• Group revenue improves to EUR 14.8 billion in third quarter, organic increase of 4.7%
• DHL divisions continue to perform well, implementation of the announced measures to improve profitability at Post - eCommerce - Parcel (PeP) on track
• Third-quarter Group EBIT negatively impacted by planned one-time expenses at PeP: Group operating profit at EUR 376 million below last year, as expected
• CEO Frank Appel: "We are confident that we will reach our earnings targets for 2018 and 2020."

Bonn - Deutsche Post DHL Group continued to grow in the third quarter and is well on its way to reaching the Group's earnings targets for full year 2018. Between July and September, Group revenue increased by 1.4% year on year to EUR 14.8 billion. The revenue increase was 4.7% adjusted for currency effects and portfolio changes. Notable increases at Express and Global Forwarding, Freight mainly contributed to the Group's s organic revenue, which continued to rise significantly thanks to the booming e-commerce business and continued momentum in international trade flows. The Group's operating profit (EBIT) came in at EUR 376 million for the third quarter. While this figure was below the prior-year amount of EUR 834 million, it was fully in line with the Group's forecasts. All of the DHL divisions reported EBIT increases, some significant.

However, earnings in the Post - eCommerce - Parcel (PeP) division were below last year, as expected. The decline was above all due to planned, previously communicated one-time charges relating to profitability improvement measures at PeP. Of the restructuring costs of around EUR 500 million announced for 2018 last June, the Group recognized the majority (EUR 392 million) during the third quarter. Adjusted for those expenses, the Group's operating profit was EUR 768 million. In addition, Deutsche Post DHL Group has spent EUR 45 million of the announced yearly investment of EUR 150 million in productivity increases.

"Deutsche Post DHL Group remains in good shape with our fundamental growth drivers intact. This is especially evident in the continued good performance of our DHL Express, Global Forwarding, Freight, and Supply Chain divisions in the third quarter. We are tackling the challenges in our Post - eCommerce - Parcel division with determination and are making good progress in implementing the announced measures to improve productivity and the cost structure. The results of our efforts will already be clearly visible over the coming year," says Frank Appel, CEO of Deutsche Post DHL Group. "We are confident that we will reach our earnings targets for 2018 and 2020 despite the significant rise in macroeconomic risk factors in recent months due to trade disputes and currency fluctuations, for example."

Earnings forecasts for 2018 and 2020 confirmed

All in all, Deutsche Post DHL Group generated consolidated net profit after non-controlling interests of EUR 146 million in the third quarter of 2018 (2017: EUR 641 million). The decline is mainly attributable to lower EBIT in the PeP division. Basic earnings per share decreased accordingly to EUR 0.12 (2017: EUR 0.53). In view of the challenges at PeP, the Group adjusted its forecast for the financial year in June 2018. The company now expects to generate EBIT of around EUR 3.2 billion. The PeP division is projected to contribute around EUR 0.6 billion to that total, while the DHL divisions are still expected to reach around EUR 3.0 billion. The Corporate Functions result, which now also includes the activities of the new Corporate Incubations board department, is expected to come in at around EUR -0.42 billion.

As already communicated in September, Deutsche Post DHL Group plans to make changes to the Group structure effective January 1, 2019. The PeP division will be split into two separate divisions, one German and one international. Post - eCommerce - Parcel will be renamed "Post & Paket Deutschland," reflecting its future focus on the post and parcel business in Germany. The international parcel and e-commerce businesses - previously DHL Parcel Europe and DHL eCommerce - will be established as a new standalone division, DHL eCommerce Solutions. The changes will take effect on January 1 and will be reflected in the report on the results for the first quarter of 2019 to be published on May 10, 2019.

Deutsche Post DHL Group still intends to increase operating profit to more than EUR 5 billion by 2020. Post & Paket Deutschland and DHL eCommerce Solutions are expected to contribute around EUR 1.7 billion and the DHL divisions around EUR 3.7 billion to that total.

The earnings forecast for 2018 does not reflect potential positive effects related to the Supply Chain-transaction in China.

Capital expenditure and cash flows: continued high investments for sustainable growth

Deutsche Post DHL Group again made targeted investments during the third quarter to further strengthen its foundation for long-term profitable growth. The company invested a total of EUR 827 million across all divisions from July to September (2017: EUR 440 million). Investments focused on initiatives that included expanding hubs and the renewal of the aircraft fleet used by Express as well as the further build-out of the domestic and international parcel infrastructure and expansion of the StreetScooter fleet of electric vehicles. For full year 2018, the Group projects an increase in capital expenditure to around EUR 2.7 billion (2017: EUR 2.3 billion).

Due above all to the high level of investment in growth areas, free cash flow fell to EUR 143 million compared with EUR 502 million in the prior-year quarter. The increase in operating cash flow to EUR 1.4 billion in the third quarter (2017: EUR 1.0 billion) was due in particular to the transition to the new IFRS 16 accounting standard.

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Source: Deutsche Post DHL