Forecast Confirmed: Deutsche Post Share Still in Red: Deutsche Post Posts Double-Digit Earnings Growth | news

With transport capacities still tight, demand will continue, the DAX group in Bonn announced on Tuesday. Although parcel volumes have declined due to a normalization of e-commerce, global logistics activity with corporate customers has more than compensated for this development. In the eyes of the Management Board, this momentum should not run out of steam anytime soon.

The management around CEO Frank Appel now assumes that freight activity will only normalize in the last quarter of the current year. Until now, the Management Board had expected normalization from the second half of the year. The company’s management has confirmed its forecast for the year as well as the objectives for 2024.

Deutsche Post stock temporarily rose more than three percent in the morning, but then recovered to significant price gains. On Tuesday afternoon, the paper turned negative and thus underperformed the leading index, which rose slightly. Ultimately, Deutsche Post shares fell 0.32% to 40.20 euros. JPMorgan analyst Samuel Bland pointed out that strong results from rivals DSV and Khne+Nagel did not particularly help share prices.

From March 2020 to September 2021, Post’s share price more than tripled and benefited from corona-related restrictions and the boom in online commerce. After the record eight months ago at 61.38 euros, the air was gone. Year-to-date, the price has fallen nearly 30%, making the stock one of the DAX’s biggest losers.

In the three months to the end of March, the Bonn-based company achieved an operating profit before interest and tax (EBIT) of almost 2.2 billion euros, beating the record figure of the year by 13%. ‘last year. Net income increased even more strongly to 1.35 billion euros. Sales even increased by a fifth to almost 22.6 billion euros.

DHL’s freight business in particular grew and, with growth of more than half to 7.4 billion euros, was the division with the highest turnover for the first time. The segment’s operating profit almost tripled to more than 600 million euros. On the one hand, the corona-related closures in Shanghai, for example, have reduced transport capacities. At the same time, Swiss Post benefited from the resulting strong competition for freight space, which drove up prices and margins. This business segment also includes the purchase of Mainz sea freight specialist JF Hillebrand, which the post office completed at the end of March.

However, the recovery has not yet had an effect on first-quarter sales, chief financial officer Melanie Kreis said in a conference call with reporters on Tuesday. La Poste announced last August that it wanted to buy the Hillebrand group for 1.5 billion euros. At 1.4 billion euros, most of the purchase price became effective in the first quarter. As a result, free cash flow in the first quarter was minus 197 million euros. Adjusted for the recovery, it was however at the level of the same period of the previous year.

Kreis did not rule out new acquisitions: “Our focus remains operational growth, but we are also open to inorganic things, provided the conditions are right.” The conditions stipulate that the potential takeover candidate works in Swiss Post’s core logistics business, is “clear and easy to integrate” and can make a positive contribution to the result.

On the other hand, things were rather weak in the areas of Post & Parcel Germany and eCommerce Solutions in the first quarter. Management expected it, Kreis said. Although e-commerce has stabilized at a higher level, shipping volumes have normalized after the boom phase during the pandemic. The volume of parcels transported in Germany fell by almost a fifth in the first quarter compared to the same period of the previous year. The head of the Appel post has not yet wanted to estimate whether the volume of parcels will also fall for the whole of the year.

According to his estimates, in the face of a crisis like the war in Ukraine, people do not feel like shopping. Swiss Post has already seen similar reluctance in the first phase of the pandemic at the start of 2020. The group has also suffered from a change in strategy at online retailer Amazon. Because the important big customer now relies more on its own delivery, which has reduced the volume of Amazon parcels transported by DHL. Significantly higher costs in the German mail and parcel sector due to cancellations due to corona diseases and the necessary tests on delivery personnel also had a negative impact.

But there was also a silver lining for the division: the mail business, which had long been declining in the digital age, proved surprisingly robust and even grew – here, volume increased by 7%. This was due to corporate customers again sending out more advertising than in the first quarter of 2021, when many stores were closed or consumers generally avoided city centers for fear of Corona.

In addition, the postal group had to depreciate its Russian operating sites in the first quarter. As is already known, the logistics group achieves less than one percent of sales in Russia, Belarus and Ukraine. Lower sales forecasts in Russia led to impairments of 30 million euros in the first quarter. Most of this was attributable to activity with urgent express shipments.

/lew/stw/tav/eas

BONN (dpa-AFX)

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