Deutsche Post–DHL (DP-DHL) turned in a set of mixed results for the second quarter with continued prosperity in the time-definite segment of its business, while others such as its freight forwarding business suffered margin pressure.
The top-line numbers for the group saw only slight movement with revenue up 0.7 per cent year-on-year at €13.7 billion and EBIT (Earnings Before Interest and Tax) up 5.7 per cent year-on-year from €619 million in 2013 to €654 million this year, although the results were hit by currency fluctuations and exceptional items. Adjusted for non-recurring factors, EBIT climbed by nearly 11 per cent. Overall revenue for Deutsche Post DHL group as a whole – including its postal business – rose by nearly €100 million to €13.7 billion in the second quarter of 2014, and adjusted for exchange-rate and other inorganic factors, revenues rose by around €570 million.
The group’s Express division continued to prosper driven by its time-definite services heavily predicated on e-commerce. Year-on-year revenue was up 2.5 per cent and EBIT was up 17.7 per cent. DHL Express said that underlying demand continued to be reasonably strong with underlying revenue growth over seven per cent.
In contrast to the express business, the performance of the Global Forwarding, Freight division was less rosy with revenue falling 2.1 per cent year-on-year although DHL said the underlying trend after currency fluctuations was an increase of around 2.1 per cent. As a result of increasing demand in Asia and continued success in new business with existing and new customers, volume in both ocean and air freight rose between April and June. EBIT fell sharply by 21.3 per cent despite the fact volumes were up with air freight up 2.1 per cent and sea freight up 5.6 per cent. Yields were the issue with DHL commenting: “Ocean carriers are effectively controlling supply and demand. For example, available capacity is effectively limited by adjusting travel speed, whilst the rates agreed upon are increased”.
On the contract logistics side, DHL Supply Chain continued its gradual improvement with revenue up by 2.3 per cent, depressed slightly by currency effects, with a 38 per cent jump in EBIT in part a result of poor results last year in the same period.
Deutsche Post DHL said that for the remainder of 2014, the group expects only slight improvement in the global economic environment. Nonetheless, the company believes that “the positive earnings trend will continue” and that consolidated EBIT for the Deutsche Post DHL group as a whole – including its postal business will – rise to between €2.9 billion and €3.1 billion.
“Due to a challenging market environment for the Global Forwarding, Freight division, together with higher investments for that division’s ‘New Forwarding Environment’ (NFE) transformation programme, the group now expects operating earnings in the DHL divisions will rise to between €2-2.2 billion. Previously, the company had assumed that the DHL EBIT would increase to between €2.1-2.3 billion.”
The group said the NFE programme for its Global Forwarding, Freight division would be one of its focal points in 2014 and 2015, alongside the continued organisational and contract mix optimisation of its Supply Chain division. “Since the company has not yet determined the exact amount of the additional NFE investment, as well as the project and strategic restructuring measures at Supply Chain, the group has decided to refrain from providing a specific guidance for 2015.”