DHL Express is growing faster than competitors, is investing in more capacity and sees no signs ofa downturn, parent Deutsche Post DHL said today as it raised its full-year profit outlook and
described itself as “cautiously optimistic” for 2012 despite uncertain world economic prospects.The higher guidance, with 2011 EBIT now expected to exceed €2.4 billion rather than be at thehigher end of the €2.2 – 2.4 billion range, together with the generally bullish outlook waswelcomed on the financial markets. The Deutsche Post share price rose strongly in early trading andclosed up 3.79 per cent.
“Our growth trend clearly continues,” CEO Frank Appel declared. “Our third quarterperformance underscores our exceptional market positioning once again. We are located in all of theregions and markets that continue to generate particularly strong growth: in the emerging marketsof Asia, the Middle East and Latin America as well as in the dynamic German parcel market.”
Addressing world economic trends, he told a press conference: “Up to the end of Q3 we couldnot see any downturn in the world economy. We are cautiously optimistic that in 2012 we will nothave a recession but lower growth.” CFO Larry Rosen said the company expected global GDP growth of3-3.5 per cent next year, with continued good growth in emerging markets and regions.
In Q3, 2011, DHL Express increased revenues by 7.7 per cent to €2.93 billion, with anunderlying rise of 12.7 per cent, and improved its operating profit by 10.1 per cent to €219million. The operating margin rose slightly to 7.5 per cent. The core business of time-definiteinternational (TDI) shipments grew by 15.3 per cent in revenue terms and 11 per cent in volumes.But time-definite domestic services showed low growth while day-definite domestic services declineddue mostly to the disposals of domestic parcels businesses in Canada and China this year.
TDI growth was higher than in the last two quarters and also exceeded that of competitors,Rosen pointed out. “We are growing faster than the market and winning market share,” he said. CEOFrank Appel commented: “We have grown faster than our competitors in all of the last threequarters. That is the first time for 10 years.”
In Europe, DHL Express increased Q3 revenues by 6.7 per cent to €1.23 billion, with TDIvolumes up by 11.8 per cent. In Asia Pacific, revenues increased by 10.3 per cent to €956 million,with “uninterrupted growth” in TDI volumes, which were up by 10.3 per cent over the first ninemonths of the year, the nine-month report stated. Q3 revenues in the Americas dropped slightly to€457 million but TDI volumes surged by 15.5 per cent, which “significantly exceeded” the growthrates of the previous quarters.
In a response to a CEP-Research question, Appel declined to say how much DHL Express isincreasing express capacity at present but pointed out that the higher volumes generated greaterscale effects than in the past. The uncertain economic environment could even benefit the expressbusiness since companies had low inventory levels and would need to use express to get productsinto shops ready for Christmas if demand picked up, he added.
Appel declined to comment on speculation that DHL might take full control of its Indiandomestic subsidiary Blue Dart, in which it owns 81 per cent. But he said the Indian domesticexpress market leader is “developing excellently”. He also highlighted DHL’s “clear marketleadership” in Asia where the business was profiting from regional growth.
At a group level, Deutsche Post DHL boosted revenues and significantly improved itsprofitability in the third quarter of 2011. Group revenues increased by 2.5 per cent to €13.1billion, with an underlying rise of 5.7 per cent, and EBIT climbed by 18.5 per cent to €646million. The net profit improved 70 per cent to €385 million.
The Mail division increased Q3 revenues by 2.6 per cent to €3.4 billion, letter volumes werestable and EBIT improved by 17.5 per cent to €302 million. DHL Parcel Germany continued its stronggrowth, with revenues up 10.3 per cent to €748 million and volumes up by 11.4 per cent thanks toe-commerce growth.
DHL Global Forwarding continued its focus on profitable growth, with revenues up 1.9 per centat €3.8 billion and EBIT improving 22 per cent to €122 million. Revenues in air and ocean freightcame under pressure during the third quarter, and volumes were lower, but the overland transportbusiness continued to produce strong gains.
DHL Supply Chain also improved its profits to €99 million, up 19.3 per cent, on flat revenuesof €3.3 billion. But organic growth, excluding currency effects and a US disposal, was 6.2 percent, fuelled by significant growth in the Asia-Pacific region as well as the Life Sciences &Healthcare and Automotive sectors.
For 2011 as a whole, the Mail division is now expected to contribute around €1.1 billion inoperating profits while combined DHL profits are expected to increase at double-digit rates toabove €1.7 billion.
