DP-DHL performs strongly due to sharper focus

Deutsche Post DHL performed strongly in 2012, with a rise in profits across most of its businesses. For the full year, the Group saw a 5.1% increase in revenue at €55.5bn and a 9.4% increase in EBIT at €2.67bn.

The previously lucrative Mail business was the only sector to report a decline in profits for 2012. Revenue was flat, whilst EBIT (Earnings Before Interest and Tax) fell 5.1% as the fall in addressed mail finally took its toll on the business. Parcel volumes continued to grow, spurred on by e-commerce, but this did not quite offset the 3% decline in letter volumes.

Express continued its strong recovery, with DHL’s positioning in higher value international services apparently a success. Revenue was up 9.3% at €12.77bn and profits, in terms of EBIT, hit €1.11bn, a jump of 21%. Time definite international shipments increased 9.4% over the year and revenues were almost as buoyant, increasing 8%, illustrating some robustness in underlying demand.

Forwarding was not quite as strong, with falls in volume in air freight of 5.3% over the year and a moderate 4.3% increase in sea freight. However, profits climbed strongly with EBIT up by 16.4% at €512m for the year, on a revenue increase of 3.6% at €15.67bn.

Contract logistics also continued to improve its performance despite economic headwinds. Revenue rose by 8.4% compared to 2011 to €14.34bn, whilst profits leapt by 14.9% year-on-year to €416m. DHL Supply Chain appears to have addressed its key problem of weak margins by pursuing better quality business, yet it has still increased its revenue, which represents an important turnaround for DHL Supply Chain.

Overall, this appears to be a convincing performance across the board for the Deutsche-Post DHL Group and one that places it around the top of the sector in all its core businesses. The strong performance can be attributed to improved market strategy as well as its execution, with DHL Express’ focus on ‘Time Definite International’ traffic being a good example.

Although it would be wise to wait and see if this performance can be sustained, the strong performance of Deutsche Post DHL is likely to cause concern for its rivals across the transport and logistics sector.