Deutsche Post DHL Group’s (DP DHLG) revenue rose by 1.4 per cent to more than EUR 15 billion in the second quarter of 2018, driven primarily by “significant gains” at DHL Express and Global Forwarding, Freight.
DP DHL said that on a comparable basis (after adjusting for currency effects and portfolio changes), revenue rose by 6.2 per cent.
The quarter’s operating profit (EBIT) at the German logistics giant amounted to EUR 747 million, down by 11.2 per cent against the record level of the prior-year period.
All of the DHL divisions reported EBIT increases, except for earnings in the Post – eCommerce – Parcel (PeP) division which contracted due to higher transport and staff costs, amongst others.
The Group has initiated a comprehensive programme for PeP from June, to raise productivity and improve the division’s cost situation, the group said. This led to increased expenses and the recognition of first provisions in the second quarter.
“The second-quarter results were in line with expectations,” said Frank Appel, CEO of Deutsche Post DHL Group. “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,” Appel said, adding: “We are confident to reach our 2020 targets.” A key part of those plans involves increasing operating profit to more than EUR 5.0 billion by 2020.
Overall, the DP DHL Group generated consolidated net profit after non-controlling interests of EUR 516 million in the second quarter of 2018 (2017: EUR 602 million) with the decline mainly attributable to lower EBIT at PeP.
Group revenue for the first half of 2018 remained at the prior-year level, coming in at EUR 29.8 billion, versus EUR 29.7 billion in 2017.
The group made “targeted investments” during the second quarter, to further strengthen its foundation for long-term profitable growth, including the June 2018 order for 14 new B777 freighters.
In the second quarter, the Express division “again continued the very good revenue and earnings performance sustained over several years, said DP DHLG its results statement.
Revenue rose by 7.9 per cent on the prior year to EUR 4.0 billion, and on an organic basis revenue climbed by 12.1 per cent. 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”.
The division succeeded in growing operating profit by 10.2 per cent to EUR 517 million on the back of strict yield management and continuous improvements in the network. The operating margin improved to a record level of 12.8 per cent (2017: 12.5 per cent).
The Global Forwarding, Freight division “maintained the positive trend” of previous quarters during the second quarter of 2018, DP DHL said.
Divisional revenue was up by 2.5 per cent to EUR 3.7 billion, “despite having taken a more selective approach with regard to the profitability of certain contracts”. Adjusted for negative currency effects, revenue improved by an even more substantial 6.0 per cent.
At the same time, the division was “better able to pass on higher freight market rates” to its customers than in the first quarter. “The measures introduced to improve cost efficiency are also proving effective.” As a result, operating profit at Global Forwarding, Freight rose significantly by 56.7 per cent to EUR 105 million.”
Revenue in the Supply Chain division came in at EUR 3.2 billion in the second quarter down from 2017’s EUR 3.5 billion. The decline in revenue was attributed to negative currency effects, and portfolio changes. After adjusting for those factors, the division’s revenue increased by 2.7 per cent. Operating profit improved by 3.2 per cent to EUR 128 million.