One of the key contributors to this positive development was the introduction of the 'IndEx' program at the end of 2008, which generated cost savings of €1.1 billion one year ahead of the original schedule and €100 million ahead of the last forecast for the end of 2009.
These efficiency increases also significantly helped Deutsche Post DHL to achieve its consolidated net profit target. Following a loss in 2008, the full-year consolidated net profit rose to €644 million in 2009.
Deutsche Post DHL's 2009 capital expenditure of €1.17 billion also fully met expectations.
Whilst the global economic crisis caused a significant decrease in transport volumes last year, triggering a 15.2% drop in revenues to €46.2 billion, DHL's successful cost cutting across all businesses, substantially lower restructuring expenses as well as the planned reduction of losses from the US Express business, helped mitigate the impact on the Group's profitability. Thus the reported EBIT of €UR231 million for 2009 substantially exceeded the €966 million loss incurred in 2008.
The 2009 result includes losses from the Arcandor insolvency and costs related to onerous contracts amounting to a total of €344 million. In addition to the operational improvements, positive effects from the Postbank sale as well as lower taxes led to an increase of the consolidated net profit to €644 million compared to a loss of €1.7 billion in 2008.
During the fourth quarter, the Group increased quarter-on-quarter revenues for the second time in a row. Year-on-year, though, revenues dropped by 11.6% to €12.4 billion. At - €283 million, the consolidated net profit was considerably better than the previous year's level, when a loss of more than €3 billion was recorded in the final quarter.
During the past year, the Mail division maintained its 87.2% market share. Revenues of €13.7 billion were 4.9% below the previous year's level, and underlying EBIT fell by 14% to €1.4 billion. However, in the fourth quarter, it rose by 7.4% despite the continuing decline in revenues.
Profitability improved in the Express division, which was also impacted by lower volumes. However, trade volumes began to rise during the second half of the year, and the fourth quarter saw a slight recovery of the Time Definite Domestic and Day Definite Domestic product groups outside the US. Nonetheless, revenues for fiscal year 2009 dropped by 24.4% year-on-year to €10.3 billion.
The main causes of this decrease were the Group's exit from the domestic express business in the US along with exchange rate fluctuations and lower revenues from fuel surcharges. Outside the US, revenues adjusted for acquisitions and exchange rate fluctuations were only 11.8% below the previous year's level. The smallest drop in revenues (6%) was reported by the Asia Pacific region, with €2.6 billion.
In Europe and the Eastern Europe, Middle East & Africa region (EEMEA), revenues dropped by 15.5% and 10.4% respectively, to €5.6 billion and €1.1 billion. In the Americas region, which includes the US, Canada, Latin America and the Caribbean, revenues were down 58.6%. Excluding the US, revenues in the region fell by 14.8% in the past year.
Unlike the revenue trend, the Express division's profitability climbed considerably in the past year due to strict cost management. Underlying EBIT at €238 million was up 45.1% over the previous year's level, primarily due to the significant reduction in losses previously incurred in the US. The target of reducing the annualised loss to less than US$400 million by the fourth quarter has been achieved. In the other regions, underlying EBIT totalled €692 million, compared to €1.1 billion in the previous year.
The decline in world trade levels resulted in double-digit decreases in transport volumes in the air and ocean freight markets. Nonetheless, the Global Forwarding, Freight division was able to sequentially increase volumes each quarter during the year. Airfreight volumes rose year-on-year for the first time in six quarters during the fourth quarter. In fiscal year 2009, DHL was able to maintain or even expand its market share in the international air and ocean freight markets and in European road transport.
However, the general decline in freight volumes, lower fuel surcharges and reduced freight rates resulted in this division posting revenues of €10.9 billion, a year-on-year drop of 23.3%. Systematic cost management and noteworthy productivity gains cushioned the effect on the division's profitability, and the underlying EBIT decreased from €403 million in 2008 to €272 million.
The Supply Chain division actually strengthened its market position despite the difficult conditions, with new business contracts worth €1.1 billion and a continuing high contract-renewal rate of 90%. Nonetheless, revenues fell by 8.8% to €12.5 billion, due to substantial negative currency translation effects and the company's own decision to decline the renewal of under-performing contracts or to terminate them prematurely.
Cost-cutting measures helped to moderate the impact of the economic crisis on the division's profitability, and while underlying EBIT was indeed - €121 million, this loss was exclusively related to charges totalling €213 million that were connected with the insolvency of Arcandor. Excluding this effect and additional one-time costs for onerous contracts, underlying EBIT in this division would have been near the previous year's total of €196 million.
For this year, the Group foresees a moderate recovery in global transport volumes, and thus expects underlying EBIT to total between €1.6 billion and €1.9 billion in 2010, with its DHL divisions and the Mail division making roughly equal contributions to earnings for the first time.
