「Industry Solutions」. The Group will continu
e its strenuous efforts to cut back on tangible fixed assets.

Implementation

There is a detailed timetable established for the implememtation of th
e Group’s change and the project will be led by strictly defined rule
s. The new organization will take effect on 1 April 1998. During the c
oming weeks, the substantive impact of the new strategy will be felt p
rogressively down through all levels of the organization. The proven
「value-based management」 system will be applied to orient the Group
even more effectively to the marketplace, to enhance the entrepreneuri
al mentality of every single employee, and to bring greater focus to t
hose factors subject to personal influence. At the same time, great im
portance will be placed on specific training and development programs.
Incentive schemes will be further expanded within the Group. The succ
essful implementation of these key strategic goals will build very eff
ectively on the existing foundation and support the Danzas Group’s pl
an to become the leading global provider of logistics solutions.