DHL Group net profits plummet nearly 90% in Q3

Deutsche Post DHL Group reported consolidated net profits of 49 million euros for the third quarter of 2015, an 89.5 percent year-over-year decline, which primarily resulted from a decline in earnings before interest and tax.    Deutsche Post DHL Group posted consolidated net profits of 49 million euros (U.S. $52.69 million) for the third quarter of 2015, an 89.5 percent decline from the third quarter of 2014, according to the company’s most recent financial statements.
   DHL attributed the sharp decrease in consolidated net profits primarily to the drop in earnings before interest and tax (EBIT), which fell 70.9 percent from last year’s third quarter to 197 million euros.
   As a result, the company lowered its full-year 2015 EBIT guidance to a minimum of 2.4 billion euros.
   Group revenues for the quarter increased 3 percent year-over-year to 14.4 billion euros.
   The Post-eCommerce-Parcel division’s revenues stood at 3.8 billion euros for the quarter, an increase of 2 percent from the third quarter of 2014, while revenues in the Post business stood at 2.3 billion euros, a year-over-year drop of 2.4 percent.
   The Express division posted revenues of 3.3 billion euros for the third quarter, a 6.9 percent increase from last year’s third quarter. The increase was 2.2 percent after adjusting for currency effects. DHL primarily attributed the increase to the continued growth in international time definite shipments, where volumes rose 9.4 percent year-over-year.
   By contrast, revenues at DHL’s Global Forwarding and Freight division fell 5.7 percent year-over-year to 3.6 billion euros, primarily the result of a weak market environment and the division’s selective market strategy, DHL said.
   Revenues at the Supply Chain division stood at 4.0 billion euros, up 9.4 percent from last year’s third quarter. Revenues rose 3.2 percent adjusted for currency effects. DHL mainly attributed the growth to the new contract wins and an increase in volumes in developed markets.
   DHL said it recognized one-off effects of 345 million euros in connection with the further course of the IT renewal plan at DHL Global Forwarding, which the company announced at the end of October.
   In addition, DHL decreased its risk to future earnings potential by recognizing one-off effects of approximately 200 million euros in its outlook for 2015.
   “These exposures relate mainly to the updated assessment of primarily legal and regulatory exposures in the Post – eCommerce – Parcel, Express and Global Forwarding, Freight divisions. 81 million euros of this sum was booked in the third quarter,” said DHL.
   Third quarter earnings were also influenced by measures taken to increase the positioning of the business divisions success in the future.
   The Post-eCommerce-Parcel division invested in the international expansion of its parcel network. In addition, the division’s earnings were influenced by the postal strike in Germany, its after-effects and the one-time payment included in a new tariff agreement.
   The Express division continued to invest in its worldwide network and the Supply Chain division booked further restructuring costs in line with the implementation of its optimization program.
   “The one-time nature of the effects and the expected impact in delivering structural enhancements for the individual business divisions should contribute to a significant increase in earnings in the comping year,” DHL said.
   DHL re-confirmed its forecast of EBIT between 3.4 billion euros and 3.7 billion euros for 2016.