Strong growth in revenues and operating profit for Deutsche Post DHL in Q2
August 08, 2017: Deutsche Post DHL Group increased revenue and operating profit significantly in the second quarter of 2017. Group revenue increased by EUR 623 million to EUR 14.8 billion, with the international parcel and eCommerce business and the global express business in particular driving this strong growth. With EBIT of EUR 841 million, Deutsche Post DHL Group recorded the strongest second quarter in its history, and the seventh consecutive quarter in which the company has posted an all-time quarterly high.
"We are very satisfied with both the second quarter and the entire first half of the year. Our company is growing in all areas and steadily increasing earnings," said Frank Appel, CEO of Deutsche Post DHL Group. "Our good results so far this year demonstrate that we are right on track to achieve our EBIT targets for full-year 2017. We also remain optimistic about the coming years. All of our divisions, thanks to their focus on fast-growing markets such as global e-commerce, are optimally positioned for long-term growth," added Appel.
Following the successful first six months, the group continues to forecast an increase in EBIT to around EUR 3.75 billion for full-year 2017. Deutsche Post DHL Group is also maintaining its forecast of an average increase in operating profit of more than 8 per cent annually (CAGR) during the period from 2013 to 2020.
Group revenue grew by 4.4 per cent to EUR 14.8 billion in the second quarter. The company's operating profit increased by 11.8 per cent to EUR 841 million. The improvement in the Group's profitability was driven largely by the Express (+12.2 per cent) and Supply Chain (+21.6 per cent) divisions, both of which achieved significant double-digit growth in operating profit.
Consolidated net profit after non-controlling interests increased by 11.3 per cent to EUR 602 million against the prior-year level (2016: EUR 541 million) thanks to the increase in operating profit. Basic earnings per share saw a corresponding increase, rising from EUR 0.45 in 2016 to EUR 0.50 in 2017.
Deutsche Post DHL Group invested EUR 351 million in the second quarter of 2017 (2016: EUR 456 million). Investments continued to focus on positioning the Group for future profitable growth in all four divisions. For example, the Group made further progress in extending its domestic and international parcel infrastructure in addition to investing in the production of its StreetScooter electric vehicle. In the Express division, global and regional hubs were upgraded and the aircraft fleet modernized and expanded. The Group continues to plan for full-year capital expenditure of approximately EUR 2.3 billion (2016: EUR 2.1 billion).
Operating cash flow was EUR 726 million in the second quarter (2016: EUR -161 million), while free cash flow was EUR 385 million (2016: EUR -600 million). The respective prior-year figures were significantly impacted by an outflow of EUR 1 billion to fund pension obligations.
The Group’s e-commerce and parcel business continued strong performance in the international parcel business. Revenue in the Post - eCommerce - Parcel (PeP) division rose by 4.8 per cent to EUR 4.3 billion in the second quarter. The division's positive performance was primarily attributable to growth in volumes and revenue in the eCommerce - Parcel business unit, with revenue increasing by 13.6 per cent to EUR 2 billion. Parcel Europe (+61.5%) and eCommerce (+15.1 per cent) were the main drivers behind this growth. A key positive factor behind the strong increase in revenue at Parcel Europe was the inclusion of the UK Mail business in the unit's consolidated results after successful completion of the British company's acquisition in December. UK Mail generated revenue of EUR 127 million in the second quarter. Organically, revenue at Parcel Europe increased by 21.2 per cent. The positive development of the eCommerce - Parcel business unit shows once again how Deutsche Post DHL Group continues to benefit from its successful positioning as market and innovation leader in the high-growth e-commerce segment.
In the Post business unit, revenue saw a slight decrease of 1.8 per cent to EUR 2.3 billion due to structural volume declines, mainly in the area of mail communication.
EBIT in the PeP division improved by 4 per cent to EUR 259 million in the second quarter. Contributing to the increase in particular were growth in the German Parcel business, the normalization of the decline in letter volumes and disciplined cost management, while earnings growth was held back by further investments in the international parcel network and eCommerce business.