DHL CEO: “We have navigated our company through this crisis very well”

DHL has regained its confidence for 2020 after performing well in the second quarter. The company has issued profit guidance of between EUR 3.5 and 3.8 billion, which is just slightly lower than the operating profit of EUR 4.1 billion last year. “We have navigated our company through this crisis very well”, says CEO Frank Appel. 

The profit guidance follows a successful second quarter in which DHL increased its operating profit (ebit) by 16% to EUR 890 million in comparison to the same period last year. Detailed figures won’t be released until August 5, but preliminary results show a sharp improvement in comparison to the first quarter of 2020, when the company’s operating profit was severely hit by the Covid-19 pandemic, dropping nearly 50% year-on-year.

“We owe this to our committed colleagues worldwide. Only through the tireless efforts of our teams have we managed to keep supply chains up and running and thus maintained the worldwide supply”, said Appel, adding that DHL’s broad portfolio of logistics services has proved to form “the backbone of global trade.”

As a demonstration of the board’s appreciation, all 500,000 employees will receive a special one-time bonus of EUR 300 for their efforts during the past few months. The company has reserved a total of EUR 200 million for the special bonus, which will be booked in the third quarter. Executives are excluded from the arrangement.

For shareholders, DHL has proposed a dividend of EUR 1.15, which is stable compared to last year. “Our strategy is focused on achieving three bottom lines: We want to be the provider, employer and investment of choice. 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”, Appel said.

Guidance

DHL expects the divisions Post & Parcel Germany, Express and Global Forwarding to all increase their profits. For Global Forwarding, the company expects the operating profit to increase from EUR 124 million last year to EUR 190 million now. The Supply Chain division has recorded lower profit due to impairments, while eCommerce Solutions is breaking even.

Based on the second-quarter results, DHL expects the group’s operating profit to be between EUR 3.5 and 3.8 billion this year. This includes expenses to realign StreetScooter activities of around EUR 400 million, the one-time bonus payments of EUR 200 million in the third quarter as well as one-time impairments of EUR 100 million.

Remaining uncertainty

Because the course of the economic recovery remains uncertain as Covid-19 is still causing chaos in many parts of the world, DHL has provided a medium-term outlook for 2022 based on three scenarios.

In the case of a rapid recovery of the global economy without broad setbacks in the pandemic development, the so-called V-shape recovery, the company expects an operating profit of more than EUR 5.3 billion. If the recovery is slower with at least local setbacks in the pandemic development, causing a U-shape recovery, DHL expects a profit of about EUR 5.1 billion in 2022. In the least favourable case of a very slow recovery due to significant setbacks in the pandemic development, DHL still expects ebit of approximately EUR 4.7 billion.

The investment plans for the years 2020-2022 remain unchanged between EUR 8.5 and 9.5 billion.

Author: Tobias Pieffers

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