Meanwhile, the Bonn, Germany-based parcel carrier is withdrawing from long-distance bus service and selling its Postbus unit to FlixMobility GmbH for an undisclosed price, Deutsche Post DHL Group said in a statement Wednesday.
Deutsche Post DHL Group saw consolidated net profits in the second quarter 2016 surge 66 percent to 541 million euros (U.S. $604.2 million) compared with the same 2015 period, according to the company’s most recent financial statements.
The Bonn, Germany-based parcel carrier posted earnings per share (EPS) of 0.45 euros compared with 0.27 euros per share in second quarter 2015, narrowly missing consensus analyst expectations of 0.47 euros per share.
Group CEO Frank Appel noted quarterly earnings before interest and taxes (EBIT) of 752 million euros represented a 40 percent increase from Q2 2015 and the strongest second quarter in company history.
Second quarter revenues, on the other hand, slipped 3.5 percent year-over-year to 14.2 billion euros, missing expectations by 1.27 billion euros.
The company attributed the decline primarily to negative currency effects, lower fuel surcharges, and a change in the recognition of revenues generated from a key customer contract in the Supply Chain division, which started in the fourth quarter of 2015. Deutsche Post noted that adjusted for the above effects, group revenues rose 4.1 percent year-over-year in second quarter 2016.
Capital expenditures increased 8.3 percent year-over-year to 456 million euros in the second quarter of 2016.
“Investments continued to focus on positioning the Group for future profitable growth in all four divisions,” the company said. “For example, Deutsche Post DHL Group made further progress in extending its national and international parcel infrastructure and invested in the production of its electric vehicles StreetScooter in addition to expanding global and regional hubs in the Express division as well as modernizing and expanding the aircraft fleet.”
The company’s Post – eCommerce – Parcel (PeP) unit saw profits from operating activities (EBIT) skyrocket, from 75 million euros in second quarter 2015 to 247 million euros in second quarter 2016, its best second quarter since 2008. Comparisons with Q2 2015 are skewed, however, as operating profit was reduced by around 100 million euros during the period due to a postal strike in Germany. Adjusted for the effect of the strike, EBIT increased 41 percent compared with second quarter 2015 on revenues that grew 7.8 percent to 4 billion euros.
“This figure reflects not only the effect of the additional working days, but also – and especially – the positive effects of revenue growth, which was attributable to the increase in postage prices and sustainable growth at eCommerce – Parcel,” the company said.
“The upward trend shows how Deutsche Post DHL Group continues to benefit from positioning itself successfully as a market and innovation leader in the high-growth e-commerce segment,” it added. “The company is expanding on its position by offering services such as time-window delivery, which was recently expanded and is now available throughout Germany.”
EBIT in Deutsche Post’s Express division grew 11.7 percent to 420 million euros for the quarter thanks to an 8.2 percent increase in daily volumes in its international time-definite (TDI) business. Revenues for the unit rose 2 percent year-over-year to 3.52 billion euros.
The Global Forwarding, Freight segment saw EBIT jump 72.5 percent in the second quarter to 69 million euros. Revenues, however, dropped 9.3 percent to 3.4 billion euros in second quarter 2016 due to what Deutsche Post described as the “still weak market environment” and the division’s “selective market strategy.”
The company’s supply chain unit reported EBIT of 102 million euros on 3.5 billion euros in revenues for the quarter, year-over-year decreases of 14.3 percent and 12.5 percent, respectively. Deutsche Post attributed the decline primarily to 16 million euros in scheduled restructuring costs as part of the division’s optimization program. The goal of the program, according to the company, is to increase the margin in the Supply Chain division to between 4 percent and 5 percent by 2020 by increasing standardization, improving efficiency and better leveraging economies of scale in the global business.
“Our successful business performance and the strong increase in operating profit we achieved in the second quarter demonstrate that we took the right decisions and made the right investments in 2015, a year of transition, to set the stage for improving our profitability this year and in the years to come,” said Appel. “Having posted the strongest second quarter in our history, we remain well on track towards achieving our targets. Our Post – eCommerce – Parcel division in particular contributed to the positive trend. PeP management is continuously expanding the division’s market-leading position through future-oriented investments and trend-setting innovations.”
In the first half of 2016, Deutsche Post profits grew 43.7 percent to 1.18 billion euros despite revenues falling 4.8 percent to 28.1 billion euros compared with the previous year.
EPS stood at 0.98 euros per share for the first six months of the year, up 44.1 percent from 0.68 euros per share in 2015.
Looking forward to the remainder of the year, Deutsche Post reconfirmed its full-year 2016 EBIT forecast of between 3.4 billion euros and 3.7 billion euros and an average increase in operating profit of more than 8 percent annually during the period from 2013 to 2020.
Meanwhile, the company also announced Wednesday it is withdrawing from long-distance bus service and selling its Postbus unit to FlixMobility GmbH. With the sale, all previous Postbus passenger busses will be operated under FlixMobility’s Flixbus brand.
Under the agreement, FlixMobility will take over all Postbus bus line and bus stop permits, IT licenses and cooperation agreements. The companies also signed a separate cooperation agreement to cover sales and marketing operations, under which over 5,000 Deutsche Post partner retail outlets in Germany will offer vouchers for Flixbus tickets with special terms and conditions, and Flixbus’ website will feature select postal products for the purpose of targeted advertising.
All Postbus lines will be available until Oct. 31, 2016, at which point they will be incorporated into the Flixbus network. All current bookings and those made between now and the end of October will be honored and customers can book travel as usual.
Starting Nov. 1, customers will automatically be transferred to the Flixbus booking system, with the exception of the feeder lines to the Munich Airport, which will continue to be served by Postbus in cooperation with Lufthansa until Dec. 14, 2016, for German destinations, and until Feb. 11, 2017, for trips to and from Innsbruck and Salzburg.
Deutsche Post said subsidiary company Deutsche Post Mobility GmbH will remain a part of the Deutsche Post DHL Group and in the future will focus on its Post Reisen tourism service, which offers vacation packages and holiday travel.
Financial terms of the deal were not disclosed.
“After entering the liberalized long-distance bus market in October 2013 with Postbus, we were able to become a recognized quality leader in a fast growing market in a short time. However, in terms of profitability, Postbus did not sufficiently live up to our expectations,” Joachim Wessels, managing director of Deutsche Post Mobility GmbH, said of the sale.
Deutsche Post Q2, first half profits surge despite slipping revenues
