DHL Group noted a strong development in its second-quarter performance prompting the courier to introduce earnings guidance which it earlier suspended due to the adverse impact of the coronavirus.
In a statement, DHL said the logistics company significantly increased earnings in Q2 2020 despite Covid-19.
Its operating profit (EBIT) improved by around 16% to around EUR 890 million. Adjusted for one-off effects in the previous year and in the current year, operating profit came in around 25% above the prior-year figure.
Frank Appel, CEO Deutsche Post DHL Group said DHL has navigated through this crisis "very well so far" as he cited the company's broad portfolio of logistics services for keeping the company resilient.
Business performance for Q2
At the beginning of the second quarter, DHL said 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 utilization 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 the 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," it said in a statement.
Preliminary Group EBIT reached around EUR 890 million in the second quarter of 2020 from EUR 769 million in 2019.
DHL said its operating profit in Post & Parcel Germany was around EUR 260 million from EUR 177 million during the same period in 2019. Its Express division managed to increase its EBIT in the second quarter to EUR 560 million compared to the previous year of EUR 521 million.
Operating profit in Global Forwarding, freight stood at around EUR 190 million from EUR 124 million in 2019.
"The overall positive business development is accompanied by continuous strong development of cash flow," DHL said, adding that the firm's free cash flow stood at more than EUR 500 million in the second quarter, significantly higher compared to last year's EUR -547 million).
Earnings guidance for 2020, 2022
DHL also introduced its new EBIT target for 2020 through 2022 in light of the recent earnings momentum.
"The reported Group-EBIT is expected between EUR 3.5 and 3.8 billion," DHL said. The Group also expects an EBIT of EUR 1.5 billion for Post & Parcel Germany.
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 5.3 billion;
- 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 5.1 billion;
- In the least favourable case of the 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 4.7 billion.
The investment plans (CAPEX) for the years 2020-2022 remain unchanged between EUR 8.5 and 9.5 billion.
To thank its employees worldwide for helping the firm tide the impact of COVID-19, DHL also announced it will be granting a special one-time bonus of EUR 300 to employees worldwide — excluding executives — that would cost the company around EUR 200 million.