DP DHL scraps earnings guidance as it takes a €200m Covid-19 hit

Deutsche Post DHL (DP DHL) has scrapped its earnings guidance for the year as it reported a €200m hit caused by the coronavirus outbreak.

The postal and logistics giant said that the global spread of the pandemic and the corresponding lack of transparency concerning the global economic development led the group to withdraw its earnings before interest and tax (ebit) guidance for 2020.

“Given the significant impact of Covid-19 on all parts of the economy, which is expected to continue over the coming months, an adjustment of the results for the effects of the pandemic becomes increasingly difficult and less meaningful,” DP DHL said.

“As soon as a stabilization in the most important economies can be foreseen and a more reliable basis for a detailed earnings guidance is given, the Group will communicate a new guidance.”

Preliminary group ebit for the first quarter stood at €590m while operating profits reached €1bn, after adjusting for the effects related to the pandemic of approximately €200m as well as realignment of its StreetScooter activities of approximately €230m.

Commenting on its forwarding business, DP DHL said: “The regional business development in Europe and North America follow the impact of the pandemic, which we have seen in China in February.

“Strong decline in air and ocean freight volumes are exposed to even stronger cuts especially in airfreight markets capacity.

“The pandemic resulted in total negative earnings effects of approx €30m for the first quarter. Ebit at Global Forwarding, Freight was approx €70m in the first quarter.”

Elsewhere, the supply chain business noted declines in fashion and automotive volumes, but there was a boost to the retail grocery segment as well as the healthcare industry.

Looking ahead, the company is hopeful that North America and Europe will pick-up in the same way China has over recent weeks.

It said: “Since the start of the global spread of the virus, the five business divisions and the activities in different regions performed in some cases better and in some cases worse than planned.

“While the development of the business situation in China has been quite promising in the last weeks, Europe and North America are still in an earlier stage of the pandemic.

“It is likely that these regions are going to see a comparable downturn and subsequent upswing like in China, while the peak of the pandemic and therefore the turnaround of the curve are not yet reached.”