DHL boosts profits in Q2

Deutsche Post DHL more than doubled its EBIT in the second quarter of 2011, and tripled its consolidated net profit. During the second quarter of 2011, Deutsche Post DHL continued the strong performance it showed in the first three months of the year, with Group revenues climbing 0.3% to €12.8 billion from April to June 2011 compared with the same period last year.

Adjusted for inorganic and exchange-rate effects, Group revenues were up 5.8%, driven by strong growth at DHL and the German parcel business.

The Group also increased its EBIT to €562 million, more than double that of the prior year period. The improvement in consolidated net profit was even stronger: at €278 million, it was more than triple that of the prior year period.

The DHL divisions produced €471 million of the Group’s operating earnings in Q2, nearly four times more than in the same period last year (2010: €122m).

At €3.3 billion, Q2 revenues in the Mail division remained stable compared with the prior year. While volumes stabilised, revenue in the traditional mail business continued to decline as a result of discounts offered to customers following the imposition of the value-added tax in July 2010. However, continuing momentum in the parcel business almost completely offset this reduction.

An increase in Internet retailing boosted Mail revenues by 8% to €667 million between April and June. However, EBIT for Q2 was down 25% year-on-year to €183 million, largely as a result of the value-added-tax effect and expenditures related to the setup of the digital business.

The Express division increased its revenues by 2.9% to €3 billion (Q2 2010: €2.9bn). Adjusted for exchange rate and consolidation effects, organic revenue growth was 11.3% between April and June. This result was a reflection of the double-digit growth rates in volumes and revenues in international shipments, with the Asia-Pacific region once again the growth driver within the Group as a whole and in the Express division in particular.

The Express division’s operating earnings also improved. Although a loss of €30 million was incurred in the second quarter of 2010, EBIT climbed to €244 million in 2011, driven not only by revenue and volume growth byt also systematic cost management and the successfully completed restructuring measures. During the same period last year, these measures resulted in non-recurring expenses of €228 million.

In the Global Forwarding, Freight division, revenues were up 3.6% to €3.7 billion (Q2 2010: €3.6bn). Adjusted for negative exchange rate effects, the division’s organic revenue growth was 7.1%, due to solid growth in air- and ocean freight as well as double-digit growth in the European overland transport business.

Despite rising fuel costs, the division profited from lower freight rates and improved purchasing conditions, resulting in a 13.1% increase in EBIT to €112 million (Q2 2010: €99m, including restructuring costs of €3m).

Although the Supply Chain division’s revenue dropped 3.4% in the second quarter, the division more than doubled its operating earnings. At €3.2 billion (Q2 1010: €3.3bn), the decrease was solely attributable to negative exchange rate effects and the sale of a US subsidiary that was not part of the division’s core business. Excluding these effects, revenue climbed by 6.1%.

With a high volume of contracts concluded in the second quarter with new and existing customers (totalling €220 million), as well as in the marked improvement in the profit margins of these new agreements, the Supply Chain division more than doubled its operating earnings from €53 million in Q2 2010 to €115 million in the current year. The significant improvement was also supported by the division’s ongoing cost management, the gain on the disposal of the US subsidiary, and the fact that the previous year’s result included restructuring expenses of €17 million.

As planned, the Group’s capital expenditure totalled €371 million in the second quarter of 2011, more than 30% above the previous year’s level of €286 million. During the first six months of the year, €623 million was invested (compared with €481 million for the previous year). Investments included modernisation of the company’s air fleet, warehouses and other property, plant and equipment.

"We are continuing to grow and have kept the positive momentum of the last quarters," said Frank Appel, CEO of Deutsche Post DHL. "The second quarter once more proves the quality and sustainable nature of the efficiency gains we have achieved over recent years."

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