Deutsche Post DHL Swings to Profit in 2009

Deutsche Post DHL, the German global mail, express and logistics group, reported 2009 net income of $876 million against a year earlier deficit of $2.3 billion as cost savings outweighed the impact of double-digit declines in air and ocean cargoes.

The Frankfurt-based company booked underlying earnings before taxes and interest of $2 billion, beating its forecast of $1.84 billion made in November.

But revenue slumped 15.2 percent from the previous year to $62.8 billion, partly reflecting DHL’s exit from the U.S. domestic express market and the decline in transport volumes.

Fourth quarter net losses narrowed to $385 million from over $4 billion in the same period in 2008. Revenue increased quarter on quarter for the second time, but was down 11.6 percent year-on-year at $16.86 billion.

Deutsche Post said it had achieved its target of capping its annualized U.S. express losses below $400 million in the fourth quarter.

“We have successfully managed the repercussions of the economic crisis and exceeded our targets for 2009,” Chief Executive Officer Frank Appel said.

“Thanks to strict cost management and the consistent implementation of our strategy, we are now able to benefit over proportionally from the accelerating global economic recovery.”

The group made cost savings of $1.5 billion in 2009, $135 million ahead of forecast, thanks to better management of DHL Express in the United States.

The company said an expected “modest” recovery in transport volume in 2010 will help boost earnings before interest, taxes and special items to between $2.18 billion and $2.58 billion.

The positive earnings trend is expected to continue into 2011, Deutsche Post said.

Express volume began to grow in the second half of the year and the fourth quarter saw a slight recovery in time definite and day definite deliveries outside the United States. Operating profit surged 45.1 percent to $324 million, reflecting lower losses in the United States, but revenue shrunk 24.4 percent to $14 billion.

The global forwarding unit saw air freight volume rise year on year for the first time in six months in the fourth quarter. But full year revenue slumped 23.3 percent to $14.8 billion on lower traffic, weaker freight rates and reduced fuel surcharges. Earnings dropped to $370 million from $548 million.