German postal and logistics giant Deutsche Post DHL met its forecast for operating profit in full-year 2015, which received a big boost from record fourth-quarter earnings.
On the heels of a strong fourth quarter, the company also reconfirmed its EBIT target for 2016.
In full-year 2015, the group registered a consolidated operating profit of EUR2.41 billion (US$2.67 billion), as it logged its strongest operating quarter on record with EBIT of EUR957 million in the final quarter. This is up by 5.7% on its 2014 performance of EUR905 million.
The record-breaking quarter is attributed to growth in e-commerce and improvement in the global freight forwarding unit.
The Post-eCommerce-Parcel (PeP) division grew 14.6% in the fourth quarter to EUR487 million from EUR425 million in the same quarter the preceding year, owing to the success of the parcel and eCommerce business during the December holiday season.
EBIT in the Global Freight Forwarding unit rose in the same period by 39.4% to EUR99 million from the 2014 earnings of EUR71 million due to the implementation of turnaround measures.
The group had lowered its earnings guidance for 2015 in October of the same year to at least EUR2.4 billion, down from the prior year’s performance of EUR2.97 billion. This was to recognize its one-off charges as well as investments, including those on the new direction of the IT renewal in the global forwarding unit.
The EBIT contribution of the PeP division in full-year 2015 amounted to EUR1.1 billion against 2014’s figure of EUR1.3 billion. The DHL divisions generated an operating profit of EUR1.66 billion from EUR2.02 billion in 2014.
With this performance, the results of PeP and DHL were also in line with the expectations communicated last October.
“The positive earnings momentum we have seen in the fourth quarter once again confirms the fundamental strength of our business. We are firmly on track with our strategy,” stated group CEO Frank Appel.
In the full year 2015, the group also continued to make substantial investments to its four divisions for the transition from Strategy 2015 to Strategy 2020 to position the company for profitable growth in 2016 and beyond, according to a company statement.
The PeP division has invested heavily in expanding its parcel network, both nationally and internationally, in order to realize even greater benefits from the global boom in e-commerce.
The Express division has further bolstered its market position by making additional significant investments in its network infrastructure and quality.
The Global Freight Forwarding division achieved a notable improvement in its operating business development in the second half of 2015, while at the same time defining a new approach to the division’s IT renewal.
The Supply Chain division made significant progress on its planned optimization program by investing substantially in restructuring activities in 2015.
Meanwhile, consolidated revenue in 2015 climbed by 4.6% to EUR59.2 billion compared with the prior year’s EUR56.6 billion.
The DHL divisions contributed to the revenue increase with growth of 5.3% and the PeP division with an improvement of 2.8%.
For 2016, Deutsche Post DHL reaffirmed its EBIT forecast of between EUR3.4 billion and EUR3.7 billion.
The PeP division is expected to contribute EBIT of more than EUR1.3 billion to the 2016 earnings target, and the DHL divisions between EUR2.45 billion and EUR2.75 billion.
Targets beyond 2016 are also maintained: The group continues to forecast an increase in operating profit by an average of more than 8% annually during the period 2013-2020.
The DHL divisions are expected to contribute to the improvement with average EBIT growth of 10% per year. Operating profit for the PeP division is expected to increase by an average of around 3% per year.
