- Group revenue up by 5.4% to EUR 60.4 billion
- Dividend increase to EUR 1.15 per share proposed
- Forecast for 2018: EBIT set to increase to about EUR 4.15 billion, EBIT target for 2020 specified at more than EUR 5 billion
- CEO Frank Appel: "In 2017 we took another major step on the road to achieving our strategic and financial goals for 2020"
Deutsche Post DHL Group can look back on another very good financial year. The Group's operating profit climbed by 7.2% to EUR 3.74 billion in the 2017 financial year. With this, the company attained its earnings target of around EUR 3.75 billion. As forecast, the Post - eCommerce - Parcel (PeP) division contributed EUR 1.5 billion to operating profit. Also as expected, the DHL divisions generated total EBIT of EUR 2.6 billion. Group revenue was up by 5.4% to EUR 60.4 billion, with all four divisions contributing to the increase. The DHL Express division and the German and international Parcel and eCommerce businesses continued to see particularly dynamic growth.
"Thanks to successful business development in all four divisions, especially outside Germany, our company has registered another very good year. In 2017 we took another major step on the road to achieving our strategic and financial goals for 2020. With our international focus and our firm orientation towards the fast-growing e-commerce market, we implemented the right measures early on and are now positioned better than ever for future growth. At the same time, we are increasingly leveraging the digitalization opportunities that present themselves in all four divisions and expanding our foundation for a successful future," said Frank Appel, CEO of Deutsche Post DHL Group.
Outlook: Further EBIT increase expected in 2018, EBIT target for 2020 specified
Deutsche Post DHL Group has applied the IFRS 16 accounting standard with effect from the beginning of 2018. As announced, this change in the recognition of leases will result in an increase in Group EBIT of about EUR 150 million per financial year. It is also expected that the solid pace of economic expansion, further business growth and operational improvements in the individual divisions in particular will lead to increased earnings in 2018: Deutsche Post DHL Group forecasts a rise in EBIT to approximately EUR 4.15 billion. The PeP division is expected to contribute around EUR 1.5 billion to this total. For the DHL divisions, the company anticipates an EBIT contribution of around EUR 3.0 billion.
Due to the change effected by IFRS 16, the company refined its medium-term earnings targets and is specifying absolute figures in this area for the first time: Deutsche Post DHL Group expects EBIT of more than EUR 5 billion in the 2020 financial year, to which PeP will contribute some EUR 1.7 billion and the DHL divisions approximately EUR 3.7 billion.
Dividend: Increase to EUR 1.15 per share proposed
The increase in revenue and earnings in 2017 is also reflected in improved net profit for the year. Consolidated net profit after non-controlling interests was EUR 2.7 billion (2016: EUR 2.6 billion). Basic earnings per share saw a corresponding increase from EUR 2.19 in 2016 to EUR 2.24 in 2017. Net profit increased at a slower rate than EBIT, due primarily to a higher tax rate. After declining to 11.2% in the previous year due to one-off effects, the tax rate was 14.3% in 2017.
In light of the Group's positive earnings performance, the Board of Management and the Supervisory Board will propose a dividend increase of 9.5% to EUR 1.15 per share at the Annual General Meeting on April 24, 2018. If approved by the shareholders, the total payout would be approximately EUR 1.4 billion, reflecting a payout ratio of 52%. This is within the range of 40% to 60% communicated in the company's finance strategy introduced in 2010.
Capital expenditure and cash flow increased, debt reduced
Deutsche Post DHL Group invested heavily in all four divisions once again in 2017. The company is thus reinforcing its foundation so that it can continue its profitable growth trajectory in the future. For example, the company expanded its parcel infrastructure both in Germany and internationally. The company also expanded and modernized the hubs and aircraft fleet at DHL Express. As planned, capital expenditure at DPDHL Group amounted to EUR 2.3 billion in 2017 (+9.8%); the company invested well over EUR 1 billion in the final quarter alone. The Group is forecasting capital expenditure of around EUR 2.5 billion in 2018.
The improvement in the Group's operating performance in 2017 also had a positive effect on cash generation. However, both the cash flow figures for 2017 and the reference values for 2016 were impacted by one-off effects. Operating cash flow in 2017 increased by EUR 858 million to EUR 3.3 billion. This reflects the outflow of EUR 495 million for the funding of pension obligations in the United Kingdom. The prior-year figure included the funding of pension obligations in Germany in the amount of EUR 1.0 billion. Free cash flow in 2017 improved by EUR 988 million to EUR 1.4 billion. After adjusting for the aforementioned funding of pension obligations, free cash flow came in at EUR 1.9 billion, exceeding the forecast. The sale of Williams Lea Tag Group had a positive effect in 2017, resulting in a net inflow of EUR 286 million. The prior-year figure reflected an outflow of EUR 278 million for the acquisition of UK Mail. For 2018, Deutsche Post DHL Group forecasts free cash flow of more than EUR 1.5 billion.
The Group's net debt fell to EUR 1.9 billion as of December 31, 2017 (2016: EUR 2.3 billion), due partly to the strong cash flow performance.
Source: Deutsche Post DHL