The Bonn, Germany-based parcel carrier and third-party logistics provider has also formed a partnership with Shanghai Pharma of China to facilitate improvements to the company’s logistics infrastructure and a global expansion.
Deutsche Post DHL Group saw its net profit in the second quarter of 2017 jump 11.3 percent to 602 million euros (U.S. $706.6 million) compared with the same 2016 period, according to the company’s most recent financial statement.
Revenues at the Bonn, Germany-based parcel carrier and third-party logistics provider grew 4.4 percent year-over-year to EUR 14.8 billion (U.S. $17.4 billion) for the quarter, thanks in large part to strong growth for e-commerce and the express business, DHL said. Basic earnings per share (EPS) rose from EUR 0.45 in Q2 2016 to EUR 0.50 per share in Q2 2017.
Three of DHL’s four business segments reported positive results, with the Express sector registering the highest growth as measured in earnings before interest and tax (EBIT), up 12.2 percent to EUR 469 million. The Post-eCommerce-Parcel (PeP) division grew EBIT 4 percent to EUR 259 million, while Supply Chain EBIT was up 21.6 percent to EUR 124 million.
The group’s Global Forwarding division, on the other hand, saw its EBIT drop 2.9 percent to EUR 67 million.
“We are very satisfied with both the second quarter and the entire first half of the year. Our company is growing in all areas and steadily increasing earnings,” said Deutsche Post DHL Group CEO Frank Appel. “Our good results so far this year demonstrate that we are right on track to achieve our EBIT targets for full-year 2017. We also remain optimistic about the coming years. All of our divisions, thanks to their focus on fast-growing markets such as global e-commerce, are optimally positioned for long-term growth.”
During the first six months of 2017, DHL grew its net profits 4.7 percent to EUR 1.2 billion compared with the first half of 2016 on revenues that rose 5.8 percent to EUR 29.7 billion. PeP and Express EBIT rose 3.2 percent and 11.9 percent, respectively, but EBIT in the Global Forwarding and Supply Chain segments were down 10.8 percent and 2.6 percent, respectively.
Meanwhile, DHL also announced a new partnership with China-based Shanghai Pharma to enhance quality control measures, streamline distribution processes, and strengthen compliance with local and international food and pharmaceutical regulations.
The agreement will enable Shanghai Pharma to prepare its logistics infrastructure for rapid global expansion and will give the company access to DHL’s network and supply chain optimization assistance, the company said. A range of recent government initiatives, including the “two-invoice,” or “fapiao,” policy which was rolled out earlier this year, have put greater onus on China’s pharmaceutical sector to improve the transparency and efficiency of local supply chains.
“The quality and resilience of our logistics infrastructure will determine not only how successfully we adapt to new legislation like fapiao – which seeks to cut down on multiple distributors and mark-ups by only allowing two invoices per goods shipment, but also our ability to capitalize on the huge international growth opportunity for high-grade Chinese pharmaceutical products and medical devices,” Shanghai Pharma President and Executive Director Cho Man said of the partnership agreement.
“China’s national market for drugs has grown rapidly in recent years to become the world’s second-largest with an estimated growth to around $167 billion by 2020,” he added. “Our partnership with DHL will help Shanghai Pharma to become one of the world’s foremost pharmaceutical manufacturers – supported by a global distribution network that combines world-class quality control with fast, seamless delivery.”
According to Yin Zou, DHL Supply Chain CEO for Greater China, China’s pharmaceutical industry has historically suffered from high levels of fragmentation among its local customers and distributors, hence the new “fapiao” policy.
“In this regulatory climate, end-to-end supply chain management plays an increasingly crucial role in determining how effectively Chinese pharmaceuticals firms not only maintain sales locally, but gain traction abroad in a cost-effective and sustainable manner. We believe that our partnership will not only greatly benefit both parties, but raise the bar for quality control and supply chain efficiency across China’s entire pharmaceutical industry,” said Yin Zou.
E-commerce, express growth fuel strong DHL Q2 results
