Group revenue increases by 4.4% to EUR 14.8 billion in the second quarter
Operating profit up by 11.8% to EUR 841 million
Forecast for full-year 2017 confirmed: EBIT expected to increase to about EUR 3.75 billion
CEO Frank Appel: "We are generating profitable growth and are right on track to meet our targets"

Deutsche Post DHL Group increased revenue and operating profit significantly in the second quarter of 2017. Group revenue increased by EUR 623 million to EUR 14.8 billion, with the international parcel and eCommerce business and the global Express business in particular driving this strong growth. With EBIT of EUR 841 million, Deutsche Post DHL Group recorded the strongest second quarter in its history, and the seventh consecutive quarter in which the company has posted an all-time quarterly high.

"We are very satisfied with both the second quarter and the entire first half of the year. Our company is growing in all areas and steadily increasing earnings," said Frank Appel, CEO of Deutsche Post DHL Group. "Our good results so far this year demonstrate that we are right on track to achieve our EBIT targets for full-year 2017. We also remain optimistic about the coming years. All of our divisions, thanks to their focus on fast-growing markets such as global e-commerce, are optimally positioned for long-term growth," added Appel.

Outlook: Earnings targets confirmed for 2017 and beyond
Following the successful first six months, the Group continues to forecast an increase in EBIT to around EUR 3.75 billion for full-year 2017. Deutsche Post DHL Group is also maintaining its forecast of an average increase in operating profit of more than 8% annually (CAGR) during the period from 2013 to 2020.

Second quarter of 2017: Group EBIT grows at double digit rate
Group revenue grew by 4.4% to EUR 14.8 billion in the second quarter. The company's operating profit increased by 11.8% to EUR 841 million. The improvement in the Group's profitability was driven largely by the Express (+12.2%) and Supply Chain (+21.6%) divisions, both of which achieved significant double-digit growth in operating profit.

Consolidated net profit after non-controlling interests increased by 11.3% to EUR 602 million against the prior-year level (2016: EUR 541 million) thanks to the increase in operating profit. Basic earnings per share saw a corresponding increase, rising from EUR 0.45 in 2016 to EUR 0.50 in 2017.

Capital expenditure and cash flow: Group further strengthens foundation for long-term growth
Deutsche Post DHL Group invested EUR 351 million in the second quarter of 2017 (2016: EUR 456 million). Investments continued to focus on positioning the Group for future profitable growth in all four divisions. For example, the Group made further progress in extending its domestic and international parcel infrastructure in addition to investing in the production of its StreetScooter electric vehicle. In the Express division, global and regional hubs were upgraded and the aircraft fleet modernized and expanded. The Group continues to plan for full-year capital expenditure of approximately EUR 2.3 billion (2016: EUR 2.1 billion).

Operating cash flow was EUR 726 million in the second quarter (2016: EUR -161 million), while free cash flow was EUR 385 million (2016: EUR -600 million). The respective prior-year figures were significantly impacted by an outflow of EUR 1 billion to fund pension obligations.

Post - eCommerce - Parcel: Continued strong performance in the international parcel business
Revenue in the Post - eCommerce - Parcel (PeP) division rose by 4.8% to EUR 4.3 billion in the second quarter. The division's positive performance was primarily attributable to growth in volumes and revenue in the eCommerce - Parcel business unit, with revenue increasing by 13.6% to EUR 2.0 billion. Parcel Europe (+61.5%) and eCommerce (+15.1%) were the main drivers behind this growth. A key positive factor behind the strong increase in revenue at Parcel Europe was the inclusion of the UK Mail business in the unit's consolidated results after successful completion of the British company's acquisition in December. UK Mail generated revenue of EUR 127 million in the second quarter. Organically, revenue at Parcel Europe increased by 21.2%. The positive development of the eCommerce - Parcel business unit shows once again how Deutsche Post DHL Group continues to benefit from its successful positioning as market and innovation leader in the high-growth e-commerce segment.

In the Post business unit, revenue saw a slight decrease of 1.8% to EUR 2.3 billion due to structural volume declines, mainly in the area of Mail Communication.

EBIT in the PeP division improved by 4.0% to EUR 259 million in the second quarter. Contributing to the increase in particular were growth in the German Parcel business, the normalization of the decline in letter volumes and disciplined cost management, while earnings growth was held back by further investments in the international parcel network and eCommerce business.

Express: Success story continues with new record margin
The upward revenue and earnings trend that has been maintained for years in the Express division continued in the second quarter. Revenue rose by 8.7% on the prior year to EUR 3.8 billion. This dynamic performance was driven once again by solid growth in the international time-definite (TDI) delivery business, where daily volumes rose by 8.5% year-on-year in the second quarter, supported by successful yield management.

The division's EBIT increased by 12.2% to EUR 469 million. In addition to continuous improvements in the network, strong growth in TDI was responsible for the significant increase in profitability. The increase is also reflected in the operating margin, which improved to a record level of 12.5% (2016: 12.1%).

Global Forwarding, Freight: Continued volume growth in air and ocean freight
Revenue in the Global Forwarding, Freight division rose by 5.5% to EUR 3.6 billion in the second quarter of 2017. In line with the dynamic market trend, the division registered significant growth in revenue and volumes in both the air freight and ocean freight businesses.

The division has not been able to immediately pass on the higher freight rates that have accompanied the market growth to customers in the form of higher prices. As a result, its gross profit declined slightly, as expected. Operating profit was at the prior-year level at EUR 67 million in the second quarter (2016: EUR 69 million). This shows that the earnings situation in the division continues to stabilize.

Supply Chain: Optimization program showing positive effects
Revenue in the Supply Chain division came in at EUR 3.52 billion in the second quarter, or approximately at the prior-year level (2016: EUR 3.54 billion). Negative currency effects were partially offset by the positive business development in the Asia Pacific region, in particular. Supply Chain continued to generate additional new business. The division concluded additional contracts with a total volume of EUR 288 million with both new and existing customers during the second quarter.

Operating profit rose by 21.6% to EUR 124 million. Adjusted for restructuring costs of EUR 16 million reported in the prior-year figure, EBIT improved by 5.1%. The increase reflects in particular the positive impact of successful implementation of the optimization program at Supply Chain.

First half: Revenue and earnings grow by 6%
Group revenue was up by 5.8% to EUR 29.7 billion in the first half of 2017 (2016: EUR 28.1 billion). All four divisions contributed to the increase. Operating profit advanced by EUR 101 million to EUR 1.7 billion. Consolidated net profit after non-controlling interests improved to EUR 1.24 billion in the first six months of the year (2016: EUR 1.18 billion). Basic earnings per share increased to EUR 1.02 in line with the increase in net profit (2016: EUR 0.98).

Free cash flow improved to EUR -45 million in the first half (2016: EUR -1.3 billion). FCF also registered a substantial increase after adjusting for the outflow of EUR 1 billion in the prior-year figure which related to the funding of pension obligations.

Panalpina has gained its largest award with a specific oil and gas major to date. The company was awarded with a long-term contract to manage transportation for a gas project in Iraq. The contract will run over a minimum of five years and involve high air and LCL (less than container load) ocean freight volumes. Work has already begun and besides transport Panalpina will also provide customs clearance, light warehousing, full order management and in-house staffing for the customer. Additionally, Panalpina will handle ad hoc air and ocean chartering for this project.

Panalpina has worked with the customer since 2010 in the USA and over the last seven years has developed activities with several divisions and geographies, which now also include Canada, Singapore, Thailand, Indonesia, Hong Kong and Morocco. In 2015, Panalpina and the customer developed an automated order management system in the USA, and building on this expertise Panalpina will expand the value offering to the project in Iraq throughout the duration of the contract.

Another critical factor for winning this new business was the fact that Panalpina fosters local expertise in a key country such as Iraq, meaning that the company employs a local workforce instead of an expat workforce. This showcased Panalpina’s commitment to continue developing its resources and expertise with local labor in the same way as the customer does. The customer was also impressed by Panalpina’s strong commitment to health, quality, safety and environment as well as ethics and compliance.

DHL combines competencies and capabilities under DHL Semiconductor Logistics to provide a full suite of end to end supply chain solutions
Launch of the Global Capital Support Center for semiconductor equipment moves with dedicated teams in Europe, Asia Pacific and the U.S.
Dynamic industry outlook: Semiconductor market to grow by 16.8 percent in 2017 surpassing first time value of 400bn US-Dollar, but correction is expected in 2019

DHL is revamping its logistics offering for the semiconductor industry by bundling individual solutions under DHL Semiconductor Logistics. This suite of services covers the entire value chain from inbound to manufacturing facilities through to final distribution to end users and provides end to end visibility of products, full compliance with international regulations and maximum security of sensitive and high value goods.

"With more than 3,000 dedicated employees and 50 facilities worldwide, we have built extensive infrastructure and expertise for the semiconductor industry. With our new offer, we connect DHL's broad capabilities, enabling us to individually service our customers along their complete supply chain in a cost-efficient way. This becomes crucial for an industry that requires special logistics to be a competitive differentiator," said Rob Siegers, President, DHL Technology Sector.

The semiconductor industry is undergoing significant changes due to the increased demand created through trending digitization and Internet of Things applications. After a moderate growth in 2016, the market is expected to grow in revenues by 16.8 percent surpassing first time a market value of 400bn US-Dollar, mainly driven by shortages in the supply in the memory segment.1 In combination with increased merger and acquisition activities, growth coming from automotive and industrial applications as well as wearable consumer devices, changes in manufacturing and supply networks are common. DHL's new suite of semiconductor logistics services addresses this development and is designed to improve flexibility and agility of semiconductor supply chains.

As part of DHL Semiconductor Logistics, DHL is launching a Global Capital Support Center with dedicated teams in Europe, Asia Pacific and the U.S. These teams are experienced in the unique handling and transportation requirements for the movement of capital equipment. Key features include 24/7 proactive monitoring supported by a specifically designed IT solution leveraging the latest Internet of Things developments.

Intel's Christine Boles, General Manager of the Internet of Things, Industrial & Energy, Smart Building Division, stated: "The support and insight provided by DHL as we developed the Intel Connected Logistics Platform has been very valuable. Our Logistics operations have in turn been providing input into the development of DHL's Global Capital Support Center. We look forward to reaping the rewards of a more advanced transportation visibility solution and a support center designed specifically for capital shipments."

"In light of the challenges the industry is facing when it comes to supply chain management, the new center allows us to provide our customers with a truly holistic view of their supply chain and effectively manage their logistic needs," explains Doug Whaley, Semiconductor Business Development, DHL Customer Solutions & Innovation. "Together with the data on our customers' logistics movements, we can identify potential issues early and consistently optimize logistics costs."

Augmented reality supported glasses now business-as-usual in warehouses around the globe
Successful completion of international trials prove stability of functionalities and value of solution
Productivity improvements average at 15 percent, with higher accuracy rates and approval ratings by users

DHL Supply Chain successfully completed its global augmented reality pilots and is expanding its "Vision Picking" solution in more warehouses around the globe, establishing a new standard in order picking for the industry. The smart glasses provide visual displays of order picking instructions along with information on where items are located and where they need to be placed on a cart, freeing pickers' hands of paper instructions and allowing them to work more efficiently and comfortably. The international trials have shown an average improvement of productivity by 15 percent and higher accuracy rates. The user-friendly and intuitive solution has also halved onboarding and training times.

"Digitalization is not just a vision or program for us at DHL Supply Chain, it's a reality for us and our customers, and is adding value to our operations on the ground. Customers have been very happy about the productivity gains and are equally excited about using innovative technology at their warehouses," says Markus Voss, Chief Information Officer & Chief Operating Officer, DHL Supply Chain.

After having completed a pilot program across the U.S., Mainland Europe and the UK throughout different industries such as technology, retail and consumer, DHL has now established the Vision Picking solution for the long run. The technology has matured to become a standard, replicable solution for customers, allowing faster and easier implementation in their operations, helping them to benefit from productivity gains with increased speed of operations and better picking accuracy.

Employees have been enthusiastic about being able to use state-of-the-art technology and are pleased with how light the smart glasses are, and how much more comfortable the process is now with hands-free picking. "We are very satisfied and happy that the pilot phase went so well and that we can now say augmented reality technology is one of our standard offerings at
DHL Supply Chain," Voss adds. "As one of the first logistics companies using the technology, we have truly established a new way of order picking in the industry."

DHL has been working alongside three partners in the pilot phase. Ubimax provided the augmented reality software xPick, whereas the recently announced Glass Enterprise Edition and Vuzix M100 and M300 glasses were used as hardware. Further proofs of concept running in Asia and Australia with other partners show similar promising benefits. Following the success of its Vision Picking program, DHL is looking into additional applications for augmented and virtual reality such as trainings, maintenance, dimension calculations and more.

A survey conducted by DHL found that the supply chain talent pool is not keeping up with the changing requirements as technology reshapes the industry
More than a third of companies have failed to take steps to create their future talent pipeline or develop their workforce
The common impression of supply chain careers as lacking in excitement continues to have a significant impact in finding, attracting and retaining talent

DHL called upon industry leaders to recognize the growing talent gap crisis in the supply chain sector. The U.S. Bureau of Labor Statistics reports that jobs in logistics are estimated to grow by 26 percent between 2010 and 2020. Furthermore, one global study estimated that demand for supply chain professionals exceeds supply by a ratio of 6:1, with some predicting that ratio could be as drastic as 9:1.

DHL surveyed more than 350 supply chain and operations professionals in five global regions. The findings revealed that there are a number of reasons contributing to the talent shortage crisis in a rapidly evolving field. The report 'The Supply Chain Talent Shortage: From Gap to Crisis' was commissioned by DHL and authored by Lisa Harrington, president of the lharrington group LLC. The report highlights the key supply chain talent challenges experienced today, and identifies opportunities for businesses to compete on a global stage.

Harrington said, "Leading companies understand that their supply chains - and the people who run them - are essential to their ability to grow profitably. However, the task of finding people with the right skillsets required to run these highly complex operations is increasingly difficult - especially at the middle- and upper management levels. Unless companies solve this problem, it could threaten their very ability to compete on the global stage."

The survey revealed the top factors driving the talent shortage:

Changing skill requirements: Today, the ideal employee has both tactical/operational expertise and professional competencies such as analytical skills. 58 percent of companies say this combination is hard to find. But tomorrow's talent must also excel at leadership, strategic thinking, innovation, and high-level analytic and technological capabilities.
Aging workforce: As much as a third of the current workforce is at or beyond the retirement age.
Lack of development: One third of companies surveyed have taken no steps to create or feed their future talent pipeline.
Perception that supply chain jobs lack excitement: The industry is still contending with the impression that other fields are more prestigious and offer more opportunities, fuelling lack of interest in the industry within the world's future workforce.
Harrington continues, "Companies are now recognizing that sourcing strategy has a large impact on their bottom line and ability to remain competitive. As one study recently found, companies that excel in talent management increased their revenues 2.2 times as fast and their profits 1.5 times as fast compared to 'talent laggards.' That's a powerful advantage. Unfortunately, recruiting the right talent - especially at the critical mid-level and senior management levels - is proving very difficult in today's environment. New technologies and fundamental areas of the supply chain have changed, meaning they now require that a person has a different and much larger skillset than required when most of the current workforce began their careers."

The report outlines numerous opportunities for the industry to start closing this talent gap. Offering clearer career paths and a visible commitment to the professional development of its supply chain staff combined with competitive remuneration packages are just a few ways to develop and retain their current talent. To attract talent, the industry needs to start emphasizing that the future workforce will need to have skills in robotic management, AI and AV control - job aspects that would be attractive to the younger demographic and help combat the negative perception of the sector.

Louise Gennis, Vice President Talent Management/Acquisition, Learning & Development, DHL Supply Chain, said, "We recommend that companies start with prioritizing the development of their current talent pool to adapt to the changing job requirements through training programs, and then retaining staff through clear career paths. We strive to combat misconceptions surrounding working in the supply chain through highlighting the technological developments which are digitalizing the industry and that are attractive to younger demographics."

Gennis cites the success of DHL's diverse recruitment and development initiatives as evidence that a long-term, well-informed talent management strategy can help businesses mitigate the potentially devastating effects of a shrinking talent pool. "The supply chain talent shortage is now critical enough that it's on the minds of supply chain managers across all industries, but the gap didn't develop overnight. Since supply chain solutions are our business, we've seen the issue developing over many years - and have used this time to adjust our approach toward attracting, developing and retaining talent accordingly. Our unique expertise helps ensure that job openings are filled by qualified experts wherever we and our customers operate, which will become an increasingly critical success factor as talent resources grow scarcer."