Deutsche Post DHL Group has continued to lay the groundwork for long-term business success. In the process, the Group has recorded a number of one-off effects that impacted earnings in the third quarter of 2015.
"2015 is a transition year from our Strategy 2015 to Strategy 2020. We are working systematically to position each of our business divisions optimally and to achieve the long-term targets projected in Strategy 2020. We have recorded a number of one-off effects, which will de-risk and strengthen our ability to meet or exceed those targets. We expect that the benefits will begin to materialize already in 2016," said Frank Appel, CEO, Deutsche Post DHL Group.
As announced on October 28, the Group has recognized one-off effects of EUR 345 million in connection with the further course of the IT renewal roadmap at DHL Global Forwarding. In addition to the above described measures, as also communicated at the end of October, Deutsche Post DHL Group has reduced risk to future earnings potential by recognizing in its outlook for 2015 further one-off effects of around EUR 200 million. These exposures relate mainly to the updated assessment of primarily legal and regulatory exposures in the Post - eCommerce - Parcel (PeP), Express and Global Forwarding, Freight divisions. EUR 81 million of this sum was booked in the third quarter.
Alongside these one-off effects, third quarter earnings have also been impacted by further measures taken to strengthen the positioning of the business divisions for future success: The Post - eCommerce - Parcel (PeP) division has invested in the international expansion of its parcel network, in order to maximize benefits from the dynamically growing e-commerce segment outside of Germany. At the same time, the earnings of the PeP division have been impacted in the third quarter by the postal strike in Germany and its after-effects, and the one-time payment included in the new tariff agreement. The Express division has continued to invest significantly in the modernization and expansion of its unrivalled worldwide network, in order to further bolster its leading market position. The Supply Chain division booked further restructuring costs in line with the implementation of its optimization program.
Overall, including the impact of the above factors, Group EBIT in the third quarter declined to EUR 197 million. In order to recognize the one-off effects in Global Forwarding and the additional one-off effects of EUR 200 million, the Group lowered its 2015 EBIT guidance in October and now expects operating earnings of a minimum of EUR 2.4 billion. The Group previously expected operating earnings of between EUR 2.95 billion and EUR 3.1 billion.
Outlook: Earnings guidance for 2015 adjusted in October. Forecast for 2016 and longer-term objectives confirmed Larry Rosen
Outlook for 2016 and 2020 confirmed
The DHL divisions are expected to contribute minimum EUR 1.65 billion in 2015 EBIT to the full-year 2015 target of at least EUR 2.4 billion, while the guidance for PeP is at least EUR 1.1 billion. The Group expects expenses for Corporate Center/Other to remain at around EUR 350 million.
Source: Deutsche Post DHL