Press Release

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Revenues produced by the Group totaled EUR 13.6 billion between April and June.
“After generating revenues of EUR 13.7 billion in the second quarter of 2012, the Group generated revenues of EUR 13.6 billion in the second quarter of this year.
The company originally forecast operating earnings of between EUR 2.7 billion and EUR 2.95 billion.
Operating earnings generated by the DHL divisions are still expected to total between EUR 2.0 billion and EUR 2.15 billion.
On a reported basis, the division’s EBIT fell to EUR 296 million in the second quarter (2012: EUR 367 million).
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Company: DHL, Activity: DHL, Date: 2013-08-06
Keywords: news, shipping, dhl, shippers, earnings, revenues, eur, second, division, operating, effects, release, million, quarter, press, billion

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Consolidated revenues on prior year’s level in Q2

Operating earnings up; significant increase in consolidated net profit

Strong cash flow development in Q2

Guidance adjusted to reflect positive one-time effect in MAIL: Group EBIT of between EUR 2.75 billion and EUR 3.0 billion expected

CEO Frank Appel: “Focus on cash flow is increasingly bearing fruit”

During the second quarter of 2013, Deutsche Post DHL generated further gains in revenues and earnings. Revenues produced by the Group totaled EUR 13.6 billion between April and June. The slight 0.6 percent dip compared with the same period last year was solely the result of negative exchange-rate and other inorganic effects. Adjusted for these factors, revenues in the second quarter of 2013 increased nearly 2 percent above the level reached last year. This growth was largely due to the continuing volume and revenue gains being generated by the parcel segment in Germany, the international EXPRESS business and the SUPPLY CHAIN division.The Group’s operating earnings increased 14 percent to EUR 619 million in the second quarter. The reversal of a provision in the MAIL division during the second quarter and the absence of a number of one-time effects that negatively impacted the previous year’s results contributed to this increase. During the second quarter, consolidated net profit climbed from EUR 196 million in 2012 to EUR 422 million in 2013 due in part to the one-time effects. The Group also made considerable headway in cash generation: During the second quarter of 2013, free cash flow was around EUR 350 million above the previous year’s level.”Given the economic challenges we continue to face, we can be satisfied with our solid performance in the second quarter,” said Frank Appel, CEO of Deutsche Post DHL. “Our strength in the international express business and in Germany’s parcel market has paid off once again in the past few months. Our focus on cash flow generation is also increasingly bearing fruit.”After generating revenues of EUR 13.7 billion in the second quarter of 2012, the Group generated revenues of EUR 13.6 billion in the second quarter of this year. The slight decrease of 0.6 percent resulted from negative exchange-rate and other inorganic effects. Adjusted for these factors, revenues rose by more than EUR 250 million in the second quarter of 2013. Consolidated EBIT jumped by 14 percent in the same period to EUR 619 million (2012: EUR 543 million).This rise was largely attributable to a EUR 50 million reversal of the postage stamp provision in the MAIL division. Another key reason was the absence of one-time effects that had a negative impact totaling EUR 38 million on the second-quarter results of 2012. These one-time effects stemmed largely from the VAT settlement charge taken last year and the reversal of provisions in the EXPRESS division. During the past quarter, the Group recorded a small loss resulting from the disposal of company units that were not part of the core business in the SUPPLY CHAIN division. Adjusted for these one-time effects in both years, operating earnings produced in the second quarter of 2013 would have reached the previous year’s level.The Group’s financial result improved during the second quarter, from minus EUR 249 million to minus EUR 39 million. Part of the VAT settlement charge taken last year is also reflected in this result. This charge had a negative impact of EUR 115 million on the Group’s financial result in the second quarter of 2012. As a result of this development, a positive one-time effect in this year’s financial result in an amount of EUR 42 million and the significant rise in operating earnings, the company was able to more than double its consolidated net profit for the second quarter of 2013 to EUR 422 million (2012: EUR 196 million). This corresponds to an increase in basic earnings per share to EUR 0.35 (2012: EUR 0.16). Adjusted for the one-time effects in both years, consolidated net profit and earnings per share would have improved by around 9 percent in the second quarter.In light of the positive one-time effect in the MAIL division in the second quarter, the company has increased its earnings guidance for the current financial year. It now expects to produce consolidated EBIT of between EUR 2.75 billion and EUR 3.0 billion. The company originally forecast operating earnings of between EUR 2.7 billion and EUR 2.95 billion. Operating earnings generated by the DHL divisions are still expected to total between EUR 2.0 billion and EUR 2.15 billion. The Group now expects to see earnings at the MAIL division rise to a level of between EUR 1.15 billion and EUR 1.25 billion, EUR 50 million more than previously projected. Expenditures for Corporate Center/Other are expected to remain at about EUR 400 million. At the same time we now expect that net profit growth should exceed the growth in operating profit in 2013. The company also expects that its focus on cash flow will continue to yield positive results and enable this year’s free cash flow to at least cover the dividend payment for financial year 2012.Looking beyond the current year, the Group expects the positive earnings trend to continue. For DHL, the Group forecasts earnings to rise by an annual average of between 13 percent and 15 percent between 2010 and 2015. The operating profit of the MAIL division should stabilize at a level of at least EUR 1 billion thanks to cost-cutting measures and growth programs that have been introduced. In combination with the planned reduction of expenditures for Corporate Center/Other, the Group expects operating earnings to increase to between EUR 3.35 billion and EUR 3.55 billion by 2015.The Group’s intensified focus on cash flow also paid off in the second quarter: At EUR 501 million, operating cash flow in the second quarter was more than twice as high as it was a year ago (2012: EUR 215 million). In the first half of the year, the cash flow from operating activities totaled EUR 621 million. Last year, the Group reported a cash outflow of EUR 142 million. This year-over-year increase of more than EUR 750 million primarily reflects the Group’s continued good operating performance and working capital improvements. Accordingly, free cash flow improved significantly in the first half of the year, climbing by more than EUR 850 million from minus EUR 767 million in the first half of 2012 to EUR 99 million in 2013. At the end of the second quarter, the Group’s net debt totaled EUR 2.8 billion. Compared with the end of 2012, this involves a seasonally typical rise, which totaled around EUR 850 million this year and primarily reflects the dividend payment that was made in May (EUR 846 million).The Group’s capital expenditures totaled EUR 281 million in the second quarter (2012: EUR 374 million). A total of EUR 499 million was invested in the first half of the year (2012: EUR 679 million). This decline from the previous year’s level was primarily due to timing effects. For the entire year, the Group expects capital expenditures to rise to a maximum of EUR 1.8 billion. In the first half of the year, the DHL divisions remained the focal point of the Group’s capital expenditures. These investments flowed into areas that reinforce the foundation for future growth and long-term business success – including the continued expansion of the network, a more efficient air fleet, state-of-the-art warehouses, and a new IT infrastructure for Global Forwarding. The MAIL division increased its capital expenditures, mainly due to higher investments in the expansion of its parcel infrastructure.In the first half of the year, consolidated revenues remained at the previous year’s level at EUR 27.1 billion. Adjusted for negative exchange-rate and other inorganic effects, revenues would have risen by 1.7 percent, or more than EUR 450 million, in the first half. The Group’s operating earnings rose by 7.8 percent compared with the first half of 2012, climbing to EUR 1.3 billion (2012: EUR 1.2 billion). The one-time effects reflected in the quarterly results in both years had a similar impact on the half-year figures. Adjusted for these one-time effects, consolidated EBIT would have risen slightly between January and June 2013.During the first six months of 2013, consolidated net profit climbed by 27 percent from EUR 725 million in 2012 to EUR 920 million during the current financial year. Earnings per share rose from EUR 0.60 in the previous year to EUR 0.76 in 2013. Adjusted for all one-time effects – in addition to the previously stated factors, the absence of the EUR 186 million disposal gain that resulted from the Postbank sale in the first quarter of the previous year impacted the year-on-year comparison – consolidated net profit would have risen by around 26 percent.During the second quarter of 2013, revenues in the MAIL division climbed by 4.4 percent to EUR 3.4 billion (2012: EUR 3.3 billion). In addition to significant revenue gains in the Global Mail business, this growth was fueled in particular by the continuing dynamic performance of the division’s parcel operation in Germany. As online retailing continues to grow, the company is proactively addressing the opportunity with innovative products and delivery services. Parcel revenues climbed by nearly 9 percent to EUR 867 million in the second quarter.As a result, the parcel business is now generating more than one-fourth of total revenues in the MAIL division. Operating earnings produced by the division climbed to EUR 223 million between April and June 2013 (2012: EUR 38 million). The comparison with the previous year’s results was significantly impacted by the provision reversal in this year’s quarter and the absence of the VAT charge taken last year. Adjusted for these effects, EBIT produced by the MAIL division in the second quarter would have fallen slightly as a result of increased material and personnel costs.During the second quarter of 2013, the EXPRESS division continued to increase both organic revenues and earnings. Between April and June, reported revenues did remain at the previous year’s level of EUR 3.2 billion. But revenues reported last year included the results of the domestic express businesses in Australia, New Zealand and Romania that the company has sold in the meantime. Adjusted for this disposal effect and negative exchange-rate developments, revenues rose by 4 percent in the second quarter.Once again, the main growth driver of the revenue improvement were the division’s international time-definite shipments. This positive trend results from significant volume and revenues gains in these products that continue to be achieved in all regions. On a reported basis, the division’s EBIT fell to EUR 296 million in the second quarter (2012: EUR 367 million). The sole reason for this decrease was the absence of various one-time effects related to the VAT charge taken last year, the reversal of provisions and the gain on the disposal of company units that were not part of the core business. These factors had a positive impact of EUR 113 million on the division’s earnings in the same period last year.Adjusted for these non-recurring effects, operating improvements produced by the investments made over the past quarters in the expansion of the division’s network, employee training and its range of services resulted in a double-digit gain in EBIT and a significant rise in the operating margin to more than 9 percent.In the GLOBAL FORWARDING, FREIGHT division, revenues in the second quarter of 2013 fell by 6.3 percent to EUR 3.7 billion (2012: EUR 4.0 billion) in a challenging market environment. Adjusted for negative exchange-rate effects, the decrease would have been slightly lower at about 4 percent. Volume and revenues in air freight fell below the previous year’s level primarily due to weak demand in the “Technology” and “Engineering & Manufacturing” sectors.Volume and revenues also decreased in ocean freight during the past quarter. This resulted largely from weaker demand on traditional east-west trade lanes. In contrast, demand on north-south routes and within continents rose. Small revenue gains were achieved in European overland transport. Thanks to a selective market strategy and continued strict cost controls, the division’s operating margin remained stable despite the decline in revenues. Operating earnings in the division totaled EUR 129 million in the second quarter (2012: EUR 138 million).Revenues generated by the SUPPLY CHAIN division in the second quarter of 2013 rose to EUR 3.6 billion (2012: EUR 3.5 billion). Adjusted for negative exchange-rate effects and the impact of the disposal of three subsidiaries that were not part of the core business, revenues between April and June climbed by nearly 6 percent, or about EUR 200 million. This growth was fueled in particular by significant gains in the Asia-Pacific region as well as in the Automotive, Retail and Consumer sectors. During the second quarter of 2013, the volume of new contracts concluded with new and existing customers set a second-quarter record at EUR 350 million, another clear demonstration of the division’s successful performance. Despite further operating improvements, EBIT fell to EUR 79 million in the second quarter (2012: EUR 101 million). This drop, however, resulted largely from one-time expenses related to the disposals and small restructuring charges.

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Company: DHL, Activity: DHL, Date: 2013-08-06
Keywords: news, shipping, dhl, shippers, earnings, revenues, eur, second, division, operating, effects, release, million, quarter, press, billion

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