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DHL operating profit up 21pc to US$997 million, but sales off 6.1pc

DEUTSCHE Post-DHL Group, the Bonn-based global forwarder and express delivery giant, posted a first quarter 21 per cent year on year increase in operating profit to EUR873 million (US$997 million), drawn on revenues of EUR.38 billion, which fell 6.1 per cent.

While increasing operating profit, its air freight volumes slipped 8.8 per cent and its quarterly forwarding revenues fell 12.2 per cent year on year.

DHL said the drop in volumes came about by adopting a "more selective market strategy" and eliminated certain low-margin business activities.

In this way DHL said it had "secured additional new business during the reporting period, which will be implemented as the year progresses and is expected to have a positive impact on volume development."

In addition, during the Q1 results call, DHL Group CEO Frank Appel said he was unconcerned with the recent announcement that chief rival Amazon will be leasing twenty 767-300 freighters from Atlas Air Worldwide units.

"Atlas can work with other customers and [the deal] has, to our knowledge, no impact on our operations," Mr Appel said. "It is normal that airlines work with other customers."

DHL's troubled Global Forwarding arm reported quarterly revenues of EUR3.3 billion for 2016. Adjusted for negative currency effects, revenue declined by 9.3 per cent, the company said.

Air freight fell to 476,000 tonnes, representing the fourth consecutive quarter in which the forwarding arm experienced air freight volume declines.

Air freight revenues declined 18.4 per cent, to EUR1 billion, thanks mostly to currency effects and lower fuel surcharges. Gross profit for air freight fell to EUR210 million, a 4.5 per cent decline.

But operating profits for the forwarding division showed improvement, rising from EUR17 million in the previous quarter to EUR51 million.

"This is a clear indication of the positive effects of measures introduced in the past year to improve operating performance at Global Forwarding, Freight," he said.

Meanwhile, the operating profit for DHL's supply chain division increased from EUR53 million to EUR127 million.

Also, the Express arm saw an increase in operating profit of 7.5 per cent, to EUR357 million, while the post - e-commerce - parcel division saw its operating profit rise 3.3 per cent to EUR412 million.

For the rest of 2016, the DHL Group said it is expecting only "moderate growth" in the global economy but is optimistic about its recent strategic measures it has enacted.

"We've had a good start to the current year," Mr Appel said. "We have registered the strongest first quarter in our company history. The efforts we made in 2015 to position ourselves for profitable growth in all divisions are paying off. Last year was a year of transition, and we are now firmly on track to achieve our targets for 2016," he said.