Deutsche Post DHL (DPDHL) said group operating profit (EBIT) for February took a hit of around EUR60 million (US$67 million) to EUR70 million from the impact of the coronavirus (COVID-19).
DPDHL said it achieved record earnings in 2019 and had a good start to 2020, but the unexpected arrival of the coronavirus in January had affected its business by February.
“A worldwide crisis like the Coronavirus does not leave us unaffected. It is currently hard to judge how strong the impact on our business will be. That is why our guidance is as of now excluding any impact of this,” said group CEO Frank Appel in a recent statement.
DPDHL has in recent weeks monitored a weakening of trade volumes, not only on the inbound and outbound China trade lanes but also in other countries of Asia. Constraints on industrial production are increasingly expected also outside of China.
Since the health crisis, Post & Parcel Germany, DHL Supply Chain, and DHL eCommerce Solutions have been only marginally impacted.
In contrast, more significant effects are being seen for the DHL Express and DHL Global Forwarding divisions, where the business is particularly affected with regards to cross-border trade flows into and out of China, said the company.
“Group-wide the negative impacts of the Corona crisis on Group EBIT amount to around EUR 60-70 million for the month of February, compared to the initial internal planning,” said DPDHL.
Should the situation normalize again, there could also be positive effects for logistics companies. If it endures or worsens over the coming months, the negative impacts for the group are likely to outweigh the positives, it continued. “The concrete earnings impact can only be assessed after a normalization of the situation,” it added.
The supply chain and logistics company said its 2020 guidance for a group EBIT of more than EUR5.0 billion is as of now excluding any still-to-be-quantified effect induced by the COVID-19 implications.
“2022 guidance for a Group EBIT of minimum EUR 5.3 billion is not at all affected by this,” said the statement.
Meanwhile, group revenue was up 2.9% year-on-year in 2019 to EUR63.3 billion, with all five divisions contributing to this positive performance.
Group operating profit (EBIT) improved significantly (+30.6%) compared with the previous year. Group EBIT reached EUR4.13 billion, which is well within the range targeted for 2019.
The Post & Parcel Germany division contributed EUR1.23 billion to earnings. The DHL divisions generated total EBIT of EUR3.4 billion, of which EUR2.039 billion are attributable to the Express division, EUR521 million to Global Forwarding Freight and EUR912 million to Supply Chain. The division eCommerce Solutions recorded a result of -EUR51 million, while the result for Corporate Functions came in at -EUR523 million.
”We have reached record earnings in 2019 despite the challenging macroeconomic environment. All divisions continued to grow, and we took a big step forward with regards to our profitability,” said Appel.
Photo courtesy of DPDHL
