Tuesday, August 2, 2011

Freight Forwarding and Express Services Profitable for Deutsche Post DHL

Mixed Bag of Figures for German Giant Prompts Optimistic Outlook
Shipping News Feature

WORLDWIDE – Whilst some sectors of the freight industry, notably bulk and container shipping are cutting back profit forecasts Deutsche Post DHL has today announced improved second quarter profits leading it to predict increased full year earnings for 2011. During the second quarter, the Group's revenues totalled € 12.8 billion, an increase year on year of € 700 million after allowances. The DHL divisions alone produced € 471 million of the Group's operating earnings in the second quarter, nearly four times more than in the € 122 million in the same period last year.

During the first six months of a year, the Group's cash flow and liquidity are regularly impacted by the annual payment made in January to the Bundes-Pensions-Service, a special pension fund for the company's civil servants, and the dividend payment in May. Despite these recurring payments, which totalled more than € 1.3 billion this year, the group claiming it has maintained a strong liquidity position during the first six months of the year: At the end of the second quarter Deutsche Post DHL's net liquidity amounted to € 202 million.

Despite the boost provided by having no major restructuring expenses this year (last year there were allowances totalling € 304 million for these) the company's net financial income fell during the first half of 2011, dropping from € 1.2 billion in the same period last year to minus € 319 million. The group claims this was, however, almost solely a result of the valuation of financial instruments from the sale of Postbank. While last year's financial result included positive effects of € 1.4 billion related to the Postbank transaction, expenses totalling € 133 million were incurred in the first six months of 2011.

This extraordinary accounting effect also apparently had a major impact on the Group's consolidated net profit: During the first half year, consolidated net profit fell from € 1.8 billion in the previous year to € 603 million. This represents a decrease in earnings per share from € 1.51 in 2010 to € 0.50 in the current fiscal year. However, adjusted for the Postbank valuation effects for both years, management claim consolidated net profit and earnings per share would have increased by more than 80 percent during the first six months of the year leading them to predict an improvement in full year guidance figures.

Briefly the Express and global freight forwarding divisions both witnessed rising revenues whilst supply chain earnings fell. The group’s bedrock mail services saw growth in the parcels sector mainly due to internet retailing trends whilst volumes stagnated in traditional mail services with stable volumes but falling revenues. Full details on each of the group’s areas of activity are available on the company’s website HERE.