Deutsche Post DHL Group's Q2 operating profit rose to EUR 890 million
Deutsche Post DHL Group’s operating profit (EBIT) improved by around 16 percent to around EUR 890 million in Q2 2020, despite Covid-19. Adjusted for one-off effects in the previous year and in the current year, operating profit came in around 25 percent above the prior-year figure.
At the beginning of the second 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 the company has recorded a positive development of shipment volumes driven by e-commerce, both internationally and in the German parcel business.
“We have navigated our company through this crisis very well so far. We owe this to our committed colleagues worldwide. Only through the tireless efforts of our teams have we managed to keep supply chains up and running and thus maintained the worldwide supply,” said Frank Appel, CEO of Deutsche Post DHL Group. “Our fundamental strength and resilience as a Group has paid off in recent months: With our broad portfolio of leading logistics services, we have the right business model to form the backbone of global trade.”
Preliminary Group EBIT reached around EUR 890 million in the second quarter of 2020 (2019: EUR 769 million). This number includes the already expected negative impact of aroundEUR 100 million to realign the Group’s StreetScooter activities and an additional aroundEUR 100 million impact from special one-time impairments as a consequence of the lockdown measures and primarily concerning the Supply Chain and eCommerce Solutions division. 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.
Operating profit in Post & Parcel Germany was around EUR 260 million (2019: EUR 177 million). The Express division managed to increase its EBIT in the second quarter to EUR 560 million compared to previous year of EUR 521 million.Operating profit in Global Forwarding, Freight stood at around EUR 190 million(2019: EUR 124 million).
EBIT in Supply Chain suffered from the above-mentioned impairments in the second quarter of around EUR60 million. EBIT at Supply Chain was aroundEUR 30 million in the second quarter (2019: EUR87 million).
Despite impairments of around EUR 30 million, eCommerce Solutions was able to achieve break-even EBIT (2019: EUR -18 million).
The overall positive business development is accompanied by a continuous strong development of cashflow; free cash flow stood at more than EUR 500 million in the second quarter, which is significantly up compared to last year (2019: EUR -547 million). Thus, a positive free cash flow of more than EUR 100 million was achieved in the first half-year.
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 the favourable case of a rapid recovery of the global economy without broad setbacks in the pandemic development (V-shape recovery) the Group expects EBIT of more than EUR 5.3billion.-In case of a slower recovery, e.g. with at least local setbacks in the pandemic development, (U-shape recovery) the Group expects EBIT of approx. EUR 5.1billion.-In the least favourable case of a very slow development of the recovery, e.g. due to significant setbacks in the pandemic development (L-shape recovery) the Group expects EBIT of approx. EUR 4.7billion.
As an appreciation for their efforts during the last months under the Covid-19 pandemic the Group has decided to grant a special one-time bonus of EUR 300 to employees worldwide. This one-time bonus payment will be carried out in the coming months and is aimed at colleagues in all divisions and in all countries. Excluded are Executives. In total, the Group will grant one-time bonus payments of around EUR 200 million, which will be booked in the third quarter 2020.