DGAP-Media / 2016-08-03 / 07:00 *Deutsche Post DHL Group continues strong earnings trend in the second quarter* - *Group EBIT increases by 40.0% to EUR 752 million * - *Guidance for full-year 2016 confirmed: operating profit forecast to rise to between EUR 3.4 billion and EUR 3.7 billion * - *CEO Frank Appel: "Having posted the strongest second quarter in our company's history, we are well on track towards achieving our targets."* *Bonn, August 3, 2016*: Deutsche Post DHL Group, the world's leading mail and logistics company, increased operating profit significantly in the second quarter of 2016. Group EBIT climbed to EUR 752 million, or a 40.0% increase over the prior-year period (2015: EUR 537 million). With this, the company recorded its best ever second quarter, as the strong earnings momentum of the preceding two quarters continued. Group revenue decreased by 3.5% to EUR 14.2 billion between April and June 2016 (2015: EUR 14.7 billion). In addition to negative currency effects and lower fuel surcharges, the decline primarily reflects a change in the recognition of revenue generated from a key customer contract in the Supply Chain division, which started in the fourth quarter of 2015. Adjusted for the above effects, Group revenue rose by 4.1% year on year. "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. 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," stated Frank Appel, CEO of Deutsche Post DHL Group. *Outlook: Earnings forecast for 2016 and long-term objectives confirmed* Although global economic growth remains only moderate, the strategic initiatives implemented in all four divisions are expected to significantly increase EBIT performance for full-year 2016. Deutsche Post DHL Group therefore re-confirms its full-year 2016 forecast for Group EBIT to be between EUR 3.4 billion and EUR 3.7 billion. The Group is also maintaining its targets beyond 2016: Deutsche Post DHL Group continues to forecast an average increase in operating profit of more than 8% annually during the period from 2013 to 2020 (CAGR). *Q2 2016: Profitability increases significantly* Although the moderate revenue development continues, both the Post - eCommerce - Parcel (PeP) division and the DHL divisions contributed to the substantial 40.0% increase in second-quarter Group EBIT to EUR 752 million (2015: EUR 537 million). Operating profit at PeP improved to EUR 247 million (2015: EUR 75 million). The DHL divisions reported a combined increase in EBIT of 10.5% to EUR 591 million (2015: EUR 535 million). Express saw another strong EBIT increase of 11.7% to EUR 420 million. Global Forwarding, Freight maintained the positive trend of the preceding quarters with an EBIT increase of nearly 75%, from EUR 40 million to EUR 69 million. Operating profit at Supply Chain declined due to restructuring costs with a decrease from EUR 119 million to EUR 102 million. Thanks to the increase in operating profit and lower financing costs, consolidated net profit improved by 66.0% to EUR 541 million in the second quarter of 2016 (2015: EUR 326 million). Basic earnings per share saw a similar increase, from EUR 0.27 in the previous year to EUR 0.45 in 2016. *Capital expenditure: Foundation for growth reinforced * Group capital expenditures rose by 8.3% to EUR 456 million in the second quarter of 2016 (2015: EUR 421 million). Investments continued to focus on positioning the Group for future profitable growth in all four divisions. 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. *Cash flow: Strong performance impacted by pension provisions* The change in both operating cash flow and free cash flow in the second quarter reflects the further funding of pension obligations, which led to a cash outflow of EUR 1 billion in April 2016. The cash inflow from the placement of two bonds is recognized under cash flow from financing activities. The cash outflow from pension funding led to a decrease in operating cash flow to EUR -161 million in the second quarter (2015: EUR +266 million), while free cash flow declined to EUR -600 million (2015: EUR +67 million). When this effect is excluded, the Group's cash flow performance was very strong in the second quarter: On an adjusted basis, operating cash flow was EUR 573 million higher than in the prior-year period at EUR 839 million, while adjusted free cash flow rose by EUR 333 million to EUR 400 million. The improvement reflects not just the significant improvement in operating net profit, but also good performance in working capital management. *Post - eCommerce - Parcel: Strong growth continues in the parcel business* Revenue in the Post - eCommerce - Parcel division increased by 7.8% to EUR 4.0 billion in the second quarter (2015: EUR 3.7 billion). In addition to the postage stamp price increase implemented at the beginning of the year, the division's positive performance was driven above all by volume and revenue increases in the eCommerce - Parcel business unit. In addition, the second quarter of 2016 included three more working days than the prior-year period. The second quarter of 2015 was also impacted by the postal strike in Germany. Revenue in the eCommerce - Parcel business unit increased by 14.2% to EUR 1.7 billion. The increase was based on revenue gains of 15.3% for Parcel Germany, 18.1% for Parcel Europe and 8.5% for eCommerce. 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. 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. Revenue in the Post business unit rose by 3.6% to EUR 2.33 billion (2015: EUR 2.25 billion). This performance reflects the positive effect of the additional working days and the increase in letter postage prices at the beginning of the year, which more than offset the structural decline in volumes in the Mail Communication and Dialogue Marketing segments. In terms of operating profit, the PeP division registered its best second quarter since 2008. EBIT climbed to EUR 247 million, up from EUR 75 million in the prior-year period when operating profit had been reduced by around EUR 100 million due to the postal strike in Germany. After adjusting for this effect, EBIT improved by 41% compared with the second quarter of 2015. 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 PeP-division entered the liberalized long-distance bus market in October 2013. Within a short period of time it was able to become the quality leader in the market with its Postbus service. However, the Postbus service has not met the company's financial expectations sufficiently. Therefore, the company has decided to withdraw from the market and has agreed to a sale of its Postbus business to FlixMobility GmbH. Following the positive ruling of the General Court of the European Union (EGC) on a European Commission state aid decision from 2012, the Group reclassified a total of EUR 378 million that had been paid into an escrow account to current financial assets at the end of the second quarter. This contributed to a decline in net debt to EUR 3.5 billion. The repayment, which already took place, does not impact Group earnings. *Express: Success story continues with a new record margin* In the second quarter, the Express division again continued its very positive revenue and earnings performance. Revenue rose by 2.0% to EUR 3.52 billion (2015: EUR 3.46 billion). Adjusted for negative currency effects and lower fuel surcharges, the increase was 7.2%. This strong performance was once again driven by solid growth in the international time-definite (TDI) shipments business, where daily volumes rose by 8.2% in the second quarter compared with the prior-year period. At the same time, Express focused on disciplined yield management. Divisional EBIT rose by 11.7% to EUR 420 million between April and June 2016 (2015: EUR 376 million), with negative currency effects preventing an even greater increase. The operating margin further improved to an all-time high of 11.9% (2015: 10.9%). This excellent margin performance was also supported by the low reported revenue growth. *Global Forwarding, Freight: Additional improvement in operating profit* Revenue in the Global Forwarding, Freight division decreased by 9.3% to EUR 3.4 billion in the second quarter of 2016 (2015: EUR 3.8 billion). Adjusted for negative currency effects and lower fuel surcharges, revenue declined by 3.1%. Apart from the still weak market environment, the main reason for the revenue decline was the division's selective market strategy. Operating profit improved by 72.5% in the second quarter to EUR 69 million. With this development, EBIT rose strongly for the third consecutive quarter. The increase would have been even greater without the non-recurring effects
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