Revenues down but operating profit surges for DP-DHL’s forwarding arm
03 / 08 / 2016
Deutsche Post DHL Group’s (DP-DHL) freight forwarding arm saw 2016 second quarter revenues fall by 9.3% to €3.4bn, versus €3.8 in like prior year period 2015, while divisional operating profit improved by 72.5% to €69m.
Adjusted for negative currency effects and lower fuel surcharges, the Global Forwarding, Freight division’s revenue declined by 3.1%.
The Germany-based logistics giant said: “Apart from the still weak market environment, the main reason for the revenue decline [in global forwarding] was the division’s selective market strategy.”
Commenting on the increase in forwarding’s operating profit, DP-DHL added: “With this development, EBIT rose strongly for the third consecutive quarter. The increase would have been even greater without the non-recurring effects in the prior year quarter, including gains of €99m generated from the sale of shares in logistics firm Sinotrans.
“The earnings trend shows that the measures initiated last year to sustainably improve profitability at Global Forwarding, Freight are achieving positive results.”
At group level, the mail, parcel, freight and logistics company’s EBIT climbed to €752m, or a 40.0% increase over the prior-year period, recording the company best ever second quarter, “as the strong earnings momentum of the preceding two quarters continued”.
Group revenue decreased by 3.5% to €14.2bn between April and June 2016. Group chief executive Frank Appel said: “Having posted the strongest second quarter in our company’s history, we are well on track towards achieving our targets.”
Although global economic growth “remains only moderate,” DP-DHL said that the strategic initiatives implemented in all four divisions are expected” to significantly increase EBIT performance for full-year 2016”.
DP-DHL re-confirmed its full-year 2016 forecast for group EBIT to be between €3.4bn and €3.7bn. The group is also maintaining its targets beyond 2016 and continues to forecast an average increase in operating profit of more than 8% annually (CAGR) from 2013 to 2020.
In May this year Deutsche Post appointed Tim Scharwath as the new chief executive of its DHL Global Forwarding, Freight division.
It stated then that Scharwath will join the German logistics giant “within the next twelve months”. In the meantime Appel retains responsibility for this division
Scharwath will join from rival logistics player Kuehne + Nagel International (K+N) where he was responsible for global airfreight.
In February this year, Appel rejected suggestions that his group’s forwarding arm was up for sale, saying that the division was "core to our company and we see a good future for it as part of DP-DHL Group”
In October last year, DP-DHL said it would write off €345m due to a troubled freight forwarding IT platform which it had been developing as part of its New Forwarding Environment (NFE) transformation project.