Ecommerce inspires 70% profit boost in Deutsche Post third quarter

Deutsche Post lifted its forecast for the rest of 2011, after making a 70% increase in net profit in its latest quarter partly thanks to strong growth in parcel volumes. The world’s biggest logistics company issued its third quarter results this morning, showing a stronger than expected performance in its Mail division and at DHL.

Group revenues increased 2.5% compared to the same quarter last year, to EUR 13.1bn. Adjusting for currency movements and one-off consolidation costs, the growth was 5.7%. Operating earnings grew by 18.5% to EUR 646m.

Profits for the Group increased to EUR 385m during the three months up to the end of September, a 70.4% increase on last year’s third quarter.

Frank Appel, the Deutsche Post CEO, said: “We are located in all of the regions and markets that continue to generate particularly strong growth: in the emerging markets in Asia, the Middle East and Latin America as well as in the dynamic German parcel market.”

Growth

Deutsche Post said an 11% growth in parcel volumes, prompted by the exploding e-commerce market, was particularly apparent in the upward trend in its Mail division, which is now expected to contribute EUR 1.1bn to Group earnings in the full year 2011, EUR 100m more than previously anticipated.

Mail revenues in the third quarter were up 2.6% year-on-year to EUR 3.4bn, with parcels revenue up 10% to EUR 748m in the quarter.

DHL has been positioned well in growth markets, even in Asia where other global integrators have struggled in this third quarter, the company said, as express division revenues grew 7.7% to EUR 2.9bn for the quarter and forwarding/freight revenues increased 1.9% to EUR 3.8bn. Supply chain revenues remained at last year’s level.

The company said its air and ocean freight business came under pressure during the quarter, but its overland transport business saw strong gains thanks to lower freight rates and selective focus on particularly attractive business areas.

Going forward, Deutsche Post had previously predicted that earnings before tax for the full 2011 year would be in the EUR 2.2bn to 2.4bn range, but said today it now expected EBIT to be above the EUR 2.4bn level.

In the year to date, the company has seen its revenues increase 3.2% to EUR 38.8bn, or 6% rise when currency and consolidation is taken into account. Operating earnings in the nine months to September were up 40% to EUR 1.8bn.

The improvement has come as the culmination of years of operational improvements, the company said.

During the third quarter, Deutsche Post increased its capital investment by 50%, to EUR 418m, including spending on its aircraft fleet, warehouse network, in new vehicles and “high-end” IT infrastructure.

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