DHL sale in China funds UK restructuring

From Logistics Manager Magazine,
Published Friday 10 May 2019 9:16 am

DHL Supply Chain has reinvested money from the sale of its Chinese business to restructure its UK business, Deutsche Post DHL said in its first quarter results.

As a s result of the sale, in the first quarter DHL Supply Chain recorded a one-time positive EBIT effect of €426 million and said: “A portion of the funds generated from the SF transaction were reinvested into restructuring the Supply Chain business, mainly in the United Kingdom.”

Operating profit at DHL Supply Chain rose to €486 million in the first quarter of 2019 from €55m the year before, while revenue increased by 4.6 per cent to €3.3 billion. The division concluded additional contracts with an annualised total volume of €180 million.

Deutsche Post DHL sold its supply chain operations in mainland China, Hong Kong and Macau to SF Holding for €700 million (RMB5.5bn) at the end of last year. The business has been branded SF DHL Supply Chain China. Deutsche Post DHL will continue to receiver revenue-based partnership fees for ten year, in return for the trademark licence, customer referral, employee training, and best practice sharing.

Total group revenue rose 4.1 per cent to €15.4 billion while operating profit was up 28.1 per cent to €1.2bn.

Since 1st January the group’s international parcel business and the e-commerce unit of the former PeP division have been operating as DHL eCommerce Solutions, a newly created division. Revenue in the new division improved by 8.9 per cent to € 1.0 billion in the first quarter. However, restructuring costs means that it made and operating loss of €28m.

The Express division saw revenue rise 5.3 per cent to €4bn, but operating profit fell from €461m to €453m as the group decided to shift the focus of the business to lighter-weight higher-margin shipments.

The Global Forwarding, Freight division saw another strong rise in operating profit, up 42.9 per cent, to €100m, while revenue was up 4.8 per cent at €3.8bn.

The group said: “The rollout of the new IT infrastructure continues to progress well. The division is thus well on the way to closing the profitability gap to its leading competitors in the medium-term.”

Group chief executive Frank Appel said: “We are performing according to plan and are on track towards achieving our targets.”