Deutsche Post DHL's profit halved in Q3

Deutsche Post DHL Group's profitability suffered heavily from restructuring measures at its ailing letter- and package delivery division during the third quarter (Q3) of 2018, earnings figures published on Tuesday by the German logistics company show.

The company's earnings before interest and taxes (EBIT) slumped by more than half (minus 54.9 percent) to 376 million euros (428.67 million U.S. dollars) in Q3.

But its revenue climbed by 1.4 percent to 14.85 billion euros (16.93 billion U.S. dollars).

The development largely owed to ongoing efforts by chief executive officer Frank Appel to restore the Post -eCommerce- Parcel (PeP) division to health which cost the Bonn-based company 392 million euros in Q3 alone.

Overall, Deutsche Post DHL Group generated consolidated net profit after non-controlling interests of 146 million euros in the third quarter of 2018 compared to 641 million euros during the same period last year.

Weak PeP earnings in an increasingly crowded German letter- and package delivery industry in Germany are a long-standing source of concern for Deutsche Post in 2018 which have prompted Appel to personally take over control of the embattled unit. Back in June, the DAX-listed company already lowered its forecast for annual earnings before interest and taxes (Ebit) by around 1 billion euros to 3.2 billion euros in 2018 in response to problems encountered by the division.

Nevertheless, Appel emphasized on Tuesday that Deutsche Post remained in "good shape" as its "fundamental growth drivers" were still 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," the CEO added.

According to Appel, good progress was being made to implement previously announced measures to improve productivity and cost structures at the PeP division. He predicted that the results thereof would "already be clearly visible over the coming year."

The CEO also expressed confidence that Deutsche Post was well on track to reach its earnings targets for 2018 and 2020. In spite of the "significant rise in macroeconomic risk factors in recent months due to trade disputes and currency fluctuations", the company still intends to raise operating profits to over 5 billion euros by 2020.

Annual gross revenue grew by 5.4 percent to 60.4 billion euros at Deutsche Post in 2017, while a booming e-Commerce division propelled group EBIT to 3.74 billion euros (plus 7.2 percent). The DAX-listed company is Europe's largest postal service provider and employed around 520,000 at the start of the current year.