Ad hoc: Deutsche Post AG withdraws Guidance for 2020
04/07/2020 06:22 PM CEST
Disclosure of inside information pursuant to Article 17 MAR
Since the initial spreading of the corona virus in February, our focus has been on preserving the safety and health of our employees, maintaining the ability to operate our global businesses and services and thus keep supporting our customers in a challenging environment. Despite local restrictions our global operations have been kept up and running.
The financial results for March - to the degree visible as of today - are expectedly affected by the global measures to contain the spreading of the covid-19 pandemic.
Following the negative deviation versus our internal plan of around EUR50 million in February we see for the month of March a pandemic-related deviation in the amount of around EUR150 million.
Whilst in the previous month only the divisions DHL Global Forwarding, Freight and DHL Express were affected, in March all divisions feel the effects of the global spreading of the pandemic, however to a differing extent depending on business model, geographic exposure and customer industries. The developments on a divisional level are as follows:
P&P Germany: With the introduction of the current pandemic-related measures in Germany we see a double-digit-percentage decline in mail volumes and revenue, driven mainly by suspended direct-marketing campaigns of our customers. In contrast we see overall stable, towards the end of the month even increasing parcel volumes; in the first quarter parcel volume growth is within the guided range of 0 - 5 %. With the covid-19 related revenue decline in mail and additional cost to ensure full operations we see for March a negative EBIT deviation from plan by around EUR40 million. For the first quarter we expect EBIT to be at around EUR330 million.
Express: The covid-19 effects on the global business and profitability follow the widening of pandemic-related measures. Whilst the Chinese business already significantly recovered in March we see the patterns of the development observed in China in February now materializing in Europe and North America. With the introduction of respective local containment measures we register in both regions initial strong declines in volumes. However, also here running a dedicated aviation fleet proves to be an important factor to enable customers speedy shipping at all. Overall we see for the month of March a covid-19 related deviation from planned EBIT by around EUR60 million. For the first quarter we expect EBIT to be at around EUR390 million including a covid-19 related impact of EUR90 million.
Global Forwarding, Freight: Like for the Express business the regional effects of covid-19 related measures in Europe and North America mirror the observations in China in February. Overall we see significant volume declines with even stronger cuts to available capacity, particularly in Air Freight. With overall uptrending gross profit margins this means for March a covid-19 related negative deviation from plan of around EUR10 million. For the first quarter we expect EBIT to be at around EUR70 million including a covid-19 related impact of EUR30 million.
Supply Chain: We see strong deviations from normal business, both positive and negative, depending on region and customer sector. Whereas activities for customers in Automotive or Retail (Fashion) are significantly reduced, we see equally strong uplifts in Retail (Groceries) and Life Science/Health Care. Global pandemic-related measures in total result, however, in lower revenues and additional cost, which lead to March EBIT being below plan by around EUR30 million. For the first quarter we expect EBIT to be at around EUR100 million.
eCommerce Solutions: Pandemic-related effects differ strongly by region, and we experience the strongest impact in Spain and India, driven by strong declines in B2B volumes and additional cost which cannot be compensated by higher B2C volumes. For March we see a covid-19 related negative deviation from plan of around EUR10 million. For the first quarter we expect EBIT to be close to EUR10 million.
The accumulated pandemic-related negative EBIT deviation from plan in February and March amounts to EUR200 million for the group. The reported group EBIT for the first quarter will be at around EUR590 million. This includes around EUR230 million of the already flagged cost for re-focussing the StreetScooter activities. Adjusted for covid-19 related effects and the StreetScooter cost group EBIT in the first quarter is about EUR200 million above the adjusted result of the same period last year (EUR814 million).
We started with a strong cash flow performance into the year, when taking into consideration seasonal effects, and also in the month of March we have not seen any significant change to cashflow beyond the covid-19 related impact on EBIT.
The comprehensive disclosure for the first quarter 2020 will be released on May 12th as planned.
Explanations on these financial indicators are available in the 2019 Deutsche Post DHL Group Annual Report (see page 15), which is published on the company's website under
While we see an encouraging development in our Chinese business in recent weeks, Europe and North America are still at an earlier stage of the pandemic. Given the strongly dynamic development it is at this stage not realistic to assess how and for how long public life and business will be affected by the corona pandemic, nor in what shape the global economy will be once the pandemic fades.
Given the global spread of the pandemic and the manifestation of negative effects at least for the current business year, a distinction between covid-19 related effects and an adjusted result becomes increasingly difficult and less meaningful. In today's board meeting the management therefore decided to suspend earnings guidance for 2020. As and when a more stable outlook for major economies becomes available and reliable forecasting is possible again, we will communicate new guidance to the market.
We do confirm, however, our guidance for a group EBIT of at least EUR5.3 billion for 2022. Equally, we uphold our guidance for aggregated Free Cash Flow and Capex 2020 to 2022, which are subject only to pandemic related effects to current year's Free Cash Flow.
Management today further decided to push out the date for the regular shareholder meeting, which so far was planned to be held on May 13th, to a later date this year. With that also the resolution of approbation of the balance sheet result for financial year 2019 and the payment of a dividend of EUR1.25/share will be pushed out to a later date this year.
Due to the covid-19 pandemic a shareholder meeting with physical presence currently cannot be held. We will hold a virtual online-only meeting should the pandemic situation also at a later point in the year not allow for a physical meeting.
As soon as a more reliable planning for a shareholder meeting has become possible again we will announce a new date.