DHL exceeds earnings forecast
Deutsche Post DHL has reported a significant increase in revenues during the past financial year as well as strongly improved profitability. A slight drop in revenue in the MAIL division, caused in part by a regulatory change in value-added tax that took effect in mid-2010, was more than offset by top-line growth in all DHL divisions. Overall, Group revenues were up 11.4% to €51.5 billion (FY2009: €46.2bn), with DHL margin improvements significantly increasing the Group’s operating profit. At €2.2 billion, underlying EBIT was 50% higher than the previous year’s level (FY 2009: €1.5bn), which exceeded the upper end of the upgraded guidance for the company’s operating earnings by more than €100 million. With an operating profit of €1.45 billion (2009: €378m), for the first time the DHL divisions contributed more to overall earnings than the MAIL division, which generated an underlying EBIT of €1.15 billion in 2010 (2009: €1.4 bn). In combination with positive effects from the sale of Postbank, the efficiency improvements also produced a fourfold increase in the company’s net profit to €2.5 billion in FY 2010.
2010 revenues at the Mail division fell slightly by 0.7% to €13.8 billion. The general trend of electronic media replacing physical letters, the effect of the new value-added tax resolution introduced in July, and the price discounts offered in response to the change as well as the loss of the Quelle business contributed to the overall drop in revenue. However, these effects were almost completely offset by the dynamic momentum generated by the parcel business. The rapidly growing Internet retailing sector pushed revenues in this segment with an increase of more than 6%. Profitability in the division was impacted by higher wages and the value-added tax effect and expenditures related to the expansion of the division’s digital business. As a result, EBIT was down 19% to €1.15 billion (2009: €1.4bn), but remained within the forecast range of €1.1 billion to €1.2 billion.
The recovery of the global economy, improved service quality and an intense focus on the international express business enabled the Express division to generate strong growth in both revenues and earnings. Cross-border shipments generated a double-digit revenue increase, which compensated for the decrease in day-definite domestic products following the divestiture of the domestic express businesses in the UK and France. In all regions – except Europe – revenues grew at double-digit rates. Following its repositioning, the business in the US generated an organic revenue increase of nearly 25%. Overall, revenues in the division were up 12% to €11.1 billion in 2010 (2009: €9.9bn). The increased revenue, coupled with the completed restructuring in the US, UK and France as well as efficiency gains worldwide, produced strong improvements in profitability. Underlying EBIT increased from €235 million in 2009 to €785 million in 2010. GLOBAL FORWARDING, FREIGHT division In the Global Forwarding, Freight division, volumes continued to rise. This, combined with higher freight rates in both air and ocean freight, generated top-line growth at high double-digit rates. A slowdown of the growth rates experienced towards the end of 2010 was primarily a result of the stabilisation of freight rates over the course of the year. Overall, the division generated revenues of €14.3 billion in 2010, up 27.6% (2009: €11.2 bn) and profitability rose significantly. The division increased its underlying operating profit by 41.8% to €390 million during 2010 (2009: €275m). The contract logistics business significantly improved both revenues and earnings in 2010, despite the loss of the Quelle business and the systematic withdrawal from underperforming contracts. The division’s revenues were up 9.2% to €13.3 billion (2009: € 12.2bn), with growth in all sectors and regions fuelled by positive currency effects, new business wins and increases in existing business activity. In 2010, additional contracts were concluded with new and existing customers worth €1.1 billion. At €274 million, underlying EBIT in 2010 was more than €400 million higher than the previous year’s level, which was a loss of €132 million, due mainly to significant expenditures related to the Arcandor insolvency. Q4 2010 During the fourth quarter, the Group generated a strong revenue increase of 12% to €13.9 billion (Q4 2009: €12.4 bn), driven primarily by robust growth in the DHL divisions. While the MAIL division also contributed to increased revenue through the strong growth produced by the parcel business, the division’s operating profit declined despite continuous strict cost management, as a result of the effect of the new value-added tax, investments in the expansion of its digital business and one-time bonus payments made to employees. However, significant gains in the three DHL divisions were able to more than offset this decrease. Consequently, underlying EBIT for the Group rose by 12.7% to €593 million (Q4 2009: €526m). Outlook For the current year, the Group expects the global economy to continue to recover, which will drive revenue and earnings growth at the company’s DHL divisions. Deutsche Post DHL expects an EBIT of between €2.2 billion and €2.4 billion. With the Mail division expected to contribute between €1 billion and €1.1 billion to this figure, earnings at DHL should increase to between €1.6 billion and €1.7 billion. Quelle: eyefortransport |