Deutsche Post Achieves Great Success Through E-Commerce Positioning in Q3

Deutsche Post AG looks back on a very successful third quarter. The group was able to continue its growth path, with group revenue increasing by 4.4 percent to 16.2 billion euros. Deutsche Post particularly benefited from developments in the parcel, express, and eCommerce solutions business.

(Bonn) – Deutsche Post DHL Group experienced strong growth in the third quarter of 2020. The group was able to increase its revenue by 4.4 percent to 16.2 billion euros compared to the same quarter last year, in an economic environment shaped by Covid-19. Organically (adjusted for portfolio and exchange rate effects), revenue growth was even 9.0 percent. With its wide range of logistics services, Deutsche Post DHL Group benefited from globally rising e-commerce activities. In particular, the volumes in the Post & Parcel Germany and DHL eCommerce Solutions divisions increased significantly. The business with international time-sensitive express shipments also developed very dynamically across all regions, allowing the network to be utilized very well. Deutsche Post DHL Group increased its operating profit (EBIT) in the third quarter by around 50 percent compared to the previous year to 1.4 billion euros. This confirmed the preliminary figures published in October. The EBIT margin climbed from 6.1 percent to 8.5 percent. Free cash flow increased by more than 750 million euros compared to the previous year to around 1.3 billion euros.Post Keeps the Global Economy Running“We had a successful third quarter and were able to increase revenue, EBIT, and cash flow – thanks to our 550,000 employees and our excellent portfolio of logistics solutions in the booming e-commerce business, from which both small and large customers worldwide benefit. With our global services, we keep the world economy running even in times of crisis. Every day, our employees achieve extraordinary results under challenging conditions to provide our customers with the best possible service,” said Frank Appel, CEO of Deutsche Post DHL Group.

Raised EBIT Forecast for 2020 Confirmed, Free Cash Flow Forecast for 2020 Increased Again

In light of the strong earnings development in the third quarter, the group revised its earnings forecast for the current fiscal year upward in October: Deutsche Post DHL Group expects an operating profit of 4.1 to 4.4 billion euros for 2020. This includes one-time special effects of around -610 million euros. For the end of the year, the group expects a very strong Christmas business driven by dynamic online trading. To achieve this, the company aims to secure all necessary resources required to maintain a high-quality service level. Achieving the upper end of the forecast is largely dependent on whether volume development allows for efficient utilization of the networks. The group raised its forecast for free cash flow in 2020 from around 1.4 billion euros to more than 1.8 billion euros in October and has now increased this expectation to more than 2.0 billion euros. Furthermore, Deutsche Post DHL Group continues to expect to invest around 2.9 billion euros for the entire year. The mid-term earnings forecast updated in July, which expects a group EBIT of around 4.7 billion euros to more than 5.3 billion euros for 2022, depending on the course of the overall economic recovery, remains unchanged.

Consistently Strong Development of Free Cash Flow with Continued Investment Activity

In line with earnings growth, the group was able to increase free cash flow in the third quarter to 1.26 billion euros (2019: 507 million euros). After the first nine months, free cash flow stands at 1.46 billion euros (2019: -296 million euros).”We have not only significantly increased our profitability but also our cash flow. In an economically uncertain environment due to the pandemic, this is particularly important. We are therefore very well positioned to continue investing consistently in profitable growth and the implementation of our Strategy 2025,” said CFO Melanie Kreis.

Post & Parcel Germany: Sustained E-Commerce Boom Drives 11.6 Percent Volume Growth in Parcel Business

The revenue of the Post & Parcel Germany division increased in the third quarter by 3.4 percent compared to the previous year to over 3.8 billion euros. Operating profit improved to 320 million euros (2019: 304 million euros) – despite the granting of a special bonus and a one-time payment to employees totaling 93 million euros. In addition to strong parcel growth, the cost and price measures implemented positively impacted the results in both the letter and parcel business. The long-standing trend of increasing parcel volumes alongside declining letter volumes was significantly intensified in the third quarter by the pandemic. The restraint in dialog marketing continued, while the e-commerce boom in the German parcel business enabled a volume growth of 11.6 percent, significantly exceeding the growth forecast of 0 to 5 percent issued at the beginning of the year.

Express: Very Good Network Utilization Leads to Record Quarter in EBIT and EBIT Margin

The Express division was able to increase its revenue in the third quarter by 14.6 percent to around 4.9 billion euros compared to the previous year. Operating profit reached a record level of 753 million euros, 65.9 percent above the previous year – despite one-time expenses of 33 million euros for a special bonus. The basis for this outstanding development was the volume growth of 15.8 percent in the business with international time-sensitive express shipments. Throughout the third quarter, volumes in all regions worldwide remained at a significantly elevated level. The network was adjusted in response to the increased share of B2C business across all industries while B2B volumes were returning. Express was able to further increase the efficiency of shipment processing and utilize flight capacities in the global network very well. This resulted in a record margin of 15.5 percent, significantly above the previous year (2019: 10.7 percent).

Global Forwarding, Freight: Efficient Response to Changed Market Environment

Despite ongoing capacity constraints in international transport markets, the Global Forwarding, Freight division was able to increase its revenue in the third quarter to around 3.8 billion euros (2019: 3.7 billion euros). Operating profit improved by 25.0 percent to 155 million euros and included one-time expenses of 13 million euros for a special bonus. The positive margin development in air freight compared to the previous year was clearly reflected in the results and more than compensated for the declining transport volumes. In addition to the still limited capacity for cargo in intercontinental passenger aircraft, the division faced another tightening of supply for sea freight.

Supply Chain: Rising Customer Activities Increase Revenue and Results Over the Quarter

During the third quarter, customer activities in contract logistics picked up. As a result, the division increasingly recovered from the pandemic-related weak dynamics of the previous quarter. Overall, revenues of around 3.1 billion euros were still below the previous year (2019: 3.4 billion euros). The operating profit in the Supply Chain division amounted to 111 million euros in the third quarter. This included one-time expenses of 52 million euros for a special bonus. Adjusted for this, the result was nearly at the previous year’s level of 162 million euros. The basis for this good development in a volatile market environment is high cost discipline and the flexibility to find new solutions for customers.

eCommerce Solutions: Successful Continuation of Growth Course and Significant Increase in EBIT

The eCommerce Solutions division increased its revenue in the third quarter by 26.1 percent to over 1.2 billion euros. The operating profit of the division also rose significantly to 76 million euros (2019: 6 million euros). This was due to the rapidly growing shipment volumes in the consumer business in Europe and America. The realignment of international parcel activities is paying off: In addition to positive revenue development, improved cost management led to efficiency gains. The operating margin in the third quarter was 6.3 percent, significantly above the previous year (2019: 0.6 percent). Without considering the one-time expenses of 10 million euros for a special bonus, the increase would have been even stronger. Download the presentation of the quarterly results (Q3/2020) here!www.dpdhl.deImage: © Deutsche Post AG