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DHL reduces loss in US Express

Posted by | Nov 9, 2006 | |

Deutsche Post announced yesterday, 3rd Quarter results up by a third on 2005. But the performance of its US Express division is a continuing cause for concern, dragging the rest of the Express business and the whole group down.

Headline growth was impressive, with consolidated revenue up by 35% to *14,887m and EBIT up 40% to *1.03bn compared with the same period last year. But these figures are flattered by the acquisition of Exel in early 2006.

The logistics business continues to perform reasonably. The Exel acquisition is running smoothly and the Division as a whole is gaining market-share. Revenue for the nine months was up to *16 billion, with *8.6billion coming from the acquisition of Exel. EBIT for the year-to-date was *513 million.

The problem area remains Express. The US Express division continues to lose money, although losses have been reduced by what was called a “three digit million euro amount”. CEO, Klaus Zumwinkel stated both in comments to analysts and in an interview earlier this week that the US Express business had 10% market share and that if it achieved 12% “we would be very happy”. Elsewhere the company described growth in Express as strong, with double-digit growth in revenue in Asia-Pacific. Overall results for Express revenue were down over Q3 2005 by 2.8% at *3,755million but EBIT was back in positive territory at *86million.

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Exel takeover fuels growth at Deutsche Post

Posted by | Nov 9, 2006 | |

German logistics and mail giant Deutsche Post has reported double-digit growth both in turnover and profits for the third quarter of the year.

Turnover rose by 35% to Euro14.9bn (USD17,4bn) compared with the third quarter a year earlier, while net profits added 30% to Euro537m.

The increases were driven by the integration of British supply chain giant Exel and financial group BHW as well as through organic growth, the former monopoly said.

The main contributor to the company results was again the logistics division, which is the strongest segment. Thanks to Exel, turnover increased by 100% to Euro6.1bn compared with the third quarter a year ago, while earnings before income and tax surged 70% to Euro189m.

‘We have achieved growth by the integration of Exel as well as by organic growth,’ a spokeswoman for the logistics giant said. The integration had not been an obstacle, but a driver for growth, she added.

In September, DP clinched a GBP1.6bn (USD3bn) logistics services contract with the British government. The company will provide all procurement and logistics services for 600 hospitals and other health providers.

Over the first nine months of this year the logistics division achieved turnover of Euro16bn, of which Euro8.61bn stemmed from newly acquired companies. Most of the latter figure was directly attributable to the purchase of Exel.

Seafreight transport volumes in the quarter increased by 82% to 574,000 teu and air freight performed slightly better with an 84% rise to 1.1m tonnes. Turnover from seafreight amounted to Euro736m, up 52%. Air freight also saw a 52% increase to Euro1.2bn.

The company’s shares dipped 2.2% to euro21.87 yesterday afternoon on analysts’ predictions that even better results should be expected.

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Deutsche Post reports 30% rise in Q3 profit

Posted by | Nov 9, 2006 | |

German logistics conglomerate Deutsche Post World Net has reported a double-digit increase in revenue and earnings in the third quarter through September.

Consolidated revenue rose by 35% from E11.0 billion to E14.9 billion in the period, boosted by the acquisitions of logistics service provider Exel and financial service provider BHW.Profit from operating activities (EBIT) rose by 40.1% to E1.03 billion, including the expected income of E276 million from calling the exchangeable bond on Postbank stock in July prior to maturity. Consolidated net profit was E537 million in the third quarter of 2006, compared to E412 million in the year-earlier quarter, corresponding to a 30.3% increase. “On the whole, the company is doing well: Logistics and Postbank continue to post exceptionally strong performance and have made rapid progress with respect to integration. At the bank we were even able to finalize the process earlier than planned,” said Edgar Ernst, CFO. “The mail and express divisions, which both suffered a drop in earnings in the second quarter, posted higher profits again in the third quarter. In view of the traditionally strong Christmas quarter, I am very confident for the remaining weeks of the year.”Deutsche Post World Net is the parent company of global express and logistics business DHL, and, following the 2005 purchase of Exel, is the largest contract logistics company globally.

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German DHL can open cargo hub at Lepizig/Halle

Posted by | Nov 9, 2006 | |

DHL, the express and logistics unit of German postal services group Deutsche Post AG, has cleared its way to establishing its own cargo hub at the Leipzig/Halle airport, following a decision by the District Court in Leipzig, allowing nighttime landings and takeoffs only for cargo aircraft, it was reported on November 9, 2006.

The ban is pending the approval of the regional council.

The court ruling has thus ensured Leipzig/Halle’s becoming an international cargo hub airport.

The reconstruction of the new 290 mln euro (USD369.9 mln) southern runway is progressing according to plan and is scheduled to start operation by the summer of 2007.

However, due to the excessive noise caused by the night flights, the court has retained its right to further revise the matter.

[Editor’s note: In May 2005, the court ruled against a collective lawsuit filed by a citizens’ committee which sought to shut down the new 24-hour-operation runway project, pointing out that it would create more than 10,000 jobs by 2008. The project for turning the Leipzig/Halle airport into a cargo hub airport involved the extension and reconstruction of the airport’s southern runway by 3,600 metres, the German News Digest reported on May 20, 2005.]

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Wincanton H1 pretax profit up 6.3 pct; targets more acquisitions

Posted by | Nov 9, 2006 | |

Wincanton PLC, the pan-European logistics group, has reported a 6.3 pct rise in first-half underlying pretax profit, with a robust performance from its UK and Ireland business offsetting a weaker outturn in mainland Europe. Analysts regard Wincanton as a prime target in a consolidating logistics market.

In the UK it is the second-largest player after Exel, which was acquired for 5.5 bln eur by Deutsche Post AG last year. Christian Salvesen PLC and TDG PLC are the UK’s third- and fourth-largest players respectively.

For the six months to Sept 30, Wincanton made an underlying profit before tax of 17.0 mln stg, broadly in line with analysts’ expectations and up from 16.0 mln stg last time, on revenue that was up 5.9 pct to 931.8 mln stg. Pretax profit was flat at 15.1 mln stg versus 15.2 mln stg.

Underlying operating profit rose 7 pct to 21.4 mln stg. Operating profit in the UK and Ireland rose 10 pct to 20.0 mln stg, with the division benefiting from contract wins and renewals.

In September, Somerfield, the supermarket group, extended its logistics provider contract with Wincanton for five years. Wincanton reckons the contract will generate turnover of some 900 mln stg.

It expects the momentum of the UK and Ireland business to continue into the second half, supplemented by contributions from its recent acquisitions — RDL Holdings Ltd and Lane PLC, purchased in October for up to 35 mln stg.

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DHL and Vietnam Post form joint venture in Vietnam

Posted by | Nov 9, 2006 | |

German express delivery company DHL has formed a Vietnamese joint venture with the state-owned Vietnam Post and Telecommunications Group (VNPT), the companies said.

DHL, which has been a partner of VNPT for 18 years, holds 51 pct of the DHL-VNPT Express Ltd joint venture, worth 5.5 mln usd.

The company is run by German mail service Deutsche Post.

‘This joint venture strongly demonstrates DHL’s commitment to the Vietnamese market and our faith in Vietnam’s economy and its growth prospects,’ said Stephen Fenwick, DHL’s senior vice president for South Asia and Indochina.

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UPS plans more international acquisitions

Posted by | Nov 9, 2006 | |

UPS will continue to buy express and parcel companies around the world to expand its highly profitable international business, according to senior executives. At the same time, it aims to grow its air freight and supply chain logistics activities to penetrate its large customer base more deeply.

“We will make acquisitions as we see fit around the world,” CEO Mike Eskew told the company’s November 8 Investor Day conference. Chief Financial Officer Scott Davis added that UPS saw “ acquisition opportunities” in the global small package business but stressed the company would be careful in selecting these takeovers.

Davis pointed out that UPS aimed for International to grow to 33% of operating profits by 2010 compared to 24% in 2006, with supply chain doubling to 7% and domestic operating profits dropping from 73% to 60% of overall operating income. UPS aimed to maintain or extend its international profit margins and maximise international operating profits, he added.

David Abney, head of UPS’s international business, said in a presentation that Europe now generated about 50% of UPS’ international revenues, ahead of 30% for the Americas (including US exports) and 20% for Asia. In Europe, UPS aimed to grow organically and through selective acquisitions, while deepening customer relationships and differentiating products in core markets such as Germany and the UK.

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Royal Mail rivals fail to dent lead

Posted by | Nov 8, 2006 | |

Deregulation of the postal industry has not yet severely damaged Royal Mail’s position as the main provider of post to businesses, according to Postcomm’s annual Competitive Market Review.

The watchdog’s report shows that Royal Mail still serves 99% of businesses – the same as in 2005. The postal services market was opened to full competition on 1 January.

Royal Mail’s rivals, led by TNT Post UK, DX Network Services and DHL Global Mail, appear to be expanding their customer base, albeit from a very low starting point. These competitors are used by 6.7% of businesses for at least some of their direct mail – four times more than in 2005.

‘Although Royal Mail remains by far the biggest operator, competition has encouraged it to raise its game,’ said Postcomm chief executive Sarah Chambers.

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