News / DP-DHL first-quarter profits drop by half as pandemic impacts operations

Deutsche Post-DHL saw its first-quarter operating profit this year halved by a combination of the coronavirus pandemic and one-off costs from the reorganisation of its StreetScooter business.

This morning, the German logistics giant reported Q1 revenue had grown by 0.9%, to €15.5bn ($16.8bn), while ebit dropped 49% to €592m.

It attributed €210m of the decline to coronavirus and €234m to StreetScooter, while last year’s sale of its supply chain business in China netted it €345m.

However, it said that all five divisions – Post & Parcel, e-commerce, Express, Supply Chain and Global Freight Forwarding – returned a profit, although they experienced varied fortunes, and there were one-off items that make comparison of divisional ebits problematic, according to Loadstar Premium editor Alessandro Pasetti.

“Be very careful comparing annual ebit numbers by divisions, there are plenty of one-offs,” he said. “DHL Supply Chain’s reported ebit was hammered, down from €486m one year earlier, to €105m, but that’s hardly indicative of true performance, given a changing asset base.”

Global Fright Forwarding, including the overland freight business, saw quarterly revenue drop 4.1%, year on year, to €3.6bn, and ebit by 27%, to €73m, as it suffered volume declines across the modes, almost entirely attributed to the pandemic.

Air freight volumes were down 10.7%, to 792,000 tonnes, and revenue declined 3.9% to €1.15bn. Land sea freight volumes declined 5.7%, to 709,000 teu, resulting in a 6.2% drop in revenue, to €832m.

Road freight revenues were also down, by 4%, but it did see a 1.8% increase in volumes, “driven in part by B2C business in Scandinavia”.

The Supply Chain division saw adjusted revenue decline by just 1.9%, to €3.2bn, although it added that it had won €135m in new business.

Express revenue was up 4.5% to €4.2bn, while ebit declined 13.2 %, to €393m, with pandemic-related losses amounting to €90m.

However, volumes were up 0.6% for international shipments and 6.6% for domestic express shipments’, driven largely by strong volume growth in North America.

Its Post & Parcel division saw revenues grow 3.8%, to just under €4bn, while the fledgling e-commerce solutions segment saw revenue decline 0.3%, to €996m as the pandemic affected its operations.

“The impact of Covid-19 varied greatly from region to region,” said the company. “Although B2C business was up across the board, the increase was unable to compensate for the heavy declines in B2B volumes and additional costs, above all in Spain and India. Whereas revenue increased in the Americas region, it was down moderately in Europe and noticeably in Asia.”

At a group level, DP-DHL has abandoned its profit and capex forecasts for the year, but reaffirmed a “medium-term guidance of ebit of at least €5.3bn in 2022”.