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Group EBIT was up around 16% in Q2 despite Covid-19
Deutsche Post DHL Group significantly increased earnings in Q2 2020 despite Covid-19. Operating profit (EBIT) improved by around 16.0% to around €890.0 million. Adjusted for one-off effects in the previous year and in the current year, operating profit came in around 25.0% above the prior-year figure.
At the beginning of Q2, business development was still dominated by the pandemic protection measures in place in Europe and North America as well as an initial sharp decline in volumes. The Group took measures to adjust to the pandemic-related changed utilisation of the network and to maintain its own flight capacity. During the course of Q2, the volume development started to slowly recover. In addition, since end of March the Company has recorded a positive development of shipment volumes driven by eCommerce, both internationally and in the German parcel business.
Preliminary Group EBIT reached around €890.0 million in Q2, 2020 (2019: €769.0 million). This number includes the already expected negative impact of around €100.0 million to realign the Group's StreetScooter activities and an additional around €100.0 million impact from special one-time impairments as a consequence of the lockdown measures and primarily concerning the Supply Chain and eCommerce Solutions division. The Group does not differentiate anymore between an adjusted operating results before and after effects related to Covid-19 as this distinction became increasingly artificial and less meaningful during Q2.
Operating profit in Post & Parcel Germany was around €260.0 million (2019: €177.0 million). The Express division managed to increase its EBIT in Q2 to €560.0 million compared to previous year of €521.0 million. Operating profit in Global Forwarding, Freight stood at around €190.0 million (2019: €124.0 million). EBIT in Supply Chain suffered from the above-mentioned impairments in Q2 of around €60.0 million. EBIT at Supply Chain was around €30.0 million in Q2 (2019: €87.0 million). Despite impairments of around €30.0 million, eCommerce Solutions was able to achieve break-even EBIT (2019: €-18.0 million).
A detailed publication of the results for Q2, 2020 will take place on August 5th, as planned.
In light of the recent earnings momentum, management has decided to provide outlook for the full year 2020. The reported Group-EBIT is expected between €3.5 and 3.8 billion. This includes the communicated expenses to realign StreetScooter activities of around €400.0 million, one-time bonus payments of approx. €200.0 million in Q3 as well as the above mentioned one-time impairments of approx. €100.0 million. The Group expects an EBIT of €1.5 billion for Post & Parcel Germany, which will cover a third of the one-time bonus payment. Deutsche Post DHL Group forecasts an EBIT between €2.8 and 3.1 billion for its DHL divisions including one-off effects. Operating profit in Corporate Functions including StreetScooter-effects is expected at approx. €-750.0 million. For 2020, a free cash flow of around €1.4 billion is expected with investments of approx. €2.9 billion.
In light of the continuing uncertainty about the course of an economic recovery over the next two years, the Group's medium-term earnings outlook for 2022 is updated. 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 €5.3 billion. In case of a slower recovery, e.g. with at least local setbacks in the pandemic development, (U-shape recovery) the Group expects EBIT of approx. €5.1 billion. In the least favourable case of a very slow development of the recovery, e.g. due to significant setbacks in the pandemic development (L-shape recovery) the Group expects EBIT of approx. €4.7 billion. The investment plans (capex) for the years 2020-2022 remain unchanged between €8.5 and 9.5 billion. Additionally, the cumulative free cash flows guidance of €5.0 to 6.0 billion for 2020 to 2022 is confirmed.