DP DHL reports “significantly increased earnings” in Q2 2020

By Rachelle Harry

Deutsche Post DHL Group experienced “significantly increased earnings” in the second quarter of 2020, despite global disruption caused by the global Covid-19 pandemic. 

The logistics giant saw its operating profit (ebit) increase by 16%, from €769m in 2019 to €890m this year.

“This number includes the already expected negative impact of around €100m to realign the Group’s StreetScooter activities and an additional around €100m impact from special one-time impairments, such as a consequence of the lockdown measures,” the company said in its preliminary results update.

It added: “The Group does not differentiate anymore between an adjusted operating results before and after effects related to Covid-19, as this distinction became increasingly artificial and less meaningful during the second quarter.”

The Group’s free cash flow stood at more than €500m in the quarter, which was “significantly up” compared with the €-547m that it reported in the same period last year.

“Thus, a positive free cash flow of more than €100m was achieved in the first half-year,” the company said.

Breaking down the group’s second quarter 2020 performance into divisions, Global Forwarding Freight saw its operating profits decrease from €190m last year to €124m this year. Ebit in the Supply Chain division also decreased (by 66%) from €87m in 2019 to €30m in 2020.

Alluding to the impact of the Covid-19 crisis, the company said: “Despite impairments of around €30m, eCommerce Solutions was able to achieve break-even ebit.” Last year during the second quarter, eCommerce Solutions achieved an ebit of €-18m.

Meanwhile, the Express division posted a 7% ebit increase in operating profits — from €521m last year to €560m this year.

The best-performing division was Post & Parcel Germany, which posted a 47% increase in operating profit — from €177m in 2019 to €260m in 2020.

Group chief executive Frank Appel, commented: “Our success during the past months of the crisis is based on balancing these goals in everything we do. We have therefore decided to pay a dividend at the previous year’s level to our shareholders and a special bonus for our employees.

“Our strategy is focused on achieving three bottom lines: we want to be the provider, employer and investment of choice.”

The Group also provided an outlook for the full year of 2020: operating profit is expected between €3.5bn and €3.8bn. Divisionally, the Group expects an ebit of €1.5bn for Post & Parcel Germany and between €2.8bn and €3.1bn for its other divisions.

A free cash flow of around €1.4bn is expected in investments of approximately €2.9bn, which includes around €300m for the Boeing 777 renewal programme of its Express fleet.

The Group’s medium-term earnings outlook for 2022 takes the current coronavirus pandemic into consideration.

The company explained: “In the favorable case of a rapid recovery of the global economy without broad setbacks in the pandemic development the Group expects ebit of more than €5.3bn.

“In case of a slower recovery, the Group expects ebit of approximately €5.1bn.

“In the least favorable case of a very slow development of the recovery,the Group expects ebit of approximately €4.7bn.”

The Group concluded: “The investment plans (capex) for the years 2020-2022 remain unchanged between €8.5bn and €9.5bn. Additionally, the cumulative free cash flows guidance of €5bn to €6bn for 2020 to 2022 is confirmed.”

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