The Bonn group expects strong Christmas business.
(Photo: dpa)
Dusseldorf The Bonn-based Dax group had already announced that Deutsche Post DHL would increase its profit forecast for the current year this Tuesday. As promised, CEO Frank Appel has now provided the specific figures. Accordingly, there should be earnings before interest and taxes (EBIT) of 8.4 billion euros this year – after eight billion in the previous year.
“The first three quarters of the year were the most successful in our company’s history,” said Appel. “Even if the global growth momentum slows down, we are on the way to achieving the best result ever at around 8.4 billion euros.”
The Post had initially announced an EBIT of eight billion euros for 2022 with a deviation of five percent up or down. However, analysts had recently expected a target value of 8.6 billion euros.
Freight business and takeover drive sales
The leap in sales, on the other hand, was surprisingly high. With 24 billion euros, the group achieved 20 percent more than in the same quarter of the previous year, to which in addition to a strong express business with a plus of 22 percent, the freight division in particular contributed, which increased by more than 38 percent.
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There, however, it wasn’t just the high freight rates that drove business up. Part of the additional revenue generated there, amounting to 2.18 billion euros, comes from the 1.5 billion euro acquisition of the spirits forwarding company Hillebrand.
In the traditional mail and parcel business, on the other hand, sales in the past quarter were 0.2 percent below the previous year’s figure, while operating profit (EBIT) even fell by 3.3 percent. In the Corona year 2021, a booming online business in Germany had driven the result up sharply. According to statements by Post boss Appel, things are now normalizing – at least at a high level.
“The first three quarters of the year were the most successful in our company’s history.”
(Photo: imago images/sepp spiegl)
The group as a whole achieved an EBIT of two billion euros in the past third quarter and thus increased the operating result by 15.2 percent. Since sales increased sharply at the same time, the EBIT margin fell slightly from 8.8 to 8.5 percent. From January to the end of September, EBIT totaled from EUR 5.8 billion in the previous year to EUR 6.5 billion now.
With a view to the final quarter, Deutsche Post DHL Group is well positioned despite the ongoing global economic uncertainties and is preparing for the usual seasonal pattern of shipment volumes for the Christmas business, explained Appel. We are therefore sticking to the medium-term earnings outlook, in which Swiss Post expects EBIT of around 8.5 billion euros for 2024.
Competitor Fedex has disappointed investors
In recent weeks, this has not been the case for every major player in the industry. The US competitor Fedex, for example, disappointed with its business figures in mid-September and cashed in on its original profit expectation, whereupon the share price collapsed by more than 20 percent and the shares of many competitors fell massively.
The opinions of analysts regarding Deutsche Post are no longer as unanimously positive as they were at the beginning of the year. Samuel Bland of the US bank JP Morgan was recently disappointed by slowing earnings momentum in the cargo business. He expects the trend to continue towards the end of the year, he wrote.
Goldman Sachs analyst Patrick Creuset warned in late September that profitability in the logistics sector may have peaked in the third quarter of this year and could now be caught in a multi-year down cycle. After the preliminary publication of the quarterly figures, he left his share assessment at “neutral” and named a target price of EUR 39. Before the stock market opened, the paper was quoted at EUR 36.15.
Other analysts, however, highlighted positively that Deutsche Post has broken out of the negative trend signaled by rival Fedex in mid-September.
More: Deutsche Post promises higher profits – share price increases sharply.