DHL Express and DHL Parcel Germany are both outgrowing their respective markets and making goodprofits, Deutsche Post DHL CFO Larry Rosen said today.
Rosen told analysts on a Q1 results conference call that DHL’s time-definite internationalexpress volumes were “outgrowing the market”. In Q1, DHL Express’ TDI volumes increased by 9.6 percent on a daily average basis while time-definite domestic volumes rose 5.9 per cent. Day-definitedomestic volumes declined nearly 22 per cent due to the selloff of parcels businesses in severalcountries but grew by 8.2 per cent on an underlying organic basis.
On express volume and pricing trends, Rosen said there was an “ongoing mix shift fromdocuments to packages”, resulting in higher average weights as well as volume growth. “We arepleased with overall pricing and profit levels in all regions,” he commented. Stronger growth inAsia than in Europe would not necessarily result in lower profits, he added.
The CFO said that the ongoing investment in facilities such as the new North Asia hub inShanghai and expansion of the US hub at Cincinnati would benefit both revenues and profits. TheCapex investment at DHL Express rose by 55 per cent to €127 million in the first quarter due to theair network investments.
Rosen declined to say whether DHL Express USA was now profitable or not but added: “We arevery pleased with the progress made in the USA. We have top-line growth.”
Commenting on DHL Parcel Germany, Rosen said: “We are very pleased with the sustainedabove-market growth.” DHL Parcel Germany increased revenues by 12.7 per cent to €844 million in thefirst quarter and its volumes grew by 13.6 per cent. The group was continuing to invest in theparcels unit to improve service offerings, he stressed.
Asked about DHL Parcel Germany’s profitability, Rosen declined to give precise figures forcompetitive reasons but commented: “It’s a solid single-digit margin that is not very far away fromthe overall total Mail margin.” In Q1, the DP DHL Mail division had an 11 per cent profit margin.
Rosen also said that DHL Global Mail, the international mail and parcels business, was now “performing well” following the sale of domestic letter businesses in the UK and the Netherlands.
On Global Forwarding, the CFO highlighted the improved profit margin thanks to a focus onattractive business. It was not yet clear if the ongoing modal shift from air to ocean in recentmonths was a cyclical or a structural shift, however, he told analysts.
