Deutsche Post DHL Group profits from China deal

Revenue climbed by 4.1 per cent to €15.4 billion, with operating profit up 28 per cent to €1.2 billion driven by the completion of a Supply Chain agreement in China, according to Q1 2019 financial results announced by Deutsche Post DHL Group.

The logistics company confirmed that earnings contributions from DHL divisions were ‘encouraging’, while the surge in earnings was driven by non-recurring income from completing a Supply Chain partnership with SF Holding in China initiated at the end of 2018.

Previously announced restructuring costs at Supply Chain and in the new eCommerce Solutions division reportedly slowed earnings before interest and taxes (EBIT) growth.

“The first quarter played out as we expected,” said Deutsche Post DHL Group CEO, Frank Appel.

“We achieved growth in all five divisions,” he said.

“This shows that we are very well positioned in attractive markets and that our fundamental growth drivers are intact.

“E-commerce continues to boom all over the world and although some momentum has been lost, global trade is still on the rise, just as we expected for 2019. We are therefore on track towards our target of generating more than EUR 5 billion in EBIT in the coming year.”

The Supply Chain division increased revenue by 4.6 per cent to €3.3 billion in the first quarter. New business also continued to perform very well, according to DHL. The division concluded additional contracts with an annualised total volume of €180 million in the first quarter. Operating profit surged to €486 million (2018: €55 million) due to non-recurring income. As a result of concluding the Supply Chain agreement entered into with SF Holding in China at the end of 2018, the division recorded a one-time positive EBIT effect of €426 million. In addition, a portion of the funds generated from the SF transaction were reinvested into restructuring the Supply Chain business, mainly in the UK. Adjusted for one-off effects Supply Chain recorded an EBIT increase of 12.4 per cent.

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