Deutsche Post DHL has had a similar half-year to that experienced by UPS in that e-commerce has propelled its business forward at an impressive rate, whilst its forwarding business continues to struggle.
The figures that have just been published for the first half of 2016 show revenue for the whole Group falling by 4.8% to €28,062m year-on-year. Operating profits, in-terms of Earnings Before Interest and Tax (EBIT) jumped ahead by 29.3% to €1,625m. The latter was driven by a combination of growth at the ‘Post-eCommerce-Parcel’ (PeP) business and relative recovery at Freight Forwarding.
The performance by the PeP division was propelled by a strong rise in e-retailing. Volumes were up in Germany, the rest of Europe and worldwide, leading to a 5.0% increase in revenue (€8,201m) and a 39% increase in EBIT (€659m). The profit numbers were flattered by effects of strikes in 2015, however the e-commerce specific parts of the business are growing in double digits.
Express also benefitted from internet retailing, with volumes increasing in major markets in mid-to-high single digits, with revenue depressed only by the effects of currency and falls in fuel surcharges. EBIT was up by 9.7% to €777m as margins hardened and asset utilisation improved.
However, the problems remained. Global Forwarding, Freight (GFF) saw EBIT more than double, whilst revenue fell heavily. The recovering profitability was relative, up from H1 2015’s €57m to €120m for H1 2016. Global Forwarding is still seeing falling volumes. Essentially, what appears to be happening is that GFF is contending with the effects of rationalising its business, withdrawing from unprofitable segments and decline in particular sectors such as oil and gas. These factors drove a 7.7% fall in air forwarding revenues, although the fall in freight rates was also a major contributor. Ocean freight was very volatile.
Contract Logistics registered a significant fall in revenues, however this was due to a change in how one major contract was booked. Overall it appears that profitability is heading upwards, with operating profits up 33.1% year-on-year to €229m. Return on sales is now around the industry average of 3.3%.
As ever DPDHL’s numbers are clouded by exceptional items, yet it does appear that the company is moving in the right direction with continued improvement at Supply Chain complementing its success in various aspects of eCommerce. The one exception is the continuing need to fix Global Forwarding.
Source: Transport Intelligence, August 4, 2016
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)