- Group revenues increase by 4.3 percent to EUR 13.4 billion
- Strong growth at DHL, particularly in Asia; MAIL revenues slightly up thanks to dynamic parcel business
- First-quarter EBIT up 9.9 percent to EUR 691 million, consolidated net profit climbs to EUR 533 million
- 2012 full year guidance confirmed: EBIT of between EUR 2.5 billion and EUR 2.6 billion expected
- CEO Frank Appel: “We continue to build on our strengths”
Bonn, 05/08/2012, 07:00 AM CEST – Thanks to further profitability improvements in all divisions, the Group’s operating result rose above average in the first quarter.
Deutsche Post DHL, the world’s leading postal and logistics group, continued its strong performance from last year in the first quarter of 2012 and remains on its successful growth path. Group revenues rose by 4.3 percent compared with the same quarter last year, reaching EUR 13.4 billion.
The DHL divisions played a major role in this positive development as they continue to benefit from their exceptional positions in the world’s rapidly growing regions – particularly in Asia. Thanks to further profitability improvements in all divisions, the Group’s operating result rose above average in the first quarter: EBIT climbed by 9.9 percent to EUR 691 million. During the same period the company’s consolidated net profit improved to EUR 533 million.
“Given the somewhat subdued global economic environment, our successful start into the year is clear evidence for us continuing to build on our strengths,” said Frank Appel, CEO of Deutsche Post DHL. “The efficiency improvements we have achieved in recent years and our unmatched position in the world’s growth markets have prepared us well for continuing on our profitable growth path. Building on this base, we will systematically keep on implementing Strategy 2015 in order to unlock the Group’s full potential.”
First quarter 2012: strong growth in revenues and profitability
After the company generated revenues of EUR 12.8 billion in the first quarter of 2011, it generated an increase of more than EUR 500 million to EUR 13.4 billion in the first quarter of this fiscal year. During the same period, Group EBIT rose from EUR 629 million in 2011 to EUR 691 in 2012. The DHL divisions remained the Group’s growth drivers, with an earnings contribution of EUR 409 million, and a 13-percent improvement compared with the same period last year.
At the same time the MAIL division also contributed significantly to the company’s profitability increase thanks to the ongoing strong momentum of its parcel business and the continued strict cost management. In the first quarter, the Group’s net financial income climbed from minus EUR 161 million in 2011 to EUR 76 million in 2012. In particular, this result reflects the final effects from the sale of Postbank which amounted to EUR 186 million during the first quarter of 2012. In combination with the operational improvements, the Group was able to boost its consolidated net profit by 64 percent in the first quarter to EUR 533 million (2011: EUR 325 million). Earnings per share climbed accordingly from EUR 0.27 in the first three months of 2011 to EUR 0.44 during the same period in 2012.
Capital expenditures and cash flow: foundation for growth bolstered
In the first quarter of 2012, the Group’s capital expenditures totaled EUR 305 million, more than 20 percent above the previous year’s total of EUR 252 million. The DHL divisions were the focal point of these investments. Here, the foundation for future growth and the company’s long-term business success were bolstered further by investments in a more efficient aircraft fleet, the continued expansion of the network, state-of-the-art warehouses as well as a new world-class IT infrastructure in the Global Forwarding business.
In January of each year, the Group’s operating cash flow and liquidity position are affected by the annual pension contribution that the company makes to the pension fund for the company’s civil servants (Bundes-Pensions-Service für Post und Telekommunikation). This contribution totaled EUR 530 million in the first quarter of 2012. In addition, the termination of a factoring program had a one-time negative impact on the company’s operating cash flow. Overall, net cash used in operating activities totaled EUR 357 million in the first three months of this year (2011: minus EUR 34 million). In spite of these effects, the Group enjoyed a net liquidity position of EUR 308 million at the end of the first quarter (2011: EUR 938 million).
Guidance: short- and medium-term goals confirmed
Despite continuing economic uncertainties, the Group expects that the world economy will produce moderate growth this year and that the company – driven by the DHL divisions – will generate continued gains in revenues and earnings versus the prior year. Following the company’s successful performance in the first three months of the year, it is confirming its guidance for 2012 and continues to forecast Group EBIT to reach between EUR 2.5 billion and EUR 2.6 billion. As stated before, the earnings of the MAIL division should total between EUR 1.0 billion and EUR 1.1 billion. DHL’s operating earnings are still expected to rise to around EUR 1.9 billion. Corporate Center/Other expenditures are forecast to again total about EUR 400 million.
In addition, the Group continues to project that its consolidated net profit adjusted for effects related to the Postbank transaction will increase in line with the operating business. Looking beyond the current fiscal year, the company remains optimistic and expects that its earnings will continue to rise: While cost measures and growth programs are designed to stabilize the profitability of the MAIL division, the Group expects the DHL divisions to continue producing annual earnings growth that will average between 13 percent and 15 percent between 2010 and 2015.
MAIL division: parcel business continues dynamic performance
In the first three months of 2012, revenues in the MAIL division totaled EUR 3.6 billion, a slight increase over the previous year’s level of EUR 3.5 billion. As expected, volume and revenues in the division’s traditional mail business declined slightly. In contrast, the parcel business kept up its very strong performance in the first quarter of this year. The division continued to profit from flourishing online shopping and boosted the pace of its growth once again thanks to its broad range of products and services that are tailored specifically to meet customers’ needs. While volume climbed by 14 percent, revenues rose by 13 percent to EUR 844 million during the first quarter.
As a result, the company’s thriving parcel business generated nearly one-quarter of total revenues in the MAIL division and, in combination with strict cost management, contributed to the desired stabilization of the division’s profitability: EBIT in the MAIL division totaled EUR 393 million between January and March of 2012, a slight increase over the previous year’s total of EUR 373 million.
EXPRESS division: international express business remains strong
The EXPRESS division continued to boost its revenues and earnings in the first quarter of 2012. Revenues climbed by nearly 10 percent to more than EUR 3 billion in the first three months of 2012 (2011: EUR 2.8 billion). This performance is the result of a solid increase in Europe as well as double-digit growth in all other regions and reflects the exceptional market position that DHL has in the world’s dynamic growth markets. As a result, revenues and volumes grew especially strongly in Asia and the Americas, where the division’s continuing good performance in the United States contributed in particular to the strong results.
In order to continue to meet the rising demand of international transport customers, the Group will invest nearly $50 million over the next 12 months to significantly expand its hub in Cincinnati. In addition to strong increases in revenues and volumes, the division’s first quarter results also reflect higher costs related to the operation and expansion of the company’s air network. Nonetheless, the division’s EBIT climbed by 7.9 percent in the first three months of this year to EUR 231 million (2011: EUR 214 million).
GLOBAL FORWARDING, FREIGHT division: increased margins help boost EBIT
In a challenging business environment, the GLOBAL FORWARDING, FREIGHT division increased revenues to EUR 3.7 billion in the first quarter of 2012, compared with EUR 3.6 billion in the same quarter last year. During the quarter, revenues in air and ocean freight declined. While the drop in ocean freight was triggered by declining freight rates, the decrease in air freight was mainly caused by lower volumes. But growth in the European overland-transport as well as the industrial project business more than offset these declines.
Despite rising fuel prices, the division profited in particular at the beginning of the year from improved purchasing conditions, increased efficiency and its selective market strategy. This led to considerable gross margin improvements in all categories. As a result, the division’s operating earnings jumped by 22.5 percent from EUR 71 million in the first quarter of 2011 to EUR 87 million in the first three months of this year.
SUPPLY CHAIN division: profitability continues to climb
Revenues in the SUPPLY CHAIN division also rose in the first quarter of 2012. At EUR 3.4 billion, they were 6 percent higher than the previous year’s level of EUR 3.2 billion. This improvement was generated in particular by strong growth in the Asia-Pacific region and in the ‘Life Sciences & Healthcare’ and ‘Automotive’ sectors.
At EUR 190 million, the volume of additional contracts signed with new and existing customers remained at a high level. As a result of profitability gains, which during the first quarter were mainly driven by the rise in business volume, optimized contract management, strict cost control and increased operational efficiency, EBIT rose by 16.7 percent, from EUR 78 million in the first three months of 2011 to EUR 91 million this year.