Deutsche Post DHL Group’s operating profit up 16% year-on-year in Q2 2020 despite Covid-19

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Deutsche Post DHL Group has reported its preliminary results for Q2 2020, significantly increasing earnings despite Covid-19. Operating profit (EBIT) improved by around 16% year-on-year to approximately €890m (2019: €769m). Adjusted for one-off effects in the previous year and in the current year, operating profit came in around 25% above the prior-year figure.

Specifically, operating profit in Post & Parcel Germany was around €260m (2019: €177m).

The Express division managed to increase its EBIT in the second quarter to €560m compared to previous year of €521m.

Operating profit in Global Forwarding, Freight stood at around €190m (2019: €124m).

EBIT in Supply Chain suffered from the above-mentioned impairments in the second quarter of around €60 million. EBIT at Supply Chain was around €30m in the Q2 (2019: €87m).

Despite impairments of around €30m, eCommerce Solutions was able to achieve break-even EBIT (2019: €-18m). 

At the beginning of the quarter, business development was still dominated by the pandemic protection measures in place in Europe and North America as well as an initial sharp decline in volumes. The Group took measures to adjust to the pandemic-related changed utilisation of the network and to maintain its own flight capacity. During the course of the second quarter, the volume development started to slowly recover. In addition, since end of March 2020, the company has recorded a positive development of shipment volumes driven by e-commerce, both internationally and in the German parcel business.

In light of the recent earnings momentum, management has decided to provide the following outlook for the full year 2020:

  • The reported Group-EBIT is expected to be between €5bn and €3.8bn. This includes the communicated expenses to realign StreetScooter activities of around €400m, one-time bonus payments to employees of approximately €200m in the third quarter as well as the one-time impairments of approx. €100m.
  • The Group expects an EBIT of €5bn for Post & Parcel Germany, which will cover a third of the one-time bonus payment.
  • Deutsche Post DHL Group forecasts an EBIT between €8bn and € 3.1bn for its DHL divisions including one-off effects. Operating profit in Corporate Functions including StreetScooter-effects is expected at about €-750m.
  • For 2020, a free cash flow of around €4bn is expected with investments of approx. €2.9bn. In addition to all the special effects already mentioned, this includes around €300m for the renewal programme of the Express Intercontinental Fleet.

In light of the continuing uncertainty about the course of an economic recovery over the next two years, the Group’s medium-term earnings outlook for 2022 is updated as follows:

  • In case of a rapid recovery of the global economy (‘V-shape’ recovery), the Group expects EBIT of more than €5.3bn.
  • In case of a slower recovery (‘U-shape’ recovery), the Group expects EBIT of about €5.1bn.
  • In the least favourable case of a very slow development of the recovery, (‘L-shape’ recovery) the Group expects EBIT of about €4.7bn.

DHL confirmed that a detailed publication of the results for Q2 2020 will take place in August.

Frank Appel, CEO Deutsche Post DHL Group, stated: “With our broad portfolio of leading logistics services, we have the right business model to form the backbone of global trade.”

Source: Deutsche Post DHL Group

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