Deutsche Post DHL delivered in the usual way in 2017


There appear to be few surprises for good or ill in Deutsche Post DHL Group’s annual results for 2017.

The businesses that normally deliver did so whilst the problem areas continued to be problematic.

As usual, the Express business did very well. Volume increases were up by double digit percentages and despite rises in freight costs the company was able to expand margins by increasing exposure to higher value services. Consequently, operating profits increased by 12.4% to €1.7bn.

The other consistent performer is ‘Post – eCommerce – Parcel’ or ‘PeP’. It continues to be driven by e-retail related parcel volumes with these increasing by 7.8% whilst sales were up by 10.3%. This business is dominated by the German market, however PeP’s exposure to the British market leapt by 65% with the purchase of UK Mail in the year. As ever though, these results were balanced by falls in conventional mail volumes so operating profit was a not hugely exciting €1.5bn, an increase year-on-year of 3.9%.

The results for Global Forwarding, Freight were not quite as straightforward. The good news was there has been no return to the systemic problems of the past, rather it was just a difficult trading environment particularly in the first half of the year with margins being squeezed. However, it is notable that Global Forwarding said that “the division was increasingly able to pass on the higher prices to its customers” which is in contrast to the situation described by Kuehne + Nagel earlier in the week. The division’s revenue edged up by 5.4% to €14.5bn and EBIT was 3.5% higher at €297m. Air and ocean freight volumes increased by 8.6% and 6.5% respectively. DHL Global Forwarding’s Air freight volume growth of 8.6% was roughly in line with global market, whereas its ocean volume growth of 6.5% exceeded market performance.

The Supply Chain contract logistics business had something of a tricky year. Its underlying numbers seem reasonable, however a “one-off effect resulting from a write-down of customer relationship assets”, which was not elaborated on, depressed profits. Such write-offs are part of the business of contract logistics. Over 2017, revenue was up 1.4% to €14.2bn but operating profit fell by 3.0% to €555m. Looking forward, the division seems to be expanding with a clear direction, particularly in areas such as automotive.

Overall Deutsche Post DHL Group saw revenue increase by 5.4% over the year to €60.4bn, whilst EBIT was up by 7.2% to €3,741m.

These numbers appear stable if not hugely exciting. The growth businesses of Express and PeP continue to pull the company along. Global Forwarding and Supply Chain have recovered from problems but are still not really delivering at the same level as other parts of the Group.

Source: Transport Intelligence, March 8, 2018

Author: Thomas Cullen

GSCi

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