Deutsche Post DHL beats back COVID-19 with Q2 profit

DHL Express

Deutsche Post DHL Group (OTCMKTS: DPSGY) said its diversity of services allowed it to pick up the pieces of a pandemic-shattered international supply chain and generate a healthy second-quarter profit.

The company’s pretax profit for the quarter increased 18.6% to 912 million euros (US$1.08 billion), compared to 769 million euros ($913 million) for the same period last year and a 2% increase over initial Q2 projected results in early July.

“We have never been in better shape and I am confident that our company will emerge stronger from the crisis,” said DP DHL CEO Frank Appel in a statement on Wednesday.

With fewer people transacting business in person due to COVID-19 travel restrictions and retail store closures during the first half of the year, DP DHL saw a significant rise in e-commerce activity, which transited through its global express, air and ocean freight forwarding, warehousing and supply chain, e-commerce, and German postal services.

Earlier in the quarter, DP DHL warned that its Q2 profits might suffer due to the ongoing pandemic in North America and Europe. However, the company began realizing increased demand for time-definite international express services since late March, which fueled its bottom line.

The company said all five of its divisions generated operating profit during the second quarter.

The Express division’s profit increased to 565 million euros ($670 million) compared to 521 million euros ($618 million) for the same period last year, while its operating income from post and parcel services in Germany rose 49.2% to 264 million euros ($313 million) compared to 177 million euros ($210 million) last year.

DP DHL’s global forwarding unit saw Q2 operating income increase more than 50% year-on-year to 190 million euros ($225 million) compared to 124 million euros ($147 million) during the same period last year.

Despite the pandemic and restructuring of its electric cargo bikes unit, the company’s supply chain division was still able to generate operating income of 35 million euros ($41 million) compared to the 87 million euros ($103 million) the division earned in operating income in the second quarter of last year.

“Overall, the contract logistics business is more dependent on individual customer activities, as transport and warehousing solutions are often developed and operated specifically for one customer,” DP DHL explained.

“The division saw very different developments depending on the sector,” the company said. “While parts of the retail sector and the life science and health care sector developed positively, business in the automotive sector weakened visibly.”

DP DHL’s eCommerce Solutions division generated operating income of 1 million euros ($1.18 million) despite nonrecurring impairments of 30 million euros ($35 million).

“In addition to successfully optimizing its portfolio as part of its repositioning the international parcel activities, the division made significant progress in its efforts to manage costs and boost efficiency,” the company said. “The key driving forces behind these gains were B2C activities in Europe and America that benefited from rising shipment volumes.”

DP DHL also continued investing in its operations during the second quarter, spending 482 million euros ($572 million) across all divisions.

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