Deutsche Post DHL Group profits in “challenging” 2018

DHL Express

Deutsche Post DHL (DPDHL) Group saw a 1.8 per cent rise in its Group revenue for the financial year 2018 to EUR 3.2 billion, despite what it says was a “challenging year”.

The logistics giant noted that all four Group divisions – Express, Global Forwarding & Freight, Supply Chain, and eCommerce Solutions) contributed to the positive growth, which registered 6.0 per cent growth when adjusted for currency effects and portfolio changes.

The Group’s operating profit (EBIT) came to EUR 3.2 billion, down 15.5 per cent year-on-year which was not unexpected given adjusted earnings targets communicated in June 2018.

Frank Appel DPDHL
Frank Appel

Commenting on the results, Frank Appel, CEO of Deutsche Post DHL Group says: “2018 was a challenging year for Deutsche Post DHL Group, which we closed with a successful Christmas business. Despite rising geopolitical uncertainties, global trade continued to register growth. This benefitted our DHL divisions in particular.

“In our German post and parcel business, we initiated measures to secure the division’s long-term EBIT growth – and we consciously accept that this comes with a short-term burden on EBIT. We have laid the foundation for reaching our 2020 targets and for continuing to grow profitably in the years thereafter.”

The Group continued its significant investment in 2018, with a total of EUR 2.6 billion (+16.8 per cent) spent on investments across all four divisions. This included expanding and modernising its domestic parcel infrastructure and vehicle fleet, as well as in expanding production of the StreetScooter, among others.

In the Express division, the Group upgraded its hubs in Brussels, Madrid and Hong Kong and expanded and modernised the aircraft fleet. The Group is planning to increase capital expenditure to around EUR 3.7 billion in 2019. This includes EUR 1.1 billion for the debt-financed renewal of the Express aircraft fleet announced last year.

Division performance
The Post – eCommerce – Parcel division reported revenue growth of 1.7 per cent to EUR 18.5 billion in 2018. The upward trend was primarily attributable to higher revenue in the eCommerce – Parcel business unit. Revenue at DHL eCommerce climbed by 6.9 per cent, adjusted for negative currency effects by 12.0 per cent while Parcel Europe reported an increase of 10.6 per cent. EBIT for the PeP division came to EUR 656 million in the past financial year (2017: EUR 1.5 billion).

DPDHL says these dynamic trends reflect its strong positioning in international e-commerce. The Group intends to use its new DHL eCommerce Solutions division headed up by Ken Allen to take even better advantage of the potential offered by the e-commerce market.

The longstanding upward revenue and earnings trend continued in the Express division in 2018. Revenue climbed by 7.3 per cent to EUR 16.1 billion. The increase was even greater on an organic basis at 11.0 per cent. DPDHL says the “dynamic performance” was once again driven by strong growth in the international time-definite (TDI) delivery business, where daily volumes rose by 7.4 per cent compared with the prior-year period.

Operating profit increased by 12.7 pe cent to EUR 2.0 billion on the back of strict yield management and continuous improvements in the network. The operating margin rose to 12.1 per cnt, up from 11.5 per. cent in the prior year.

Global Forwarding, Freight
The Global Forwarding, Freight division saw increased revenue by 3.4 per cent to EUR 15.0 billion despite focusing only on high-margin business. Adjusted for negative currency effects, revenue improved by an even more substantial 6.7 per cent. Gross profit also performed strongly with an increase of 3.9 per cent over the prior year to EUR 3.6 billion. The division registered gross profit margin improvements in both air and ocean freight. Operating profit surged 48.8 per cent to reach EUR 442 million in the full year 2018.

Supply Chain
Revenue in the Supply Chain division came in at EUR 13.4 billion in the past financial year (2017: EUR 14.2 billion). In addition to negative currency effects, the revenue decline mainly reflects the sale of the subsidiary Williams Lea Tag. After adjusting for those factors, revenue for the division increased by 4.3 per cent. DHL Supply Chain continued to generate additional new business, closing additional contracts worth EUR 1.3 billion with both new and existing customers in financial year 2018.

Operating profit amounted to EUR 520 million, down from EUR 555 million in the previous year. The decline was attributable to one-time negative effects of EUR 50 million from customer contracts and EUR 42 million from pension obligations. Adjusted for these factors and the one-off effect resulting from a write-down of customer relationship assets in the previous year’s result, EBIT improved by 4.3 per cent.

DP-DHL full year 2018 summary

Deutsche Post DHL Group profits in "challenging" 2018
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Deutsche Post DHL Group profits in "challenging" 2018
Deutsche Post DHL (DPDHL) Group saw a 1.8 per cent rise in its Group revenue for the financial year 2018 to EUR 3.2 billion, despite what it says was a "challenging year".
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