Dissatisfied with 2018 results, CEO Frank Appel says the company has set ambitious targets for this year and 2020.
Deutsche Post DHL Group CEO Frank Appel said the company is ready for the future after a challenging 2018.
“Deutsche Post DHL Group is well positioned. We have set the right course. This cost money and put pressure on earnings in the short term, but it sets the stage for a good 2019 and especially beyond,” Appel (pictured above) said at the group’s annual general meeting in Bonn, Germany, this week. “Our focus is on the future. In 2019, we will take a big step forward.”
Appel confirmed the group’s financial targets for both this year and next year in his speech to the company’s shareholders. Those forecasts call for operating profit (EBIT) to increase to between 3.9 billion euros and 4.3 billion euros in 2019 and to reach more than 5 billion euros in 2020. These targets are “ambitious but not excessive,” he said.
He said the group’s main growth drivers — the German parcel business and the international Express business — remained intact. He noted that the forwarding business and the Supply Chain division also had performed well and that the restructuring of the German post and parcel business was going well and according to plan.
Appel said he was dissatisfied with the financial results in 2018 but optimistic about 2019. Group revenue increased by just 1.8% in 2018 to 61.6 billion euros. Operating profit came to 3.2 billion euros and met the earnings target as revised in June.
“We are now repooling our strengths for what our shareholders expect from us. We transport, sort and deliver documents and goods. That’s our mission, what we are the best at. It’s as simple as that,” Appel said.
He said the first quarter of 2019 played out as expected. The group again reported growth in all five divisions. Revenue rose by more than 4% to 15.4 billion euros. Fueled by a substantial positive one-off effect, operating profit was up 28% year-over-year to 1.2 billion euros.
“We are performing according to plan,” Appel said.
He added that the EBIT margin of 12.1% reached by DHL’s Express division in 2018 was not only a new record for the group but also the best result in the sector and that the focus on high-margin business and cost discipline had enabled the Global Forwarding, Freight division to improve earnings by nearly 50%.
With regard to the new Supply Chain partnership between DHL and S.F. Holding in China, Appel said DHL was contributing its expertise and technology and S.F. Holding its comprehensive infrastructure and broad customer base in China, Hongkong and Macau and that the group also would benefit from an additional cash inflow of 653 million euros.
The dividend proposed by the management and supervisory boards for the 2018 financial year was unchanged from the prior year at 1.15 euros per share. The group is expected to pay out a total of about 1.4 billion euros in dividends on Monday.