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Oct 7, 2020 at 7:35 PMThe Deutsche Post DHL Group continues the positive momentum achieved at the end of the second quarter into the third quarter. The Group’s EBIT rises by approximately 45% in the third quarter of 2020 to around 1.37 billion euros. The Group now expects an operating result of between 4.1 and 4.4 billion euros for 2020 and a free cash flow of more than 1.8 billion euros.
(Bonn) Deutsche Post DHL Group today published preliminary consolidated results for the third quarter of 2020. Based on this, the company has raised its forecast for 2020.
The positive momentum achieved at the end of the second quarter was maintained by the Group in the third quarter. In September, typically an important month after the summer, the shipment volumes remained at a high level.
The preliminary consolidated EBIT was increased to around 1.37 billion euros in the third quarter (2019: 942 million euros). This includes special effects from a one-time bonus payment of 300 euros for each employee of the Group (approximately -170 million euros) as well as a one-time payment to employees of the Post & Parcel Germany division, which was decided as part of the recently concluded collective bargaining in Germany (approximately -45 million euros).
“Our business performed very well in the third quarter. Thanks to the extraordinary efforts of our 550,000 employees worldwide, we were able to benefit from the dynamic growth in e-commerce in our businesses,” said Frank Appel, CEO of Deutsche Post DHL Group. “We are now fully focused on preparations for an exceptionally strong Christmas season. The safety of our employees and the quality of service for our customers remain our top priorities.”
Positive Development of Business Segments
The EBIT of Post & Parcel Germany rose in the third quarter to around 320 million euros (2019: 304 million euros) – despite the effects of one-time payments totaling -95 million euros. The Express division increased its EBIT in the third quarter to around 750 million euros (2019: 454 million euros) – driven by strong growth in on-time shipment volumes. The operating result of Global Forwarding, Freight amounted to around 155 million euros, significantly above the previous year’s figure of 124 million euros. The performance in the Supply Chain division recovered based on rising customer activities: The EBIT in the third quarter was around 110 million euros (2019: 162 million euros). DHL eCommerce Solutions recorded another EBIT increase to around 75 million euros, well above the previous year (2019: 6 million euros). The division benefited from strong volume growth in the B2C business in selected markets. Corporate Functions achieved a result of around -40 million euros.
The overall positive business development is underscored by the continued strong cash flow performance; in the third quarter, the Group was able to increase free cash flow to more than 1.0 billion euros (2019: 507 million euros). This results in a positive free cash flow of more than 1.2 billion euros for the first nine months of 2020.
Forecast for EBIT and Free Cash Flow in 2020 Raised
In light of the recent performance dynamics, management has decided to adjust the outlook for the entire year 2020 as follows:
The reported consolidated EBIT is expected to be between 4.1 billion euros and 4.4 billion euros. (previously: 3.5 billion euros – 3.8 billion euros). For the end of the year, the Group anticipates a very strong Christmas season driven by dynamic online trade. The company aims to secure all necessary resources required to maintain a high-quality service level. Achieving the target at the upper end of the forecast essentially depends on whether the volume development allows for efficient utilization of the networks.
DHL Divisions Also Show Increase
The Post & Parcel Germany division is expected to contribute an EBIT of around 1.5 billion euros unchanged. For the DHL divisions, Deutsche Post DHL Group now forecasts an EBIT between 3.3 billion euros and 3.6 billion euros (previously: 2.8 billion euros – 3.1 billion euros). For Corporate Functions, a result of around -700 million euros is forecasted (previously: around -750 million euros). This includes approximately 350 million euros of the previously communicated and unchanged expenses of around 400 million euros for the realignment of the StreetScooter activities. The outstanding amount of around 50 million euros will now be incurred in 2021.
For the entire year, a higher free cash flow of more than 1.8 billion euros is now expected with unchanged gross investments of approximately 2.9 billion euros (previously: around 1.4 billion euros). This includes, in addition to all previously mentioned special effects, approximately 300 million euros for the 777 renewal program of the express intercontinental fleet.
Photo: © DPDHL
