Deutsche Post results down despite higher logistics, express figures
Double-digit revenue growth and improved operating profits from express and logistics activities were not enough to enable the Deutsche Post World Net group to maintain its high level of profits in the first quarter.
First-quarter net income at the German mail-to-logistics giant fell 12 percent to 441 million euros ($522 million) from 500 million euros in the same quarter of 2003, as group revenues rose 8 percent to 10.5 billion euros ($12.3 billion) from 9.8 billion euros. Deutsche Post said the increase in group revenue was driven by growth in its express and logistics divisions, which include DHL, DHL Air & Ocean and the former activities of Airborne.
By contrast, the group’s mail and financial business saw declines in their revenues in the first quarter.
Group earnings before interest, tax and goodwill amortization declined 2 percent in the latest quarter to 930 million euros ($1.1 billion).
“This was mainly due to a decline in revenues from business clients in the mail corporate division and integration costs in the express corporate division,” said Deutsche Post, referring to the takeover of Airborne. Deutsche Post’s highly profitable mail business suffered a 6-percent fall in earnings before interest, tax and goodwill amortization, to 749 million euros ($883 million) in the latest quarter.
Express activities made earnings before interest, tax and goodwill amortization of 41 million euros ($48 million) up 17 percent from the first quarter of 2003, as revenue jumped 26 percent to 4.3 billion euros ($5.1 billion).
Logistics services improved their earnings 44 percent to 59 million euros ($70 million), with revenues up 11 percent to 1.5 billion euros ($1.8 billion).
Revenue growth for the express division was helped by last year’s acquisition of Airborne. “In the Americas region, sales more than doubled to 1.06 billion euros in the first quarter compared with 430 million euros in the year-ago period,” Deutsche Post said. “Just six months after the takeover, Deutsche Post World Net has already made good progress in the U.S. with integrating Airborne.”
In the Americas region, express activities incurred a loss before interest and amortization of 147 million euros ($173 million) in the latest quarter, after costs of 49 million euros ($58 million) for the integration of the DHL and Airborne networks. Deutsche Post expects its express business in the Americas to break even in 2005.
Within the logistics division, revenue growth at DHL Danzas Air & Ocean, the group’s freight forwarding arm, “was substantial and helped compensate for negative currency effects,” Deutsche Post said.
Deutsche Post maintained its forecast that it expects to raise its operating earnings 5 to 10 percent this year and to reach at least 3.6 billion euros ($4.2 billion) in 2005. If it attains this, the German group will move close to the profitability of its U.S. rival UPS, which made an operating profit of $4.4 billion in 2003.