Deutsche Post delivers record earnings in 2016 despite lower revenues

The Bonn, Germany-based parcel carrier and logistics provider saw consolidated net profits soar 71.4 percent to 2.64 billion euros for the year, even as revenues slipped 3.2 percent to 57.33 billion euros.    Deutsche Post DHL Group saw full-year consolidated net profits skyrocket 71.4 percent to 2.64 billion euros (U.S. $2.79 billion) in 2016 compared with the previous year, according to the company’s most recent financial statements.
   The Bonn, Germany-based parcel carrier and logistics provider posted diluted earnings per share (EPS) of EUR 2.10 compared with EUR 1.22 per share in 2015. Earnings before interest and taxes (EBIT) increased to EUR 3.49 billion, in-line with consensus analyst expectations and a record for the company.
   DHL attributed the impressive earnings growth to “strong business operations in all divisions, as well as the absence of one-time charges incurred in the previous year.”
   Total group revenues, on the other hand, slipped 3.2 percent year-over-year to EUR 57.33 billion in 2016.
   The company attributed the decline to negative currency effects and lower fuel surcharges due to falling oil prices, as well as a change in the recognition of revenue generated from a key customer contract in its Supply Chain division. Adjusted for the above effects, group revenues grew 2.8 percent from the previous year.
   Capital expenditures for the year rose 2.5 percent to EUR 2.1 billion compared with 2015, and DHL said it expects this figure to further increase to EUR 2.3 billion in 2017.
   “2016 was a very successful year for us. The company has never before achieved higher earnings in its current structure,” DHL Group CEO Frank Appel said of the results.
   “We also invested substantially in all four divisions and made strong progress in the implementation of our Strategy 2020,” he added. “Thanks to our targeted approach to e-commerce, the entire group is benefiting increasingly from the dynamic international development in this segment. We are in an excellent position to maintain our profitable growth.”
   Looking ahead to 2017, the company is projecting group EBIT to increase to EUR 3.75 billion, despite anticipating only “moderate” growth in the world economy during the year.
   Appel said in an interview posted on the Deutsche Post DHL Group website the company is keeping a close eye on increasing protectionism and populism in the United States and abroad, and the potential effects on global trade.
   “We are observing two opposing trends,” he said. “On the one hand, globalization and international connectivity are constantly on the rise. This is also confirmed by the Global Connectedness Index we publish. On the other hand, developments such as Brexit or the looming withdrawals from multilateral free trade agreements show us that it could become rather more difficult for international companies in the future to conduct business across borders.
   “We are observing this closely, of course, but we are not unduly alarmed,” he added. “Our experts know exactly how to deal with trade barriers. We know the complex customs and import regulations in practically every country on earth…In the long term, however, we absolutely must not jeopardize the accomplishments of globalization. This would be in the interests of neither our economy nor in our own interests.”