Deutsche Post DHL (DPDHL) has announced it is withdrawing its 2020 earnings guidance due to the economic uncertainty generated by the COVID-19 pandemic.
The logistics and supply chain giant said its EBIT (group operating profit) guidance for 2020 is being withdrawn due to the global spread of the pandemic and “the corresponding lack of transparency concerning the global economic development.”
The company last February 28 said it had set a group EBIT guidance for 2020 of more than EUR5.0 billion, which excluded any still-to-be-quantified effect induced by the COVID-19 implications.
It also said group operating profit (EBIT) for February took a hit of around EUR60 million to EUR70 million from the coronavirus outbreak.
“Given the significant impact of Covid-19 on all parts of the economy, which is expected to continue over the coming months, an adjustment of the results for the effects of the pandemic becomes increasingly difficult and less meaningful,” DPDHL said in a statement on April 8.
In its latest release, it said a new guidance will be communicated as soon as “a stabilization in the most important economies can be foreseen and a more reliable basis for a detailed earnings guidance is given.”
Meanwhile it confirmed the mid-term target of at least EUR5.3 billion in group EBIT for 2022.
It said the impact of the pandemic differed across its five business units, but they all achieved positive results in the first quarter of 2020 despite Covid-19. There was overall, a moderate negative effect for the group in the first three months of the year.
“Since the start of the global spread of the virus, the five business divisions and the activities in different regions performed in some cases better and in some cases worse than planned,” said the company.
“Our company has shown a very good development in the first quarter, despite the global challenges. We are operating profitably which can currently not be taken for granted,” said group CEO Frank Appel.
Preliminary group EBIT reached around EUR590 million in the first quarter of 2020. After adjusting for the effects related to the pandemic of about EUR200 million as well as costs related to the realigning of the StreetScooter activities of some EUR230 million, operating profit stood at EUR1 billion and this was EUR200 million above the previous year figure adjusted for one-off effects, said the statement.
For DHL Express, the pandemic resulted in total negative earnings effects of about EUR90 million for the first quarter. EBIT was about EUR390 million in the first quarter. “Owning an air cargo fleet has proven to be an important factor in order to be at all able to offer customers urgent transports,” said the company.
For global freight forwarding, the pandemic resulted in total negative earnings effects of about EUR30 million. EBIT was about EUR70 million in the first quarter. “Strong decline in air and ocean freight volumes are exposed to even stronger cuts especially in air freight markets capacity,” said DPDHL.
On the supply chain, the pandemic resulted in total negative earnings effects of about EUR30 million for the first quarter. EBIT was about EUR100 million in the first quarter.
The development in contract logistics differs with regards to regions and sectors. “While fashion and automotive recognized negative effects due to suspended production and reduced demand, the retail grocery segment as well as the healthcare industry showed positive effects,” said the report.
On the eCommerce segment, the pandemic resulted in total negative earnings effects of around EUR10 million for the first quarter. EBIT was about EUR10 million in the first quarter.
“The development differs regionally and showed especially in Spain and India a strong decline in B2B-volumes and additional costs, which could not be compensated by overall increasing B2C-volumes.”
For Post & Parcel Germany, the division posted a negative earnings of more or less EUR40 million in Q1, with EBIT of about EUR330 million.
Photo courtesy of DPDHL
