Deutsche Post Posts Mid Single-Digit Revenue Gains In Quarter, With Express Division Leading Way

German logistics and mail giant Deutsche Post DHL Group DPSGY reported a 4.7% year-on-year increase in third-quarter revenue on November 12, boosted by gains in its intra-German parcel and its international air express businesses. Operating profit, measured as earnings before interest and taxes (EBIT), nearly tripled from the year-earlier period despite a one-time charge taken by its newly separated German post and parcel division.

The Bonn-based concern reaffirmed its 2020 EBIT target at $4.4 billion to $4.7 billion. The company said it was on track to hit profit goals for 2020 and 2022, with 2020 EBIT of $5.5 billion and 2022 results of $5.8 billion.

Revenue in the quarter hit $17.1 billion, while operating profit rose to $1.03 billion despite a $432 million one-time charge to account for the restructuring of the separated German unit. On January 1, the company's international e-commerce and German businesses were split into separate divisions. Deutsche Post has five divisions in all.

"All five divisions performed well despite the challenging economic environment," said CEO Frank Appel.

The company's Express division, its largest, reported an 8.7% revenue gain, with daily volumes rising 5.9%. Operating profit and margins rose 11.7% and 10.7%, respectively, due to an increased focus on yields combined with the higher volumes, the company said. The freight forwarding division, its second largest, posted virtually flat revenues due to demand weakness across the air, ocean and land businesses, the company said. The division's operating profit rose 17% due to tighter cost controls, it said.

The Supply Chain division posted a 2.3% revenue gain. Adjusted for currency fluctuations, revenue climbed 3.8%. Operating margins rose 4.8%, which is already at the upper end of the 2020 band, Deutsche Post said.

The eCommerce division posted a 5.4% revenue gain, and reported an operating profit for the first time in its history, Deutsche Post said. The German post and parcel division posted a 5.5% revenue increase, with the parcel segment climbing 9.9% due to strong domestic demand and the impact of rate increases, Deutsche Post said.

Deutsche Post set 2019 capital expenditures at more than $4 billion, up $1.2 billion from 2018 levels. The company added four Boeing Co. BA 777 freighters in the second and third quarters, which accounted for most, if not all, of the year-on-year Capex increase. It is unclear if it will add any more aircraft before year-end.

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