Deutsche Post DHL thanks workers with bonus after strong Q2 results
Deutsche Post DHL will pay staff worldwide a €300 ‘thank you’ bonus after “navigating very well” through the Covid-19 pandemic and achieving higher Q2 profits mostly driven by improving express and parcel volumes.
The German logistics group now expects EBIT of between €3.5 billion and €3.8 billion this year and has updated its 2022 profits outlook based on three different macroeconomic recovery scenarios.
CEO Frank Appel declared: “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.
“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,” he emphasised.
As an appreciation for their efforts during the last months under the Covid-19-pandemic, Deutsche Post DHL said it has decided to grant a special one-time bonus of €300 to its more than 500,000 employees worldwide. This one-time bonus payment, which excludes executives, will be carried out in the coming months and is aimed at colleagues in all divisions and in all countries. The measure will cost about €200 million in total.
E-commerce drives Q2 volume recovery
Deutsche Post DHL announced in an unscheduled financial update that it improved operating profit (EBIT) by around 16% to around €890 million in the April – June second quarter of 2020 despite the impact of Covid-19.
This figure includes a €100 million impact from special one-time impairments as a consequence of the lockdown measures and primarily concerning the Supply Chain and eCommerce Solutions divisions, as well as €100 million of costs for the ongoing StreetScooter restructuring. Underlying EBIT, adjusted for one-off effects in 2019 and 2020, rose about 25% on last year.
Outlining the main Q2 trends, the company said that 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. In response, it took measures to adjust to the pandemic-related changed utilisation of the network and to maintain its own flight capacity.
However, volumes started to slowly recover during the course of the second quarter. 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.
The group’s China TDI Express volumes showed solid growth in April, May and June after a slump in February and an initial recovery in March, an accompanying Q2 investor presentation showed. TDI Express volumes in Europe were well down in March and April, slightly lower in May but slightly higher in June compared to last year’s levels.
German parcel volumes surged in April and May at the height of the country’s pandemic lockdown restrictions and remained well ahead of last year in June, the presentation also indicated.
Boosted by these volume trends, Post & Parcel Germany improved its quarterly profit by 47% to €260 million, DHL Express increased its EBIT by 7.5% to €560 million, and DHL Global Forwarding, Freight improved quarterly profits by 53% to €190 million.
However, DHL Supply Chain’s EBIT dropped by 65% to about €30 million due to coronavirus-related impairments of around €60 million. DHL eCommerce Solutions was able to achieve break-even EBIT compared to the previous year’s €18 million loss despite impairments of around €30 million.
New EBIT target for 2020 and scenarios for 2022
Given this recent earnings momentum, Deutsche Post DHL now expects group EBIT of between €3.5 and 3.8 billion this year. This includes €400 million of costs related to the StreetScooter realignment, the €200 million for bonus payments and €100 million of one-off impairments.
At a divisional level, the group expects an EBIT of €1.5 billion for Post & Parcel Germany (including a third of the one-time bonus payments) and EBIT between €2.8 and 3.1 billion for the DHL divisions including one-off effects.
In light of the continuing uncertainty about the course of an economic recovery over the next two years, DP DHL has updated its medium-term earnings outlook for 2022 based on three possible scenarios:
- A rapid ‘V-shape’ recovery without significant pandemic setbacks: EBIT of more than €5.3 billion.
- A slower ‘U-shape’ recovery with local setbacks: EBIT of approx. €5.1 billion.
- A very slow ‘L-shape’ recovery with significant setbacks: EBIT of approx. €4.7 billion.
DP DHL also confirmed that its investment plans (Capex) for the years 2020-2022 remain unchanged at between €8.5 and 9.5 billion. This includes around €300m this year for the new DHL Express B777Fs as part of its ongoing fleet renewal programme.
The company will publish detailed Q2 results on August 5, 2020, as planned.