DP DHL reports mixed Q2 results as it struggles to emulate the e-commerce boom across the group


As is usually the case with Deutsche Post DHL the company’s performance over the past quarter has been both complex and divergent. Parts of the huge company are doing very well whilst other parts are doing fairly badly.

The top-line numbers show Q2 revenue of €14.7bn for the group, up 7.3% year-on-year, but EBIT falling by 18.1% to €53m. As with so many companies reporting in euros, the numbers have been flattered by the fall in the currency’s value over the past few months.

One of the most remarkable performances has been put in by the Post-ecommerce-Parcel (PeP) division. On the one hand the business had to cope with familiar single digit percentage falls in mail volumes and labour unrest in Germany which cost around €100m. On the other it saw a remarkable performance in the e-retailing exposed parcel business. Here volumes climbed strongly with parcel traffic in Germany up 8.1% year-on-year, leading to a jump in revenue in Germany of 9.3% and an increase in parcel revenue outside Europe of 26.3%. This confusing picture resulted in a rise in revenue of 1.9% year-on-year but a fall in EBIT of 60.3%, with the latter caused largely by the strike.

The Express business was almost as complex. Revenues were up strongly at 11.8% but currency movements disguised a less impressive underlying growth of 2.7%. EBIT was up by 13.6% and although it too was boosted by currency effects it also saw a hardening of margins.

The contract logistics business at DHL Supply Chain reflected the strategy of improving the quality of contracts, with an underlying revenue increase of 0.7%. However EBIT grew less rapidly and the figures were further complicated by restructuring charges and the sale of warehousing assets in London. The top line numbers of 11.8% growth in revenue and 9.2% in EBIT were fuelled largely by currency movements.

The major problem area continued to be freight forwarding. DHL’s Global Forwarding Freight division saw EBIT fall by 60.8% on revenue up 3.8% before stripping-out currency effects. The fall in profits was down to the cost of restructuring, something that has been ongoing for several quarters. In Q2 these costs were principally driven by an ambitious IT project. In fact the costs could have been worse than the figures show as the results are flattered by the sale of a €99m stake in Sinotrans.

DP-DHL’s CEO Frank Appel was keen to drive-home the message that the group’s ‘Strategy 2020’ was being realized. This is not inaccurate to the degree that, backed-up with heavy capital expenditure, the ambitions in the e-commerce market are being realized in both the PeP and Express businesses. However, as the Supply Chain division is still a work in progress and the Global Forwarding Freight division is still struggling, a great deal of progress needs to be made before the whole company can be said to be on track.