News

DHL's UK container transport arm has revealed another awful set of results, fuelling speculation that the logistics giant will look to divest itself of its under-performing division.

In the year to 31 December 2008, turnover plummeted by 20.7% to £55m from £69.5m the year before. Although pre-tax losses did not worsen significantly, they still stood at £2.9m for the period.

Liabilities also increased dramatically to £3.6m, up from £700,000 the year before.

During the accounting  period, the company also had an outstanding loan of £12m from its parent company, Deutsche Post, which was due for repayment in September this year. This is the same sum that it owed in its previous financial year, which was due for repayment in September 2008.

How long Deutsche Post can stomach these losses remains open to debate, but it only adds to the speculation earlier in the year, never completely denied by the company, that it was looking to sell off the business.

The directors' report notes that the company is only able to carry on as a going concern thanks to the continued support of the parent company.

In addition, the firm's immediate parent company, DHL Express (UK), has increased write-downs on its container subsidiaries to a total of £13.3m following a review.

The directors' report blames the company's woes on too much competition  in the sector: "The container transportation business is a competitive environment in which to operate due to a high number of low-cost operators within the market.

"The global economic downturn has brought to an end the sustained period of container volume growth in the UK. This has made an already competitive market even more competitive, characterised with hauliers having too much capacity and inadequate volume."

It adds: "In the next 12 months, all hauliers will cut capacity to match volumes and there will be increasing pressure from customers to reduce prices."

It says that cost control and retaining market share are targets in the short term.

DHL declined to comment.