Deutsche Post Q2 earnings drop due to postal strike in Germany

Deutsche Post DHL Group reported an 29.3 percent year-over-year decline in consolidated net profits for the second quarter despite a 7.3 percent increase in revenues.    Deutsche Post DHL Group reported quarterly earnings before interest and taxes (EBIT) of 537 million euros (U.S. $587.55 million) in the second quarter of 2015, an 18.1 percent decrease from the same quarter in 2014.
   Consolidated net profits were hit even harder, falling 29.3 percent to EUR 326 million in the second quarter compared to the same period the previous year. Basic earnings per share dropped from EUR 0.38 per share in Q2 2014 to EUR 0.27 in Q2 2015.
   DP DHL attributed the Q2 EBIT decline primarily to a “one-off earnings impact of strike activities,” which accounted for a negative EBIT impact of EUR 100 million, more than 75 percent of the overall EBIT decline. The company increased revenues 7.3 percent year-over-year to EUR 14.7 billion in the second quarter.
   German postal worker trade union Verdi staged a series of strikes beginning in April over the company’s plan to expand its parcel division using low-wage employees before a deal was reached last month.
   “The Post – eCommerce – Parcel division was able to reach a sustainable wage agreement that lays the foundations for long-term growth in the German parcel business, despite the one-off earnings impact of strike activities that resulted in a EUR 100 million reduction of EBIT in the second quarter,” DP DHL said in its most recent financial statements.
   As a result of the decline in EBIT, DP DHL also lowered its full-year 2015 earnings projections from between EUR 3.05 billion and EUR 3.2 billion to between EUR 2.95 billion and EUR 3.1 billion. The previous forecast had been for Group EBIT. The company confirmed its EBIT guidance for 2016 of EUR 3.4 billion and EUR 3.7 billion and said EBIT is expected to increase 8 percent annually thereafter up to the year 2020.
   “After the successful execution of Strategy 2015, the current year represents a year of transition. In the second quarter we worked very hard and took important steps towards the successful implementation of our Strategy 2020,” CEO Frank Appel said of the results. “With that, we want to ensure the long-term, profitable growth of the group. To achieve this, we have recorded some short-term impact on our results. At the same time, we are convinced that these measures will contribute to accelerated earnings growth in the next year and enable us to achieve all our targets set for 2016 and beyond.”