Express, parcel growth pushes Deutsche Post profits up 64%
Deutsche Post’s international DHL business and its domestic parcels unit has helped the logistics giant to earnings increases in a “subdued” global economy in the first quarter of the year. The company revealed its latest financial results today showing a 4.3% increase in group revenues, to EUR 13.4bn for the three months up to the end of March.
Net profits were up 64% to EUR 533bn as DHL took advantage of strong areas of growth, particularly in Asia, while domestic mail operations benefited from increasing parcel volumes, cost-cutting and the sale of the company’s remaining stake in the German Post Bank business.
The results come as Deutsche Post continues its Strategy 2015, which aims to review its business around the world, improve efficiency and withdraw from unprofitable activity.
This quarter saw the company expanding its international operations in places like India, the United States and Asia to Europe and America air routes, while cutting back on in-country operations like its DHL Global Mail activity in the UK.
Frank Appel, the Deutsche Post CEO, said the successful start to the year was evidence for his company to continue building on its strengths.
“The efficiency improvements we have achieved in recent years and and our unmatched position in the world’s growth markets have prepared us well for continuing on our profitable growth path,” Appel said.
“Building on this base, we will systematically keep on implementing Strategy 2015 in order to unlock the Group’s full potential.”
Deutsche Post DHL told investors to expect moderate growth from the world economy for the rest of the year, continued growth from its business and an increase in earnings going forward.
Divisions
Deutsche Post’s Mail division saw a 3% increase in revenues to EUR 3.6bn for the first quarter of 2012, compared to the same period last year.
The company said its volumes and revenues in the traditional mail services declined slightly, as expected, but this was countered by the growth in the parcel side of the business.
Flourishing online shopping helped parcel volumes climb 14% compared to the same quarter last year, as parcel volumes grew 13% to EUR 844m. Parcels now account for almost a quarter of the Mail division’s revenues, helping the division’s earnings before tax to increase 5% to EUR 393m.
In the Express division, revenues jumped 10% to more than EUR 3bn on the backs of a “solid” increase in Europe and double-digit growth in DHL’s other regions, with particular growth in Asia and the Americas, the latter driven by strong results in the US, where the company is investing nearly $50m over the next year in its Cincinnati hub.
Despite higher costs from the company’s operations and air network expansion, it said earnings before tax in the Express division grew 7.9% to EUR 231m in the first quarter.
Global Forwarding and Freight revenues were up 2.7% to EUR 3.7bn despite a decline in air and ocean freight revenues triggered by reduced ocean freight rates and declining air volumes, with European ground services offsetting the declines.
The Supply Chain business saw a 6% increase in its revenues, to EUR 3.4bn, on the back of strong growth in Asian markets, particularly the life sciences and healthcare segment and the automotive industry.
