DP-DHL modest growth led by strong Express

Revenue year-on-year was up 1.2% (although as so often with DP-DHL the base figure has been ‘adjusted’) whilst EBIT (Earnings Before Interest and Tax) was up 2.3%.

Yet digging down into the individual businesses seems to show a better performance.

What used to be called Deutsche Post Mail and what is now called ‘Post – eCommerce – Parcel’ or ‘PeP’ saw an increase of 2.1% in the number of items handled and an increase in postal rates helped push-up revenues by 6.5%. Costs have been the Achilles heel of what in the past has been the most successful business in DP-DHL’s portfolio and the increase in wage costs drove-down profits, with just a 0.3% increase in EBIT.

The other business heavily exposed to e-commerce, DHL Express, saw stronger results dampened by the effects of a rise in the value of the Euro. Volumes in its higher value services increased strongly driving-up revenues by 2.3% and EBIT by 14.1%. DHL Express claim that revenue before the effects of adverse foreign exchange movements would have be up over 8%.

Currency movements hit the freight forwarding business of DHL even harder, driving revenue down by 2.2% as opposed to underlying growth of 2.5%. Yet beyond this, EBIT crashed by 44.8% in the face of investment costs and lower gross profit margins.

At the contract logistics business, DHL Supply Chain, business was fairly flat with revenue up 1% and EBIT up 1.2%, although DP-DHL asserted that ‘organic’ growth is over 6%.

As ever DP-DHL’s numbers are complex, however it is clear that the strongest performing business is DHL Express with what must be a class leading performance, whilst both freight forwarding and contract logistics are still finding growth tough. The PeP business continues to struggle with costs and is not growing quite as fast as might be expected from an e-commerce exposed business.