Parcel, e-commerce, express deliver strong Q3 results for DP-DHL

Deutsche Post DHL Group (DP-DHL) reported record third-quarter results, marking the eighth quarter in a row during which DP-DHL posted an all-time quarterly high, as the group’s Express, Parcel and E-commerce business segments reported especially strong revenue growth.

Of particular note was the group’s Parcel performance. While Parcel Germany revenue rose by 5.5 percent year-over-year for the third quarter, Parcel Europe’s revenue increased by 62.9 percent, which the group attributed to the acquisition of UK Mail that was completed at the end of 2016. After adjusting for the UK Mail addition, Parcel Europe’s revenue still rose by 17.5 percent.

“Parcel Europe has now expanded its activities to 26 countries – with Bulgaria, Ireland, Croatia and Romania being the most recent additions,” said CEO Frank Appel in an interview discussing the results. “Our vision of the ‘United Parcel Nations of Europe’ is becoming a reality, step by step.” DP-DHL expects to expand its operations throughout Europe by the end of next year.

Also in the group’s Post – e-commerce – Parcel (PeP) division, overall earnings before income and taxes (EBIT) rose by 5.1 percent, y-o-y, to €308 million for Q3. Post revenue for the quarter rose by only a modest 0.6 percent, but the company’s “strategic focus on rapidly expanding sectors such as international e-commerce” supported the company’s third-quarter earnings, which were actually reduced slightly because of further investments DP-DHL made in e-commerce expansion during the quarter, Appel said. Overall, the PeP sector made up 29.4 percent of the group’s total revenues for the quarter.

The Express sector saw very strong performance during the quarter, with EBIT rising 10.4 percent from last year’s Q3 to €372 million. Most of the gain was the result of growing cross-border e-commerce business. According to Appel, DP-DHL’s market share of cross-border e-commerce is growing in all regions and especially in Asia, while a focus on yield management is delivering higher margins for the group. Daily volumes in DP-DHL’s international time-definite delivery business in the sector rose 11.9 percent, y-o-y.

The Global Forwarding and Freight sectors also rose during Q3 by 6.3 percent, but at only €67 million EBIT, it made up the smallest share of DP-DHL’s business for the quarter. Volumes in the sector rose for ocean- and airfreight, but pressure on margins kept earnings lower.

DP-DHL’s Supply Chain sector reported solid EBIT growth for the quarter of 8 percent, to €148 million. The group has focused on optimizing its supply chain with the goal of improving the EBIT margin to between 4 and 5 percent by 2020. In addition to focusing on gaining new business in the sector, digitalization is playing a role in the earnings growth through risk management and automation.

Looking ahead, DP-DHL expects fourth-quarter results to continue its positive streak, with Appel noting, “we anticipate a strong Christmas season and are confident that we will attain our targets for the full year.” The group is forecasting an EBIT increase of around €3.75 billion for full-year 2017.

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