Global logistics leader Deutsche Post DHL (DP DHL) group saw continued profit growth in the third quarter of 2019 as all of its five divisions reported revenue and EBIT growth.
Group revenue increased by 4.7% year-on-year to EUR15.6 billion (US$17.2 billion) from July to September. Operating profit improved from EUR376 million to EUR942 million, boosting consolidated net profit after non-controlling interests from EUR146 million in the prior year to EUR561 million in the third quarter of 2019. Basic earnings per share improved accordingly, rising from EUR0.12 to EUR0.45.
“We had a very good third quarter. All five divisions performed well despite the challenging global economic environment. Thanks to our broad portfolio and the market-leading position of our divisions, we are growing even in uncertain times,” said Frank Appel, CEO of DP DHL group.
“For the fourth quarter, we anticipate a traditionally strong holiday season and we reaffirm our guidance for the full year 2019.”
For the current financial year, the group continues to expect to increase operating profit to between EUR4.0 and EUR4.3 billion. The Post & Parcel Germany division is forecast to contribute between EUR1.1 and EUR1.3 billion of this amount. Earnings in the DHL divisions are expected to be at EUR3.4 to EUR3.5 billion.
Deutsche Post DHL has confirmed both its guidance for 2020 and the Strategy 2025 targets announced in October for the period until 2022, which put group EBIT at more than EUR5.0 billion next year and at a minimum of EUR5.3 billion in 2022. To achieve these targets, the group plans to push growth in its profitable core businesses and speed up its digital transformation.
The express division’s revenue climbed 8.7% to EUR4.2 billion in the period July to September. Operating profit rose 11.0% to EUR454 million in the third quarter and margin improved to 10.7% from 10.5% in 2018.
In a challenging market environment, the global freight forwarding posted a year-on-year revenue increase of 0.9% to EUR3.7 billion in the third quarter, said the company in a statement. As in the second quarter, the global air freight market remained weak. The ocean freight and overland freight transport markets also lost momentum in the third quarter.
Global freight forwarding nonetheless succeeded in markedly improving profitability thanks to cost-efficiency measures. Operating profit surged by 17.0% compared with the prior-year period to reach EUR124 million in the third quarter.
Despite the sale of the Chinese operations to S.F. Holding in the first quarter of 2019, the supply chain division increased its revenue by 2.3% to EUR3.3 billion in the period from July to September. Adjusted revenue grew by 3.8%. Operating profit was up 5.9% to EUR 162 million. The operating margin stood at 4.8% and was thus already at the upper end of the corridor of 4.0% to 5.0% targeted for 2020. This reflects the positive impact of efforts in recent years to optimize and standardize the supply chain business operations, said DP DHL.
The group’s youngest division, DHL eCommerce solutions, increased its revenue by 5.4% to EUR964 million in the third quarter compared with the prior-year figure. All regions contributed to the upward trend. With income of EUR6 million, the division made a positive contribution to the group’s operating profit for the first time after posting a EUR7 million loss in 2018. The group expects earnings in this division to continue to trend upward in the coming quarters.
In the first nine months of 2019 revenues of the group rose by 3.9% to EUR46.4 billion. All five divisions contributed to the upward trend. Operating profit grew by 41.5% to EUR2.9 billion. Adjusted for non-recurring items, group EBIT improved by 8.1%. Consolidated net profit after non-controlling interests improved by 39.9% in the first nine months to EUR1.8 billion. In line with the increase in net profit, basic earnings per share rose to EUR1.43 from EUR1.03 last year.