Deutsche Post DHL announced today a net profit of €644 million for 2009 compared to a net lossof nearly €1.7 billion during the previous year thanks to cost-cutting measures, operational
improvements and positive effects from the Postbank sale as well as lower taxes. This year, thegroup foresees a moderate recovery in global shipping volumes along with considerably higherprofits and revenues.At the group level, the company’s revenues dropped 15.2% to €46.2 billion due to a significantdecrease in shipment volumes caused by the global economic crisis. However, successful cost cuttingacross all businesses, substantially lower restructuring expenses as well as the planned reductionof losses from the US express business helped mitigate the impact on the group’s profitability.Reported EBIT of €231 million for 2009 thus substantially exceeded the €966 million loss in 2008.Underlying Ebit of €1.47 billion exceeded the November forecast of at least €1.35 billion. One ofthe key contributors to this positive development was the introduction of the ‘IndEx’ programme atthe end of 2008 that generated cost savings of €1.1 billion. The company’s capital expenditure of€1.17 billion also fully met expectations.
In Q4, the group increased quarter-on-quarter revenues for the second time in a row thusstopping the negative revenue trend caused by weakened demand and reduced shipping rates.Year-on-year revenues, however, fell by 11.6% to €12.4 billion. But the consolidated net profit wasconsiderably better at €283 million than the Q4 net loss of € 3 billion in 2008. The loss duringthe final quarter of 2009 is mainly due to high restructuring costs, losses from the Arcandorinsolvency and costs related to several contracts amounting to €344 million.
The mail division was not only affected by the global economic crisis during the past year butalso confronted with the increasing substitution of physical mail by electronic media. As a result,revenues were 4.9% below the previous year’s level, totalling €13.7 billion. For the fiscal year2009, underlying EBIT fell by 14% to EUR1.4 billion. In the fourth quarter, though, it rose by 7.4%despite the continuing decline in revenues.
Deutsche Post said it managed to maintain its share at 87.2% of the shrinking mail market thanksto its intense customer focus and its high-quality service. In addition, comprehensive cost-cuttingmeasures cushioned the impact from higher wages and Arcandor insolvency on the division’sprofitability.
Deutsche Post DHL’s express business was also impacted by lower volumes. During the second halfof the year, however, trade volumes began to rise sequentially. The fourth quarter saw a slightrecovery of the Time Definite Domestic and Day Definite Domestic product groups outside the U.S.Nonetheless, year-on-year revenues for 2009 fell by 24.4% to €10.3 billion.
The main reasons for this decrease were the group’s exit from the US domestic express businessalong with exchange rate fluctuations and lower revenues from fuel surcharges. Outside the USA,revenues adjusted for acquisitions and exchange rate fluctuations were only 11.8% below theprevious year’s level. The smallest drop in revenues was reported by the Asia Pacific region at 6%amounting to €2.6 billion.
In Europe and the EEMEA region (Eastern Europe, the Middle East and Africa), revenues fell by15.5% and 10.4%, respectively, to €5.6 billion and €1.1 billion. In the Americas region whichincludes Latin America and the Caribbean as well as Canada and the USA revenues decreased by 58.6%.Excluding the U.S., revenues in the region fell by 14.8% in the past year.
Unlike the negative revenue trend, the division’s profitability climbed considerably during thepast year. Thanks to strict cost management, underlying EBIT was 45.1% above the previous year’slevel at €238 million. A key reason for this positive development was the significant reduction inlosses previously incurred in the U.S. The target of reducing the annual loss to less than $400million by the fourth quarter has been achieved. In the other regions, underlying EBIT totalled€692 million, compared to €1.1 billion in the previous year.
DHL Global Forwarding/DHL Freight registered a year-on-year revenue drop of 23.3% at €10.9billion as a result of the general decline in freight volumes, lower fuel surcharges and reducedfreight rates. Thanks to systematic cost management, the effect on the division’s profitabilitycould be cushioned with the underlying EBIT decreasing from €403 million in 2008 to €272 millionlast year.
The freight division was able to increase volumes each quarter during 2009 despite the fact thatthe decline in world trade levels resulted in double-digit decreases in shipping volumes in the airand ocean freight markets. Due to the initial economic recovery, air freight volumes roseyear-on-year for the first time in six quarters during the fourth quarter. In fiscal year 2009, DHLwas able to maintain or even expand its market share in the international air and ocean freightmarkets and in European road transport.
DHL Exel Supply Chain showed revenues falling 8.8% to €12.5 billion. This decrease resulted fromsubstantial negative currency translation effects and the company’s own decision to decline renewalof underperforming contracts or to terminate them prematurely. Despite the difficult marketconditions, the contract logistics business of Deutsche Post DHL was able to further expand itsmarket position in 2009. Two key reasons for this positive development were new business contractsworth €1.1 billion and a continuing high contract-renewal rate of 90%. With the help ofcost-cutting measures, the impact of the economic crisis on the division’s profitability could beminimised. The operating loss of €121 million was exclusively related to the Arcandorinsolvency.
“We have successfully managed the repercussions of the economic crisis and exceeded our targetsfor 2009,” said Frank Appel, Chief Executive Officer of Deutsche Post DHL. “Thanks to strict costmanagement and the consistent implementation of our Strategy 2015, we are now able to benefitoverproportionally from the accelerating global economic recovery.”
Looking ahead, Deutsche Post DHL’s reported EBIT is expected to be considerably above lastyear’s level. Consolidated net profit should further improve compared to 2009, the company said ina statement. “We are optimistic about the future, even though many uncertainties remain about thestrength of the economic recovery as well as about political and regulatory issues,” Appel added.“We will move ahead as planned this year and sustainably improve the group’s profitability withinnovative products, high service levels and the ongoing development of customer-orientedsolutions.”
Deutsche Post DHL expects its underlying EBIT to total between €1.6 billion and €1.9 billion in2010. Reflecting the group’s two-pillar strategy announced last year, the DHL and the mail divisionare to make roughly equal contributions to earnings for the first time with estimated earningsbetween €1.0 billion and €1.2 billion for both units. The group expects the positive earnings trendto continue in 2011.
In terms of strategy, financial stability and flexibility will remain a top priority forDeutsche Post DHL.
