E-commerce and freight forwarding boost for DP DHL's second quarter
07 / 08 / 2018
Deutsche Post DHL Group's (DP DHLG) revenue rose by 1.4% to more than €15bn in the second quarter of 2018, driven primarily by “significant gains” at DHL Express and Global Forwarding, Freight.
The quarter's operating profit (EBIT) at the German logistics giant amounted to €747m, down by 11.2% against the record level of the prior-year period.
Group revenue for the first half of 2018 remained at the prior-year level, coming in at €29.8bn, versus €29.7bn in 2017. DP DHLG still plans to increase operating profit to more than €5bn by 2020.
Operating profit at Global Forwarding, Freight unit rose 56.7% to €105m in the quarter, despite a "selective" approach to the profitability of certain contracts.
All of the DHL divisions reported EBIT increases. However, earnings in the PeP division fell back as expected, due to higher transport and staff costs.
Frank Appel, chief executive of DP DHLG, 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 (PeP) and are implementing the measures for aligning the division toward long-term profitable growth.”
Appel added: “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.”
The group again 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 Boeing 777 freighter aircraft.
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% on the prior year to €4bn, and on an organic basis revenue climbed by 12.1%.
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% compared with the prior-year period”.
The division succeeded in growing operating profit by 10.2% to €517m on the back of strict yield management and continuous improvements in the network. The operating margin improved to a record level of 12.8% (2017: 12.5%).
The Global Forwarding, Freight division “maintained the positive trend” of previous quarters during the second quarter of 2018.
Divisional revenue was up by 2.5% to €3.7bn, “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%.
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% to €105m."