DP DHL reports “significantly increased earnings” in Q2 2020

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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