The week that was: 11 March 2011

Earthquake disrupts services in Japan, DP DHL sees strong growth, and USPS posts January loss… Post and parcel services in Japan have been severely disrupted after an 8.9 magnitude earthquake triggered a devastating tsunami on Friday. The quake struck at 2.46pm local time, approximately 250 miles north east of Tokyo at a depth of 20 miles. As of Friday evening, hundreds of people had been reported dead, with vast numbers reported missing. The subsequent tsunami washed away cars, ships and buildings. Japan’s Kyodo News reported that the earthquake is “the strongest ever to have been observed in the quake-prone archipelago by the Japan Meteorological Agency”. FedEx suspended services across eastern Japan. Speaking to Post&Parcel, spokesperson Nira Gale said: “Our priority is the safety of our employees and the security of our customers’ packages. We are monitoring the situation closely. At this stage, all pick up and deliveries in East Japan are suspended. We are continuing to accept shipments to Japan. We urge our customers to go to fedex.com or contact the local Customer Service team for the status of their shipments.” A TNT spokesperson told Post&Parcel that none of the company’s employees had been injured in the earthquake. He confirmed that services had been suspended across the affected region, with the company still gathering information. A DHL spokesperson said: “Deutsche Post DHL extends its sympathy to the people that are affected. First reports indicate that DHL staff are safe, although DHL buildings in Tokyo and along the east coast have been damaged. DHL’s operations have been affected across north-eastern Japan and investigations are underway on the full extent of the impact. Meanwhile, a tsunami warning has been extended across the Pacific. We’re closely monitoring the situation and updating customers of the impact.” (Service updates above were correct as of Friday evening).

In Germany, Deutsche Post DHL described its financial performance as “strong” for 2010, as Group revenue soared 11.4% to EUR 51.5bn. The company “significantly increased its revenues” and “strongly improved its profitability”. This was achieved despite a slight drop in revenue in the MAIL division, caused in part by “a regulatory change in value-added tax that took effect in mid-2010″. However, this was more than offset by “vigorous top-line growth in all DHL divisions”. DHL divisions were boosted by the acquisition of new customers, whilst positive currency effects also contributed to the improvement. Overall, Group revenues climbed by 11.4% to EUR 51.5bn. Thanks to margin improvements at DHL, the increase of the Group’s operating profit was “substantially higher”. Underlying EBIT stood at EUR 2.2bn, 50% higher than the previous year’s level. Deutsche Post DHL also exceeded the “upper end of the upgraded guidance for the company’s operating earnings by more than EUR 100m”. With an operating profit of EUR 1.45bn (2009: EUR 378m), for the first time the DHL divisions contributed more to overall earnings than the MAIL division, which generated an underlying EBIT of EUR 1.15bn in 2010 (2009: EUR 1.4bn). In 2009, net profit totaled EUR 644m. In 2010, it had climbed to over EUR 2.5bn. This represents a rise in earnings per share from EUR 0.53 in 2009 to EUR 2.10 in 2010. A statement confirmed that the Group had comfortably exceeded its targets: “Originally, the Group had forecast that underlying EBIT would rise to between EUR 1.6bn and EUR 1.9bn. In combination with positive effects from the sale of Postbank, the efficiency improvements also produced a fourfold increase in the company’s net profit to EUR 2.5bn in financial year 2010.” Frank Appel, CEO of Deutsche Post DHL, said: “Our strong performance in 2010 clearly demonstrates that we positioned ourselves at an early stage to be fit for the economic upswing and that our Strategy 2015 is increasingly bearing fruit. This past year was an important milestone on our way to sustainably increasing the company’s earnings strength.”

The US Postal Service has posted a loss of $451m for the month of January – a 23% improvement on the $592m loss in the same month last year, despite continuing mail volume declines. According to unaudited preliminary figures released by the Postal Regulatory Commission, for the first four months of its 2011 fiscal year the USPS saw a decrease in its losses from $890m to $780m, compared to the same period in the fiscal year 2010. For the month of January 2011, mail and service revenues for the USPS fell by 2%, to $5.457bn for the month. The First Class Mail decline wasn’t quite as steep as previous months, but the growth in Standard Mail appeared slower than in USPS results posted in the fall. Cost-cutting measures have meant the overall performance for January 2011 was an improvement on the same month in 2010, with much of the savings achieved through a 3.6% cut in staff costs. The Postal Service reduced its staff work hours by 3.3% for the month of January, with particular cuts in mail processing (5.7% cut in work hours), customer services (5.3% cut) and rural deliveries (4% cut) compared to the same period last year. Overall, the USPS stated that its volumes dropped by 1.3% compared to January 2010, to 13.7bn pieces for the month of January 2011. Revenues for postal services dropped by 2% to $5.46bn for the month. The Postal Service “cash cow”, First Class Mail, saw a 3.9% drop in volumes in January to just over 6.6bn pieces for the month, and a 4.1% drop in revenues compared to the same month last year, to just over $2.8bn. This First Class Mail decline was not as bad as the 5.2% decline for the whole of the first four months of fiscal year 2011, and corresponding 5.4% in revenues for that period. However, January’s 8% volume decline in the package segment compared to the same month in 2010 bucked the 1.4% year-on-year increase in volumes seen for the first four months of fiscal year 2011. Standard Mail volumes rose 1.4% in January, to just under 6.4bn pieces, with revenues for the service rising 0.6% to just over $1.3bn for the month. But, this was slower growth than the 7% volume growth and 5.7% revenue growth seen for the fiscal year to date.

And finally…

PosTech 2011 is only days away. The leading event is taking place in Dubai on 14-16 March. Click here for more details. Post&Parcel will be there reporting on the big stories – so stay tuned!