DHL’s ‘moderate start’ to 2015

Deutsche Post DHL Group saw net profits fall 1.4% in first quarter 2015 despite an 8.8% increase in revenues.    Deutsche Post DHL Group saw consolidated net profits fall 1.4 percent to 495 million euros (U.S. $557.15 million) in the first quarter of 2015 compared to the first quarter of 2014, according to the company’s latest financial statements. The decrease came despite an 8.8 percent year-over-year increase in group revenues to 14.77 billion euros.
   DHL attributed the lower profits primarily to weak performance in its Global Forwarding and Freight division and planned, non-recurring restructuring costs in its Supply Chain division.
   The mail carrier and logistics provider’s Post-eCommerce-Parcel (PeP) division increased earnings before interest and tax (EBIT) 0.8 percent to 399 million euros in Q1 2015, thanks to 3.6 percent revenue growth to 4.1 billion euros. DHL’s eCommerce-Parcel business contributed 1.5 billion euros of overall Q1 2015 revenues, an increase of 13.7 percent compared to Q1 2014, while revenues in its Post business fell 1.7 percent to 2.6 billion euros.
   The company’s Express division saw operating profits increase 20.3 percent to 332 million euros in the first quarter thanks to a 12.5 percent increase in revenues to 3.2 billion euros compared to the same period the previous year.
   By contrast, DHL’s Global Forwarding and Freight division reported a 65.3 percent drop in EBIT to 17 million euros despite a 7.6 percent increase in reported revenues to 3.8 billion euros. The company attributed the decline primarily to “the impact of the division’s transformation program and continued margin pressure within the overall market.” Ocean freight volumes in the Global Forwarding and Freight segment grew 2.3 percent in the first quarter, while airfreight volumes increased 0.3 percent compared to the first quarter of 2014.
   Similarly, operating profits in the company’s Supply Chain division also fell 37.6 percent to 53 million euros despite revenues increasing 12.4 percent to 3.9 billion euros. The decline in profits was “due principally to non-recurring costs for the division’s optimization program,” and it “intends to take advantage of the optimization program to increase margins to 4 percent to 5 percent by 2020 through further standardization, greater efficiency and improved utilization of economies of scale,” said DHL.
   “We saw a moderate start to the year, as we expected,” Deutsche Post DHL Group CEO Frank Appel said of the results. “Our strategy, aimed at growth in e-commerce and the emerging markets, in particular, is progressing.
   “At the same time, as we transition from Strategy 2015 to our new Strategy 2020, we are now consciously undertaking a number of specific measures,” Appel added. “These measures will allow us to build a strong base to bring our strategic priorities forward. We are investing significantly to ensure that our four divisions are optimally positioned, even though this is having a temporary impact on our performance, as we previously discussed. Our overarching focus today is on the sustainable, profitable growth of our business.”
   Looking forward to the rest of 2015 and 2016, Deutsche Post DHL Group confirmed its previous long-term earnings estimates. The company expects operating profits of between 3.05 billion euros and 3.2 billion euros for the full year in 2015 and a further increase in EBIT to between 3.4 billion euros and 3.7 billion euros in 2016.