News / Spread of coronavirus hits DP-DHL in every division, but all stay in profit

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Deutsche Post-DHL has binned its profit target for the year, as a result of the coronavirus pandemic.

The German group, a bellwether for the logistics industry, said in yesterday’s trading update it was withdrawing its 2020 ebit guidance, “given the significant impact of Covid-19 on all parts of the economy”.

However, it said that its preliminary group ebit was €590m for the first quarter of 2020, while preliminary operating profit came in at €1bn, “after adjusting for the effects related to the pandemic of approximately €200m as well as costs related to the realignment of the StreetScooter activities of approximately €230m”.

It suffered revenue declines in each of its main business areas, although all remained in profit.

DHL Global Forwarding and Freight saw revenue decline by around €30m, year on year, in the quarter and posted a divisional ebit of €70m.

Supply Chain also saw sales decline €30m, but its performance was more varied as it posted an ebit of €100m.

“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,” the company said.

However, there are improved prospects for its Post & Parcel and E-commerce divisions, where it said “due to the shutdown of stationary retail stores, the e-commerce business and the corresponding parcel volumes grew dynamically”.

It added: “In light of the remaining travel restrictions and Easter, the volume is likely to continue to increase.”

The Post & Parcel division saw sales decline €40m and recorded an ebit of €330m, while E-commerce saw sales decline €10m, to end the quarter with an ebit of €10m.

Finally, the performance of its Express division “followed the spread of the pandemic”, it said.

“After the business in China was able to recover noticeably in March, the business in Europe and North America is now showing the same development that the business saw in China in February.

“Owning an air cargo fleet has proved to be an important factor in order to be able to offer customers urgent transport,” it said.

Express revenues were down €90m in the first quarter, while ebit was €390m.