Deutsche Post DHL – strong Q1 performance

Deutsche Post DHL has reported that its operating profit increased by a large margin in Q1 of 2016 and the CEO, Fran Appel said that the ‘good start to the year’ puts the company firmly on track to achieve its targets in 2016.

EBIT for the Group was up 21.3% on Q1, 2015 at €873 million, though group revenue dropped by 6.1% to €13.9 billion. The company has said that the decline, “primarily reflects the changed recognition of revenue generated from a key customer contract in the Supply Chain division starting in the fourth quarter of 2015. ″ The statement went on, “The main growth drivers – above all the international express business and the dynamic parcel and eCommerce business – remained intact in the first months of the new year.”

Commenting on the results, Frank Appel, CEO of Deutsche Post DHL Group, said, “We’ve had a good start to the current year. With an EBIT of €873m we have registered the strongest first quarter in our company history. The efforts we made in 2015 to position ourselves for profitable growth in all divisions are paying off. Last year was a year of transition, and we are now firmly on track to achieve our targets for 2016.” stated

Q1 revenue in the Post – e-commerce – Parcel division increased by 2.4% to €2.4 billion. €1.7 billion of this came from the e-commerce – Parcel unit that saw an 8.6% growth.

The Post business unit fell by 1.2% to €2.53 billion. The Group statement explained, “The January 1 increase in letter postage prices almost fully offset the structural decline in volumes within the Mail Communication and Dialogue Marketing segments as well as the working day-effect.”

Operating profit in the PeP division was up 3.3% at €412m, as continued strong growth in the parcel business as well as the letter price increase more than offset the volume decline at Post and the investments the Group has made to expand the eCommerce – Parcel business.

Revenue for the Express division was up 0.3% at €3.25bn – but DPDHL Group said that when adjusted for negative currency effects and lower fuel surcharges, there was actually an increase  of 6.1%. The time-definite international (TDI) business was driving the division’s growth. EBIT for the Express division was up 7.5% at €357m.

Revenue in the Global Forwarding, Freight division fell by 12.2% to €3.3bn. “Apart from the weak market environment,” said the Deutsche Post DHL Group statement, “the main reason for the revenue decline was the division’s more selective market strategy.” Despite revenue drop, the division’s operating profit actually increased significantly, from €17m to €51m.

In the Supply Chain division, revenue fell by 13.9% to €3.4bn. although the EBIT was up from €53m to €127m.