DP-DHL led by its mail business again

Deutsche Post-DHL (DP-DHL) performance, as shown in its full year figures released yesterday (March 12, 2013), contains few surprises, but rather reflects the trends in the wider logistics market. DP-DHL’s response to these trends has been mixed.

As so often with DP-DHL it has been the legacy business of Deutsche Post that performed the best. Not only does it keep-on making money but now appears to be a long-term growth prospect. Parcel volumes increased by 7.4% over 2013 and account for 26% of volumes. As a result overall volumes increased even though the number of letters fell. The Mail business’ revenue went up 3.4% (allowing for all the normal shifting around of assets that DP-DHL are so prone to) and its Earnings Before Interest and Tax (EBIT) increased by 17% to €1,226m.

The Express business was slightly disappointing given that DHL Express has given off some very optimistic signals about the buoyancy of its ‘Time Definite International’ (TDI) business. Admittedly, DHL sold some of its domestic express businesses which depressed revenue, but unadjusted revenue fell by 0.5% year-on-year, however EBIT increased by 2.1%. Margins generally hardened due to the growth of the premium international services. However, even the TDI shipments margins seemed under pressure over 2013.

Things in Freight Forwarding were worse. In contrast to a number of its larger competitors DHL Forwarder saw falling volumes in both air and sea freight. In terms of tonnes, air freight fell year-on-year by 4.8% whilst sea freight fell in terms of TEUs by 1.2%. Part of the reason for this was the wish to retain margin in a tough market, although these remained flat leading to a fall in revenue year-on-year of 5.3% and fall in EBIT of 6%.

The Supply Chain division had a tighter grip on the market. Although revenues fell, again DHL attributed this to the sale of certain businesses with underlying revenue up 6%. The company state that the business continued to gain new contracts at an increasing rate in sectors such as automotive and healthcare. EBIT was up 5.3% year-on-year to €441m.

DP-DHL’s problems have shifted from its contract logistics business to its forwarding division. Express is strong in relation to its competitors but it is really the Mail business that is driving performance.