DHL profits fall slightly despite increased revenue

Profits were down 1% at the company in 2014 despite a 3.1% increase in group revenues, according to its annual report.    Deutsche Post DHL Group increased revenues by 3.1 percent to 56.63 billion euros (U.S. $60.18 billion) in 2014, compared to 54.91 billion euros in 2013, according to the company’s annual report. Negative currency effects reduced revenue by 407 million euros, however, and consolidated net profit for the group decreased 1 percent, from 2.09 billion euros in 2013 to 2.07 billion euros in 2014.
   The company attributed its “slow” earnings growth primarily to higher transportation costs, increased labor costs due to increased staff, and the continued expansion of DHL’s parcel network.
   Earnings per share also decreased in 2014, with basic earnings down from 1.73 euros per share to 1.71 euros per share.
   DHL’s fourth quarter 2014 revenues were up 6.3 percent to 15.37 billion euros compared to the fourth quarter of 2013, but consolidated net profits for the fourth quarter dropped 17.1 percent to 640 million euros.
   The company increased yearly revenue in its Post and eCommerce – Parcel division 2.6 percent 15.69 billion euros. DHL’s international and domestic parcel business, predominantly in Germany, accounted for most of the gain despite slightly lower domestic mail volumes.  Revenue in the eCommerce – Parcel business unit was up 6.5 percent to 5.66 billion euros.
   DHL’s Express division recorded a 5.7-percent increase in revenue over 2013 to 12.49 billion euros in the reporting year.  The company said its customers sent 1.7 percent more shipments each day year-over-year in 2014 in its Time Definite Domestic business. 
   Revenues in the Global Forwarding and Freight division increased nearly 1 percent to 14.92 billion euros in 2014, recovering slightly after declining in the first half of the year. DHL’s airfreight volumes increased 2.4 percent compared with the previous year, while ocean freight volumes were up 4.6 percent. 
   The company’s supply chain division reported a 3.6 percent increase in revenue to 14.74 billion euros for the year, with science and healthcare sectors representing a higher proportion of revenue and a slightly lower share in the retail sector.
   The group said of its yearly results, “Deutsche Post DHL Group reached the targets it had set for financial year 2014. Although the global economy only registered cautious growth overall, the Group’s revenue, EBIT and operating cash flow all increased. The German parcel business and the international express business continued to generate dynamic growth. Earnings in the Supply Chain division likewise benefited from a high level of new business and continuing restructuring programs, whereas margin pressure and transformation costs had a noticeable impact on the Global Forwarding, Freight division.”
   Looking ahead to 2015 and beyond, DHL said, “Forecasts for 2015 indicate that the global economy will continue to experience regional variations and only demonstrate moderate growth on the whole. We expect consolidated EBIT to reach €3.05 billion to €3.20 billion in financial year 2015. The Post – eCommerce – Parcel division is likely to contribute at least €1.3 billion to this figure. Compared with the previous year, we expect an additional improvement in overall earnings to €2.1 billion to €2.25 billion in the DHL divisions. The Corporate Center/Other result is projected to remain at around €−0.35 billion. The earnings forecast that we presented for 2016 remains unchanged.”