Express and forwarding boost revenue in Q2 at DHL

posted on 7th August 2018 by Justin Burns
Express and forwarding boost revenue in Q2 at DHL

Deutsche Post DHL Group’s operating profit fell 11.2 per cent to €747 million in the second quarter (Q2) of 2018 – but revenue grew by 1.4 per cent to more than €15 billion – primarily driven by significant gains in DHL Express and Global Forwarding.

All of the DHL divisions reported EBIT increases, some significant, DHL said. However, DHL said earnings in the Post – eCommerce – Parcel (PeP) division fell back as expected, above all due to higher transport and staff costs.

All in all, Deutsche Post DHL Group generated consolidated net profit after non-controlling interests of €516 million in Q2 (2017: €602 million).

Operating profit in the Global Forwarding, Freight division rose significantly by 56.7 per cent to €105 million on the back of revenue rising 2.5 per cent to €3.7 billion, despite DHL having taken a more “selective approach with regard to the profitability of certain contracts”.

The DHL Express division’s operating profit grew by 10.2 per cent to €517 million due to strict yield management and continuous improvements in the network. Revenue rose by 7.9 per cent on the prior year to €4 billion.

The upward trend was once again driven by solid growth in the international time-definite (TDI) delivery business, where daily volumes rose by 8.4 per cent compared with the prior-year period.

Revenue in the Supply Chain division came in at €3.2 billion in Q2 (2017: €3.5 billion) and operating profit improved by 3.2 per cent to €128 million. The PeP division posted revenue of €4.4 billion in Q2, up 3.4 per cent on the prior-year figure. Operating profit came to €108 million in the PeP division (2017: €260 million).

Deutsche Post DHL Group chief executive officer, Frank Appel (pictured) said: “The second-quarter results were in line with expectations. Our three DHL divisions – Express, Global Forwarding, Freight and Supply Chain – performed well.

“We are clear about the challenges that face us at Post – eCommerce – Parcel and are implementing the measures for aligning the division toward long-term profitable growth.”

He added the German logistics powerhouse is confident it will reach its 2020 targets of increasing operating profit to more than €5 billion.

Deutsche Post DHL Group still plans to increase operating profit to more than €5 billion by 2020. The PeP division is expected to contribute around €1.7 billion and the DHL divisions around €3.7 billion to that total.

In view of the challenges at PeP, the Group adjusted its forecast for the current financial year in June 2018. The company now expects to generate EBIT of around €3.2 billion for full-year 2018; the PeP division is set to contribute around €0.6 billion to that amount. Earnings in the DHL divisions are expected to be unchanged at around €3 billion.

On e-commerce, Appel said: “The booming e-commerce business remains the primary growth driver for our German and international parcel businesses – here we continue to see tremendous potential for profitable future growth. In the last years, we have worked hard to expand our leading position in the competitive German parcel market.

“In the next market development phase, we will focus more closely on our prices and costs in both the Post and Parcel businesses in order to translate the volume development into steadily rising earnings.”

Group revenue for the first half of 2018 remained at the prior-year level, coming in at €29.8 billion (2017: €29.7 billion). Operating profit was down 4.3 per cent to €1.7 billion, due above all to higher costs and operational investments at PeP.

Consolidated net profit after non-controlling interests dropped 9.6 per cent to €1.1 billion in the first six months (2017: €1.2 billion).