Logistics powerhouse Deutsche Post DHL is off to a moderate start with profit flat in the first quarter of the year despite higher revenues and volumes.
In a statement, the German supply chain service said group operating profit decreased by 1% in the first quarter to EUR720 million (US$809 million), primarily due to the weak performance of its forwarding and freight businesses and the planned restructuring costs in the supply chain division.
Revenue for the period, however, was up 8.8% over the prior-year quarter to EUR14.8 billion. With currency adjustments, revenue also grew, with improvements in all four divisions contributing to an organic increase of 2.1%. This development reflects sustained growth in revenues and volumes in the international express business as well as in the German parcel business, said the company.
“We saw a moderate start to the year, as we expected,” said Frank Appel, group CEO. “Our strategy, aimed at growth in e-commerce and the emerging markets, in particular, is progressing.”
At the same time, the company is undertaking a number of specific measures aimed at building a strong base for its strategic priorities. “We are investing significantly to ensure that our four divisions are optimally positioned, even though this is having a temporary impact on our performance, as we previously discussed. Our overarching focus today is on the sustainable, profitable growth of our business,” added Appel.
Although the group expects global growth to be moderate in 2015, it has confirmed its targets.
Operating profit is projected to increase to between EUR3.05 billion to EUR3.2 billion in 2015. The Post-eCommerce-Parcel (PeP) division is expected to contribute at least EUR1.3 billion to that figure, while the DHL divisions are projected to record an EBIT increase to between EUR2.1 billion to EUR2.25 billion.
For 2016, Deutsche Post DHL reconfirms its forecast of a rise in EBIT to between EUR3.4 billion and EUR3.7 billion. The PeP division is expected to contribute more than EUR1.3 billion to this figure, and the DHL divisions between EUR2.45 billion and EUR2.75 billion.
The firm also continues to forecast that operating profit will increase by an average of more than 8% annually during the period from 2013 to 2020 (CAGR). The DHL divisions are expected to contribute to the improvement with average EBIT growth of 10% per year. At PeP, operating profit is expected to increase by an average of around 3% per year.
