Deutsche Post sales grow 7.3%, earnings hit by VAT repayment
Deutsche Post DHL raised its predictions for its performance in the rest of this year today, as it recorded a 7.3% increase in revenues, driven particularly by the DHL business and the Asian region. However, while underlying profitability improved, some major State Aid and tax repayments to the government knocked the company’s earnings for the second quarter of the year.
The three months to the end of June saw revenues grow by almost EUR 1bn to EUR 13.7bn, helped by favourable exchange rates, to exceed growth levels seen in the first quarter of 2012.
The company’s parcel business brought double-digit growth, but even the company’s traditional mail business saw positive movement.
Deutsche Post said its profitability improved but for a EUR 181m one-time VAT repayment to the German government from the Mail division, while it was also hit by a EUR 298m repayment of state aid.
The upshot was that the company’s consolidated net profit for the quarter fell by EUR 77m (28%) compared to the same period in 2011, to EUR 201m. Earnings per share fell from EUR 0.23 to EUR 0.17 for the quarter.
During the first half of 2012, the company has seen its overall revenues grow by EUR 1.5bn or 5.8% compared to the first half of 2011, to EUR 27.1bn. Profit levels have increased 22% to EUR 734m.
The company said looking ahead, it believed the world economy would grow moderately in the second half of 2012, with DHL growing more than previously expected as a result. Executives upped their earnings forecast by EUR 100m to between EUR 2.6bn and EUR 2.7bn for the 2012 financial year.
Deutsche Post DHL said it now believed it would see its earnings grow by an average of 13-15% between 2010 and 2015.
Frank Appel, the Deutsche Post DHL chief executive, said his company was continuing to perform well.
“The excellent market positions of our brands and divisions in the world’s growth markets are paying off,” he said. “We have a strong foundation for generating long-term improvements in revenues.”
Mail division
Deutsche Post said its Mail division achieved growth close to 1% in its revenues, to EUR 3.3bn for the second quarter of the year.
Volumes and revenues in the traditional letter segment did fall around 3% since there was one less work day during the quarter than in the same period in 2011. But, the company said its parcels business more than offset the impact.
Parcel revenues increased by more than 12% to EUR 797m for the three months to June 2012, the company revealed, and now generates a quarter of all revenues in the Mail division.
Overall earnings before tax for the Mail division fell by almost 80% to EUR 38m owing to the VAT payment ordered by the German government in June, which followed a review of tax payments from 1998 to 2010.
Without the VAT impact, Deutsche Post said its Mail division would have seen its earnings increase 2%. The company has recently invested hundreds of millions in new sorting systems for both letters and parcels in Germany to further improve efficiency and profitability going forward, while other cost-cutting measures are also ongoing.
Express division
DHL has just invested $175m in its new North Asia hub to continue growth in the Asia Pacific region
As expected, Deutsche Post DHL’s express activities continued to grow revenues, particularly in Asia and the Americas.
Revenues in express grew 10.7% during the second quarter, to EUR 3.2bn, with double-digit improvements in all regions except Europe.
The company noted its strong business in the United States, as well as Asia, while the quarter also saw the termination of its joint venture parcels businesses with New Zealand Post in both New Zealand and Australia, which resulted in a EUR 143m boost to profitability in the Express division.
Overall, earnings before tax in the Express division soared by more than 50% to EUR 367m, although adjusted for one-time impacts, the growth would have more like 5%.
Global Forwarding and Supply Chain
In the DHL forwarding, freight and supply chain businesses, good growth came in revenues – growth of 5.7% in forwarding and freight, 12.7% in supply chain – with the assistance of currency effects and improvements in air freight purchasing conditions.
Forwarding and freight revenues rose to EUR 3.8bn for the quarter, supply chain revenues rose to EUR 3.5bn compared to the same period last year.
Earnings jumped by 19.1% to EUR 137m in forwarding and freight, but in supply chain fell by 9% to EUR 101m, since last year’s supply chain result was affected by the sale of a US subsidiary.
As with the express side of the business, Deutsche Post DHL noted the strength of its performances in Asia, where it has just opened a new $175m North Asia hub in Shanghai and a new MegaHub in Hong Kong.
In the supply chain business, the company said it was also seeing particular strength in key market segments including automotive and the healthcare industry.
