Solid half-year result, 'but don't let's get carried away', says Hapag-Lloyd chief
Despite the pandemic, Hapag-Lloyd recorded a net profit of $287m in the second quarter of ...
DHL has come a long way since the end of February, when it announced group ebit losses of between €60m-€70m ($66m-$77m) in the month.
With help from the Global Forwarding unit, up 53%, group ebit rose 16% in the second quarter, to some €890m.
This number has encouraged DHL to award every employee (excluding management) a one-off €300 bonus, at a cost of about €200m – and it forecasts an operating profit for the year of €3.5bn-€3.8bn.
This is down on 2019’s record €4.1bn, but its second-quarter adjusted operating profit came in 25% above a year earlier.
Chief executive Frank Appel praised the group’s “tireless” employees, and the group’s “fundamental strength and resilience”.
“Our strategy is focused on achieving three bottom lines: we want to be the provider; employer; and investment of choice,” he said.
“Our success during the past months of the crisis is based on balancing these goals in everything we do. We have therefore decided to pay a dividend at the previous year’s level to our shareholders and a special bonus for our employees.”
However, no mention was made of the news that DHL is cutting some 2,200 workers at the UK’s Jaguar Land Rover plant, whose salaries will no doubt help fund the bonuses. The group is proposing a dividend of €1.15 per share.
The beginning of the second quarter saw an “initial sharp decline in volumes”, but the group adjusted its network and volumes began to recover in the second half, with e-commerce volumes seeing a positive development from the end of March.
Its Express division saw ebit rise to €560m, up 7.5%, while operating profit for Global Forwarding rose an impressive 53% to €190m. Supply Chain suffered impairments from lockdown measures of about €60m, giving it ebit of about €30m, down about 65%. E-commerce Solutions, despite a €30m impairment, broke even, following the previous year’s loss of €18m.
Operating profit in Post & Parcel Germany was about €260m, up 47%.
The group said there was a “continuous strong development of cash flow; free cash flow stood at more than €500m in the second quarter, which is significantly up compared with last year (2019: € -547m). Thus, a positive free cash flow of more than €100m was achieved in the first half-year”.
Full-year group ebit, expected to be down year on year, between 7% and 14%, and will include about €400m of expenses related to its StreetScooter activities, the bonuses and one-off Covid-related impairments totalling about €100m. It will also pay some €300m for its 777 fleet renewal programme.
But Covid will continue to impact the group, it said and offered three potential scenarios for full-year 2022.
“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 €5.3bn. In case of a slower recovery, eg, with at least local setbacks in the pandemic development (u-shape recovery), the group expects ebit of approximately €5.1bn.
“In the least-favourable case, of a very slow development of the recovery, eg, due to significant setbacks in the pandemic development (L-shape recovery), the group expects ebit of approximately €4.7bn.”
Investment plans remain unchanged, at between €8.5bn and €9.5bn between 2020 and 2022.