News / Road transport the driving force behind a record third quarter for DP-DHL

DPDHL, Pressekonferenz 3. Quartal 2016. Bonn, 08.11.2016. ||  (c) Christoph Papsch - www.christoph-papsch.com

Deutsche Post-DHL today reported a record third-quarter operating profit.

The figures show the group overcoming weak market fundamentals in freight forwarding and challenges to its supply chain division, while its parcels, e-commerce and post (PeP) and express division continued to be propelled by growing e-commerce activity.

Group earnings before interest and tax (EBIT) came in at €755m, a “sharp rise” over the €197m reported in the third quarter of last year, when the company had to record a significant write-down due to the failure of its IT revamp programme, New Forwarding Environment (NFE).

The increase in EBIT also came despite a group-wide 3.9% drop in revenues to €13.9bn for the period, as a result of negative currency effects and falling fuel costs, and the reclassification of the UK NHS contract with its supply chain division.

DHL Global Forwarding saw revenue decline 6.3% to €3.36bn, but EBIT saw a dramatic turnaround after the NFE debacle, which saw the €337m loss that it posted in the third quarter of 2015 transformed into a €63m profit this year.

Air freight volumes increased 1.5% in the third quarter as new business contracts won earlier in the year began to filter into its network. But pricing remained under pressure from carrier overcapacity and revenues for the third quarter were down 8.8% year-on-year, with gross profit down 5.2%.

Ocean freight volumes also increased, up 3.6% year-on-year to 781,000 teu for the third quarter, but revenues from the business, which is also plagued by overcapacity, were down 9.7% to €833m.

The standout result was delivered by its European road transport arm, where volumes grew 9.1%, largely on the back of e-commerce business growth in Sweden and its less-than truckload business in Germany, and which mitigated adverse currency effects and Russian sanctions.

Overland transport in the first nine months of the year saw revenues rise 1.6% to €3.18bn and gross profit went up 2.1% to €828m.

Its supply chain division, the largest contract logistics operation in the world, was badly hit by the loss of NHS revenue in the UK and adverse currency swings. Revenue in the EMEA region declined 28.3% year-on-year, but the unit significantly improved its profitability on the back of new strategic initiatives, it said, with an EBIT of €137m, compared with €101 in the third quarter of last year.

Group chief executive Frank Appel (pictured above) said: “The strong trend in operating profit in all four divisions shows that we have set the right priorities with our Strategy 2020. We are taking an increasingly active role in the dynamic development of e-commerce all over the world and are continuing to invest in this segment. Thanks to the targeted investments and strategic initiatives we implemented in prior years, we are now enjoying success, despite weak economic tailwind.

“We are well on track to reach the ambitious goals we have set for 2016 and beyond,” he added.

DP-DHL said it remained on target to hit a group-wide EBIT of €3.4bn-€3.7bn for the 2016 full year.