Deutsche Post DHL Group reported that its revenues were up by 7.3% year-on-year to €14.9bn in the first quarter of 2017. All four divisions contributed, though the company emphasised that volumes and revenues saw “substantial growth in particular in the German and international Parcel and eCommerce businesses as well as the global Express business”.
Group EBIT in the first quarter was the highest in the Group’s history, up by 1.4% to €885m. Adjusted for the non-recurring positive effect posted by Supply Chain in 2016, the increase in EBIT was 6.0%. The improvement in the Group’s profitability was driven largely by Express, with a significant double-digit growth in operating profit.
In the Post – eCommerce – Parcel (PeP) division, revenues were up by 6.4% to €4.5bn in Q1. This was mainly due to volume and revenue growth in the eCommerce – Parcel unit, which saw revenues grow by 17.5% to €2.0bn. Parcel Germany had revenue and volume growth of 6.1% and 9.4% respectively, eCommerce had revenue growth of 13.7% while Parcel Europe’s figure was 70.3%, mainly thanks to the inclusion of UK Mail revenues following its acquisition in December 2016. In Q1, UK Mail had revenues of €139m. At the beginning of the year, the division also extended its European network to include Spain and Portugal. DHL also asserted that its international eCommerce, domestic U.S. and cross-border Asian businesses, were growing particularly dynamically. As for the Post unit, revenues fell by 1.2% to €2.5bn due to structural volume declines mainly in the area of Mail Communication. EBIT for the PeP division overall was €425m, up from €414m a year ago.
In Express, both revenues and earnings expanded at double-digit rates (13.0% and 11.5% respectively). Revenues improved largely due to volume growth of 8.0% (daily volumes) in the international time-definite (TDI) delivery business, coupled with “successful” yield management. EBIT of €396m was put down to “further network enhancements, rapid international growth and pricing initiatives”, with the operating margin standing at 11.0%.
In Global Forwarding, Freight, revenues were up by 6.6% to €3.5bn. In line with the positive market trend, the division registered significant growth in revenue and volumes in both its air freight and ocean freight businesses. In air freight, tonnage handled was up by 13.9%, thanks to new business wins from the previous year. However due to contract structures, year-on-year rate increases from carriers can only be passed on to customers with a delay, limiting revenue gains to 6.9% in the quarter. As a result, air freight gross profit fell by 1.4%. Ocean freight TEU volumes increased by 6.4%, mainly thanks to growth on Asia to Europe trades, and to a lesser extent, Transpacific trades. Freight rates increased considerably on most trade lanes, in some cases due to capacity shortages. As with air freight, the pattern was one of revenue growth (3.7%) but a gross profit decline (-0.6%).
In the European overland business (Freight), revenues increased by 3.4% to €1,080m on the back of 5.4% volume growth. This was driven largely by e-commerce business in Sweden and LTL business in Germany. Gross profit increased by 2.2%. However, EBIT for the Global Forwarding, Freight division overall fell from €51m to €40m thanks to the dynamics in air and ocean.
As for DHL Supply Chain, the division reported “positive operating performance” in all regions. Revenues improved by 3.8% to €3.5bn. Additional contracts worth €192m were won from new and existing customers in the quarter. Compared to the previous year, the Life Sciences & Healthcare and Technology sectors reported the best revenue growth. Although EBIT fell from €127m to €99m, adjusted for the net one-off effect of €38m recorded in 2016, Q1 2017 EBIT increased by 11.2% year-on-year.
Source: Deutsche Post DHL Group