OREANDA-NEWS. Deutsche Post DHL Group increased revenue significantly in the first quarter of 2017 and posted a further improvement in operating profit. Group revenue climbed by more than EUR 1 billion to EUR 14.9 billion.  All four divisions contributed to the strong growth. Volumes and revenue saw substantial growth in particular in the German and international Parcel and eCommerce businesses as well as the global Express business. With Group EBIT of EUR 885 million, Deutsche Post DHL Group surpassed the good prior-year result and registered the strongest first quarter in the company's history1.

"Following a record year in 2016, the upward trend has continued at Deutsche Post DHL Group this year. We reported growth in all four divisions in the first quarter: Our strategy is working, and we are confident that we will achieve our targets for 2017," said Frank Appel, CEO, Deutsche Post DHL Group.

Strategy 2020: Positive half-time assessment

Deutsche Post DHL Group is seeing good results at the half-time mark for its Strategy 2020, which the company introduced in 2014. Key milestones have already been reached. All four divisions have been positioned to leverage growth opportunities, particularly in the e-commerce sector. The company has successfully expanded its Parcel business into international markets, and has also introduced new solutions in its Express business to continue capitalizing on the booming online commerce sector. The Global Forwarding, Freight and Supply Chain divisions are more streamlined and efficient today and therefore positioned for sustainable growth.

"Our team has managed the first half of Strategy 2020 very successfully. Our strategic measures are already clearly paying off. At the same time, we continue to work hard to expand our global market leadership. We are developing trend-setting innovations, moving into new fields of business and leveraging the opportunities presented by digitalization. Our company is already ideally positioned to achieve its strategic and financial targets for 2020," said Frank Appel.

Outlook: Earnings targets confirmed for 2017 and beyond

Deutsche Post DHL Group expects the global economy to grow moderately in 2017. After a good first quarter, the Group has maintained its forecast of increasing EBIT to around EUR 3.75 billion. Additionally, Deutsche Post DHL Group continues to forecast that operating profit will increase by an average of more than 8% annually (CAGR) during the period from 2013 to 2020.

First quarter of 2017: Growth in all four divisions

Group revenue grew significantly by 7.3% to EUR 14.9 billion in the first three months of the year. The company's operating profit increased by 1.4% to EUR 885 million in the first quarter. Adjusted for the non-recurring positive effect posted by Supply Chain in 2016, the increase in EBIT was 6.0%. The improvement in the Group's profitability was driven largely by Express, with a significant double-digit growth in operating profit.

Consolidated net profit after non-controlling interests was slightly below the prior-year level at EUR 633 million (2016: EUR 639 million), due to a higher tax rate. Basic earnings per share decreased correspondingly, edging down from EUR 0.53 in the previous year to EUR 0.52 in 2017.

Capital expenditure: Foundation for growth further strengthened

Deutsche Post DHL Group invested EUR 334 million in the first quarter of 2017 (2016: EUR 411 million). Investments continued to focus on positioning the Group for future profitable growth in all four divisions. For example, the Group made further progress in extending its domestic and international parcel infrastructure and invested in the production of its StreetScooter electric vehicle, in addition to expanding global and regional hubs in the Express division and modernizing and expanding the aircraft fleet.

Substantial year-on-year increase in cash flow

The Group saw free cash flow of EUR -430 million in the first quarter (2016: EUR -700 million). This substantial increase was mainly the result of improved working capital management. The significant cash outflow in the first quarter reflects the usual seasonal trend for Deutsche Post DHL Group. The company's cash flow is regularly impacted at the beginning of each year by the annual prepayment made to the Federal Post and Telecommunications Agency for civil servant pensions. The contribution for 2017 was EUR 493 million.

Post - eCommerce - Parcel: German and International Parcel business continues to grow

Revenue in the Post - eCommerce - Parcel (PeP) division increased by 6.4% to EUR 4.5 billion in the first quarter. This positive development was attributable in the main part to growth in volumes and revenue in the eCommerce - Parcel business unit, which increased revenue by 17.5% to EUR 2.0 billion. The increase was based on revenue gains of 6.1% for Parcel Germany, 70.3% for Parcel Europe and 13.7% for eCommerce. A key positive factor behind the strong increase in revenue at Parcel Europe was the inclusion of the UK Mail business in the unit's consolidated results after successful completion of the acquisition of the British company in December. In the first quarter, UK Mail had revenue of EUR 139 million. The integration of UK Mail shows that PeP is making good progress in the expansion of its 'United Parcel Nations of Europe'. At the beginning of the year, the division also extended its European network to include Spain and Portugal. In the international eCommerce business, the domestic U.S. and the cross-border Asian businesses, in particular, are growing dynamically. The positive development in the eCommerce - Parcel business unit shows once again how Deutsche Post DHL Group continues to benefit from its successful positioning as market and innovation leader in the high-growth e-commerce segment.

In the Post business unit, revenue saw a slight decrease of 1.2% to EUR 2.5 billion due to structural volume declines mainly in the area of Mail Communication.

EBIT in the PeP division improved to EUR 425 million in the first quarter (2016: EUR 414 million).