Deutsche Post DHL Group this afternoon released preliminary Q3 results, including a 45% rise in operating profits to around €1.37 billion, and has increased its full-year guidance.
The German logistics group said that in the third quarter it “has continued the positive dynamic seen at the end of the second quarter. In September, typically an important month after summer, Deutsche Post DHL Group has seen shipment volumes holding up very well”.
Preliminary Group EBIT increased to around €1.37 billion in the third quarter from €942 million 12 months ago. This includes the €170 million effect of the one-time bonus of €300 to each employee as well as €45 million in one-time payments to P&P employees as part of the just concluded wage agreement in Germany.
“Our business has performed very well in the third quarter. Thanks to the outstanding commitment of our 550,000 employees worldwide we were able to significantly benefit from the dynamic e-commerce growth in our businesses,” said Frank Appel, CEO Deutsche Post DHL Group. “We are now fully focused on preparing for an exceptionally strong Christmas business. For this, the safety of our employees and the quality of service for our customers remain our top priorities.”
Higher profits for three out of four divisions
Operating profit in Post & Parcel Germany rose to around €320 million in the third quarter from €304 million in Q3, 2019, despite the effects of the one-off payments totaling to €95 million, DP DHL Group said.
Moreover, the Express division managed to increase its EBIT in the third quarter to around €750 million from €454 million last year driven by a strong development in TDI volumes.
Operating profit in Global Forwarding, Freight stood at around €155 million, clearly above previous year’s Q3 with €124 million. The earnings development at Supply Chain recovered due to increasing customer activities with EBIT of about €110 million, compared to €162 million in the same quarter last year.
DHL eCommerce Solutions has seen a further acceleration of EBIT driven by strong B2C volumes in its markets and recorded an EBIT of around €75 million in the third quarter, clearly ahead of previous year’s EBIT of just €6 million.
The group said its overall positive business development is underpinned by a continuous strong development of cash flow; free cash flow has significantly increased in the third quarter to more than €1.0 billion (2019: €507 million), resulting in a positive free cash flow of more than €1.2 billion for the first nine month of 2020.
Guidance on EBIT and free cash flow increased for 2020
In light of the ongoing earnings momentum, the Group has decided to adjust the outlook for the full year 2020 as follows:
The reported Group EBIT is now expected between €4.1 billion and €4.4 billion (previously: €3.5 billion – 3.8 billion). In anticipation of a very strong peak season in particular driven by the dynamic e-commerce growth, the company is focused on securing all necessary resources required to maintain a high quality service level. Achieving the upper end of the guidance will mainly depend on whether the volume development will allow for an efficient utilization of the networks.
The Group continues to expect an EBIT of around €1.5 billion for the Post & Parcel Germany division. For its DHL divisions Deutsche Post DHL Group now forecasts an EBIT between €3.3 billion and €3.6 billion (previously: €2.8 billion – 3.1 billion).
Operating profit in Corporate Functions is now expected at around €-700 million (previously: around €-750 million). This includes negative effects of around €350 million as part of the already communicated and still valid cost of around €400 million for the re-alignment of the StreetScooter activities. The remaining amount of around €50 million will now be booked in 2021.
Gross capex for the full year 2020 is still expected to be in total at around €2.9 billion, free cash flow is now expected to be more than €1.8 billion (previously: around €1.4 billion). This includes all mentioned one-off effects and the already previously expected around €300 million for the 777 renewal program in the Express intercontinental fleet.
Deutsche Post DHL Group will release its full results for Q3 and the first 9 months of 2020 on November 10th as planned.
