- Consolidated revenue rises 13.9 percent in the third quarter –double-digit growth in all DHL divisions
- Underlying EBIT climbs 43.7 percent to EUR 543 million –consolidated net profit reaches EUR 226 million
- Underlying EBIT for the full year 2010 now expected to total between
- EUR 2.0 billion and EUR 2.1 billion
- CEO Frank Appel: “A further step forward in sustainably improving profitability”
Deutsche Post DHL, the world’s leading postal and logistics group continued the sound performance of the first half of 2010 during the third quarter, generating another double-digit increase in revenue. Despite a slight decline in the MAIL division, also resulting from a regulatory change in value-added tax that took effect in July, consolidated revenue rose 13.9 percent to EUR 12.8 billion driven by strong growth generated by all three DHL divisions. In particular, this performance reflects increased transport volumes, higher freight rates and the continuing success in attracting new customers. During the past quarter, the Group also profited from positive currency effects.
Additional margin gains in the DHL divisions also resulted in the significant increase in profitability. Underlying EBIT totaled EUR 543 million, 43.7 percent above the previous year’s level. Efficiency improvements also contributed significantly to the Group’s ability to generate a consolidated net profit of EUR 226 million in the third quarter, following the loss of EUR 83 million in the same period last year.
“The company’s very good performance in the third quarter demonstrates once again that we have an exceptionally good position that allows us to profit tremendously from positive economic trends,” said Deutsche Post DHL CEO Frank Appel. “Our strategy is robust, our efficiency programs are paying off, and our customers are rewarding our efforts.”
Third quarter 2010
In the third quarter of 2010, reported EBIT more than doubled, rising from EUR 231 million in the same period last year to EUR 545 million in 2010. In addition to the significant revenue and profitability improvements another factor behind this increase was the marked reductions in non-recurring expenses that were realized as planned. While in the previous year, non-recurring expenses totaled EUR 147 million, no noteworthy nonrecurring expenses occurred during the third quarter of this year. The Group’s net financial result improved as well. At minus EUR 222 million, it was well above the previous year’s total of minus EUR 310 million. This improvement largely reflects changes in the valuation of financial instruments related to the sale of Postbank: While last year’s figure included negative effects totaling EUR 188 million, the effect in relation to the Postbank sale had only an impact of minus EUR 123 million on the net financial result in the third quarter of this year. The consolidated net profit after minorities climbed to EUR 226 million. This equals an improvement in earnings per share to EUR 0.19. In the same quarter last year, the company reported a consolidated net loss of EUR 83 million and earnings per share of minus EUR 0.07.
Capital expenditure and cash flow
The Group’s capital expenditure totaled EUR 282 million in the third quarter, 8.4 percent below the previous year’s level. This figure includes investments in new technologies and products in the MAIL division that range from state-of-the-art letter-sorting equipment, and new camera and scanning technology in the parcel centers to the E-Postbrief introduced in July and the shopping portal “Mein Paket”. The Group expects capital expenditure to increase in the fourth quarter. Full-year investments are planned to be around EUR 1.3 billion and thus will conclude the year slightly below the original target of EUR 1.4 billion.
Bolstered by the improvements in underlying EBIT and the significant reduction in restructuring expenses, the Group’s operating cash flow climbed by EUR 133 million to EUR 632 million during the third quarter of 2010. Free cash flow was also affected by net cash from the sale of money-market funds. During the third quarter, it increased by EUR 1.6 billion to EUR 1.3 billion (2009: minus EUR 306 million). As a result of the dividend payment (EUR 725 million), the contribution to the Bundes-Pensions-Service (EUR 556 million) and a cash outflow from restructuring (EUR 684 million) the Group’s net liquidity decreased by EUR 762 million compared with the end of 2009. However, at EUR 928 million net liquidity was almost EUR 400 million above the level at the end of the second quarter, underlining the Group’s very solid liquidity position after the first nine months of the year.
“During the third quarter, we remained true to our strategy and carefully invested in the organic expansion of our business,” CFO Larry Rosen said. “Deutsche Post DHL continues to be solidly financed and has – also thanks to the very positive performance of its operating business – the necessary financial flexibility to reach its growth targets and systematically exploit opportunities that present themselves.”
Nine months
In the first nine months of fiscal year 2010, revenue rose 11.2 percent to EUR 37.6 billion.
As a result of significant increases in volume and revenue as well as efficiency gains, the Group‘s underlying EBIT increased 70.2 percent to EUR 1.6 billion. As planned, nonrecurring items declined compared with the same period last year, nearly dropping by half to EUR 302 million (2009: EUR 580 million). In addition to higher revenues and the improved efficiency, this effect helped fuel the strong rise of the reported EBIT from EUR 367 million in the first three quarters of 2009 to EUR 1.3 billion from January to September 2010. At EUR 2.1 billion, consolidated net profit after minorities more than doubled year over- year (2009: EUR 927 million). On top of the operating improvements, this figure includes positive effects related to the Postbank sale, which has risen by about EUR 600 million above last year’s level during the first nine months of 2010. Year-to-date earnings per share were EUR 1.70, well above the previous year’s number of EUR 0.77. Operating cash flow also rose measurably. It climbed to EUR 902 million in the first nine months of the year, a more than threefold increase from EUR 270 million generated in the same period of 2009.
Guidance
As a result of the continuation of the economic recovery and the Group’s good earnings performance during the first nine months of the year, Deutsche Post DHL has been able to improve its earnings guidance for the full year 2010 and raise the lower end of the planned range for the Group’s underlying EBIT. The Board of Management now projects the Group’s underlying EBIT to total between EUR 2.0 billion and EUR 2.1 billion.
Deutsche Post DHL had previously expected an amount in the range of EUR 1.9 billion and EUR 2.1 billion. Earnings of the MAIL division are expected to be between EUR 1.1 billion and EUR 1.2 billion. This represents an increase of EUR 100 million in the lower end of the range. The DHL divisions are now expected to contribute more than EUR 1.3 billion to overall earnings (previous guidance: about EUR 1.3 billion). At the beginning of the year, the company had expected its logistics divisions to produce no more than EUR 1.1 billion. As a result, DHL’s earnings contribution will exceed that of the MAIL division for the first time. As has been announced since the beginning of the year, Corporate Center/Other expenditures will total about EUR 400 million. The Group also continues to expect that consolidated net profit in 2010 will significantly improve compared to 2009.
From today’s perspective, the positive earnings trend is likely to continue in 2011, even though global economic performance remains somewhat unpredictable.
“In recent years, we have systematically created the conditions that enable the Group to sustainably improve its profitability. With underlying EBIT that will likely total more than EUR 2 billion, we will take another big step forward this year. But we are still a long way from reaching our full potential,” CEO Frank Appel said.
