Record Q1 profit, retained 2016 outlook for DHL group

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DHLDeutsche Post DHL announced a significant jump in operating profit for the first three months of 2016, a historic high for the first quarter that was spurred by growth in all of the company’s four business divisions.

Group EBIT (earnings before interests and taxes) rose to EUR873 million (US$987 million) or 21.3% over the same quarter in the prior year, extending further the earnings momentum in the fourth quarter of last year, said the company.

However, revenue decreased by 6.1% to EUR13.9 billion in the first three months of the year due to negative currency effects, lower fuel surcharges, as well as the changed method of registering revenue from a key customer contract in the supply chain division starting in the fourth quarter of 2015.

The main growth drivers—the international express business and the dynamic parcel and e-commerce business—remained intact in the first months of the new year, said the organization.

“We’ve had a good start to the current year. With an EBIT of EUR 873 million we have registered the strongest first quarter in our company history. The efforts we made in 2015 to position ourselves for profitable growth in all divisions are paying off. Last year was a year of transition, and we are now firmly on track to achieve our targets for 2016,” stated Frank Appel, group CEO.

In the first quarter the DHL divisions reported a combined operating EBIT increase of 32.8% to EUR534 million. Express saw an EBIT increase of 7.5% to EUR357 million. Operating earnings for global freight forwarding rose from EUR17 million to EUR51 million, and supply chain EBIT increased from EUR53 million to EUR127 million.

Consolidated net profit rose by 29.1% to EUR639 million in the first quarter of 2016. Basic earnings per share similarly increased from EUR0.41 in the previous year to EUR0.53 in 2016.

Revenue in the post-eCommerce-parcel (PeP) division increased by 2.4% to EUR4.2 billion in the first quarter. A total of EUR1.7 billion of that figure was generated by the e-commerce-parcel business unit, which continued to see dynamic growth of 8.6% compared with the prior-year period.

“The upward trend shows once again how Deutsche Post DHL Group is benefitting from positioning itself successfully as a market and innovation leader in the high-growth e-commerce segment,” said the company.

Revenue from the post business declined slightly by 1.2% to EUR2.53 billion, with the first quarter of 2016 having one working day less than last year’s period.

Operating profit in the PeP division climbed by 3.3% to EUR412 million. Continued strong growth in the parcel business as well as the letter price increase more than offset the volume decline at post and the significant investments in the e-commerce-parcel business.

In the express division, the first quarter continued to bring positive revenue and earnings trends. Revenue rose by 0.3% to EUR3.25 billion over the prior-year figure. The sustained upward trend was primarily driven by the time-definite international business, where first-quarter shipment volumes rose by 7.9% and yields expanded year-on-year.

Divisional EBIT rose by 7.5% to EUR357 million in the first quarter of 2016, and operating margin improved to 11.0%.

Revenue in global freight forwarding decreased by 12.2% to EUR3.3 billion in the first quarter of 2016, largely on account of the weak market environment and the division’s more selective market strategy.

Operating profit increased from EUR17 million in the previous year to EUR51 million in the first quarter of 2016, attributed to measures introduced in the past year to improve operating performance in freight forwarding.

Revenue from supply chain operations decreased by 13.9% to EUR3.4 billion in the first quarter. Supply chain continued to generate further new business. In the first quarter, the division concluded additional contracts worth around EUR276 million with both new and existing customers.

Divisional EBIT improved from EUR53 million in the first quarter of 2015 to EUR127 million in the first three months of 2016. The 2016 figure includes income from real estate transactions, which was partially offset by the restructuring costs incurred.

For 2016, the group continues to anticipate moderate growth in the global economy. But banking on strategic measures implemented in all four divisions in 2015, Deutsche Post DHL reconfirmed its 2016 EBIT forecast of between EUR3.4 billion and EUR3.7 billion.

The group is also maintaining its targets beyond 2016, forecasting an average increase in operating profit of more than 8% annually during the period 2013-2020.

Photo: Frank Vincentz