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May 13, 2020 at 11:57 AMDeutsche Post DHL Group was able to increase its group revenue by 0.9% in the first quarter of 2020. The impact of the coronavirus crisis is not yet strongly noticeable, but it was taken into account in the results, as were the burdens for the e-delivery vehicle StreetScooter.
(Bonn) Deutsche Post DHL Group continued to grow in the first quarter of 2020 despite noticeable effects from Covid-19. Revenue improved by 0.9 percent to 15.5 billion euros. The operating result (EBIT) was 592 million euros. Adjusted for the negative impacts of the pandemic amounting to 210 million euros and the burdens incurred in the first quarter for the restructuring of the StreetScooter activities amounting to 234 million euros, the operating result was around 1 billion euros, approximately 200 million euros above the previous year’s result adjusted for one-off effects. The group confirmed the preliminary quarterly figures published in April.
“With 550,000 employees in all countries of the world and our unparalleled, global logistics network, we make a fundamental contribution to crisis management. We transport protective equipment and medicines, secure supply chains for industry, and help supply the population. We are proud of our teams who make the impossible possible every day. They also form the basis for Deutsche Post DHL Group’s good performance in the first quarter despite global challenges,” said Frank Appel, CEO of Deutsche Post DHL Group.
All five business areas contributed positively in the first quarter
With its extraordinarily broad geographical presence and its extensive portfolio of logistics services – from global express, air and sea transport to warehousing and e-commerce solutions to postal and parcel services in Germany – Deutsche Post DHL Group is more robustly positioned than other companies and is therefore well positioned to navigate through crisis times. Since the beginning of the global spread of the coronavirus, activities in different regions have developed better or worse compared to the original planning. Thanks to the significant differences in both the geographical fields of activity and the industries in which the divisions operate, all divisions were able to operate profitably even in a challenging environment, thereby demonstrating their resilience in times of crisis. “The current crisis once again highlights the value of our broad and resilient portfolio,” said Frank Appel.
While in the German postal and parcel business, for example, the volumes of packages significantly increased towards the end of the quarter, the letter business recorded significant declines. The DHL divisions felt the standstill in many regions and customer industries. At the same time, however, the business in China recovered in March after the low point in February. Globally, there was a significantly increased demand, particularly from the food and health sectors. With its own fleet of cargo planes, Deutsche Post DHL Group was also one of the few providers that could still facilitate urgent transports.
Mid-term target confirmed: At least 5.3 billion euros EBIT by 2022
Despite the impact on results from the Covid-19 pandemic in all five divisions, all of them operated profitably in the first quarter of 2020. A forecast for the rest of the year is currently hardly feasible due to the still very difficult to assess impacts. For this reason, Deutsche Post DHL Group suspended its annual forecast on April 7. As soon as a more reliable basis for a detailed earnings forecast is available, the company will communicate a new forecast.
The mid-term target of a group EBIT of at least 5.3 billion euros for 2022 remains valid. The cumulative investment and cash flow forecasts for the years 2020 to 2022 also remain in place, but are subject to the condition of a yet to be quantified Covid-19-related effect on free cash flow in the current year.
Operating cash flow nearly tripled with continued significant investments
In the first quarter, the group’s operating cash flow was 750 million euros (2019: 252 million euros). This reflects the solid financial situation of the group – even in times of crisis. The free cash flow was minus 409 million euros (2019: minus 256 million euros). A cash outflow in the first quarter is seasonally typical for Deutsche Post DHL Group. The previous year was supported by a cash inflow of 653 million euros from the sale of the supply chain business in China. Adjusted for this positive effect in the previous year, the free cash flow improved mainly due to the very good development of the operating cash flow – also due to a lower cash outflow from changes in working capital – by 500 million euros.
“Thanks to our good balance sheet and liquidity situation, we were able to invest nearly half a billion euros again in the first quarter despite Covid-19. We have strengthened our global network and thus prepared ourselves for further profitable growth in the future,” said Melanie Kreis, CFO of Deutsche Post DHL Group.
Deutsche Post DHL Group invested 453 million euros (2019: 448 million euros) across all business areas in the first quarter of 2020. In total, Deutsche Post DHL Group generated a group profit attributable to non-controlling interests of 301 million euros (2019: 746 million euros) in the first quarter of 2020. The undiluted earnings per share amounted to 0.24 euros compared to 0.60 euros a year ago.
Photo: Deutsche Post DHL
