Tuesday, May 14, 2013

Logistics Giant Reports Freight Forwarding Falls Whilst Online and Express Services Profit

DHL Releases First Quarter 2013 Figures
Shipping News Feature

GERMANY – WORLDWIDE – Deutsche Post DHL released first quarter figures yesterday showing a 5.9% fall in consolidated net profits as some sectors of its activities suffered from the general malaise facing the industry ending at €498 million against 2012’s €529 for the same period. Basic share earnings fell 6.8% to €0.41 but the company however said that the final sale of Postbank last year to Deutsche Bank would have boosted profits in the postal sector by almost 45% taking net income closer to €500 million. Freight forwarding suffered particularly with an interesting contrast between air and ocean cargo offerings.

DP DHL acknowledged that its traditional mail business continues to decline as expected although a recently reported collective bargaining agreement meaning higher labour costs and the impact of the reduced number of working days in the period was partially offset by the firms parcel business profiting from online shopping, and stricter cost controls. EBIT in the MAIL division fell by 2.6% (€10 million) in the first quarter of 2013 to €382 million.

Adjusted for exchange-rate effects and the sale of the domestic express businesses in Australia and New Zealand, revenues rose by 2.4% in the Express sector and DHL says its Time Definite International service is driving an increase in revenues but global freight forwarding revenues fell against the first three months last year by almost 2% to €3.6 billion in what the group calls ‘a difficult business environment’. The company says its air and ocean freight units moved in different directions with a decrease in both volume and revenues in the air-freight business whilst they rose in ocean freight, largely due to increased demand on north-south routes and within Asia.

The air cargo decline is primarily attributed to a dramatic drop in demand in the 'Technology' and 'Engineering & Manufacturing' sectors. According to the group the freight division's selective market strategy and strict, ongoing cost management allowed operating earnings to rise slightly to €88 million (2012: €87 million) despite the dip in revenues.

Automotive, retail and ‘Airline Business Solutions’ are partially credited with supporting the group’s Supply Chain division which saw revenues rise over 2% against the same period in 2012 following double digit revenue increases in the Asia-Pacific region finishing with €3.5 billion whilst the division’s EBIT fell from €92 million in the first quarter of 2012 to €84 million this year due to insolvency proceedings involving a customer in the United States. Frank Appel, CEO of Deutsche Post DHL, was typically upbeat, saying:

"Even though we have yet to feel any sort of economic tailwind, we were able to get off to a solid start in the New Year. In doing so, we demonstrated once again just how robust our business model is and lived up to our position as market leader. Thanks to our commitment to customers, the gains in efficiency we have made in recent years and our determination to continuously simplify processes, we can reliably deliver profitable growth."

Anyone interested in hearing DP DHL’s own opinion on the figures for the first three months of 2013 can see a company made video HERE of an interview with Group Financial Officer Lawrence A Rosen (pictured).