Deutsche Post DHL has increased its financial forecasts for the year on the back of strong results for the second quarter.
The DHL business is now predicted to produce an underlying EBIT in the region of 1.3bn euros – up from its previous forecast of 1 to 1.1bn euros. And, as the forecast for the Mail business remains unchanged at 1-1.2bn euros, the expectation is that DHL will, for the first time make a bigger contribution to group profits.
Profits almost doubled at Deutsche Post DHL in the second quarter as a result of a mix of new business wins, a marked rise in transport volume being fuelled by the continuing economic recovery and favourable currency effects in all DHL divisions.
Underlying EBIT at the group totalled 503m euros for the first quarter, 95.7 per cent up on last year, while sales were up 15.6 per cent to 12.8bn euros.
Some of DHL’s divisions were hit by the closure of Quelle, the German mail order business of the Arcandor group, but the group said that despite the loss of this revenue sales in the Supply Chain division at 3.4bn euros were 10.7 per cent up on last year.
“New business wins and an increase in volume among contracts with existing customers produced strong growth, particularly in the Asia-Pacific region. In the second quarter, additional contracts with new and existing customers worth around euros 260m were concluded. The contract-renewal rate continued to be above 90 per cent. As a result of margin improvements, the direct result of efficiency-enhancing programs, underlying EBIT climbed to 72m euros from 16m euros last year.”
In the Express division, volumes continued to rise in the second quarter, propelled by the economic recovery. In addition to increased revenue, the group said: “The positive development mainly reflects the completed restructuring program in the United States, the withdrawal from the domestic Express business in the UK and significant cost cuts achieved around the world.
“International sales recorded double-digit growth and were able to more than offset decreases in day-definite domestic products resulting mostly from the sale of the domestic Express business in the United Kingdom.
Underlying EBIT rose to 198m euros in the second quarter of 2010 – up from65m euros on 2009. Sales were up 19.2 per cent to 2.9bn euros.
Volumes – and rates rose in the Global Forwarding, Freight division, pusing sales up 35.6 per cent to 3.6bn euros. However, underlying EBIT rose more slowly – 29.1 per cent to 102m euros.
The Mail division reported a 42.1 per cent rise in underlying EBIT to 243m euros despite the trend for physical letters to be replaced by electronic media and the loss of the Quelle business in Germany.
Chief executive Frank Appel said: “As an enabler of global trade, we benefited significantly from the recovery of the world economy in the second quarter. This was particularly true at the DHL divisions, which have become the sustainable driver of the Group’s profit growth.
“We are now reaping the fruits of our successfully implemented strategic initiatives and efficiency-enhancing measures as well as the portfolio restructuring that we have largely completed.”