Forecasts increased again: Parcel boom continues to drive Deutsche Post
Earnings before interest and taxes (EBIT) of over 7.7 billion euros are expected to be ten percent more than previously targeted, announced the Dax group on November 4, 2021 upon presentation of detailed quarterly figures in Bonn. Free cash inflows are now expected to be 3.6 billion euros in 2021 instead of the previous 3.2 billion euros. As previously announced, management has also raised the medium-term targets again.
Deutsche Post wants to increase the operating result to more than 8 billion euros by 2023. Previously, at least 7.4 billion had been targeted. Cumulative for the years 2021 to 2023, the management around CEO Frank Appel now expects the free cash inflows to be 10 billion euros, one billion more than before. This does not take into account the effects of the takeover of the Mainz sea freight specialist JF Hillebrand, which was announced in August.
The new medium-term targets are slightly above analysts’ expectations. They are a confirmation of the success story of the group, wrote Metzler analyst Guido Hoymann. He also believes in a “significant” dividend increase and possibly also in share buybacks.
In a conference call, Chief Financial Officer Melanie Kreis referred to the share buyback, which will run until March 2022 at the latest, with a volume of up to one billion euros. In addition, it was based on the Group’s dividend policy, which provides for a distribution of 40 to 60 percent of net profit. The group profit has so far also developed significantly positively. Most recently, the group had distributed 1.35 euros per share.
On the stock exchange, the news of the share gave a further boost, the price rose by a good 3.2 percent to 57.60 euros and thus continued to recover. The shares had lost something since the record high of a little more than 61 euros reached in August. Over the year, however, there remains an increase of over 40 percent.
In terms of sales, the group recorded an increase of almost a quarter to 20 billion euros. The operating result rose in the third quarter by around 29 percent to 1.8 billion euros. Without the second Corona one-time bonus of 300 euros for employees, the result would have been over 1.9 billion euros, according to Kreis. At around 1.3 billion euros, free cash inflows were slightly above the preliminary result published at the beginning of October. The bottom line was that almost 1.1 billion euros remained in profit.
Deutsche Post’s business continues to boom thanks to high freight rates, and shipment volumes are also stabilizing at a high level. Deutsche Post cites “noticeably increasing world trade” as the most important driver for good business development. There is particularly strong demand in corporate banking. But online trading has also stabilized at a higher level, it said. And that although the stationary trade is now open again.
The Express segment again had the largest share of the result, in other words the business with the delivery of goods, which also includes the Group’s network of airlines. The amount of goods transported by the post office declined slightly, but thanks to higher prices and greater weight, sales increased. However, the segment’s growth slowed somewhat on the basis of the strong prior-year figures.
With a sales growth of more than 50 percent and an operating result that has more than doubled, the segment for air, ocean freight and land transport (Global Forwarding, Freight) has developed above average. The tense supply chains around the world meant that the gross profit in ocean freight almost doubled with almost the same volume.
Deutsche Post was also able to improve results in the two-digit percentage range in the supply chain and online retail solutions. Only the Post and Parcel Germany division (P&P Germany) lost something compared to the same period in the previous year. While the parcel volume has stabilized at an increase of 30 percent compared to before the corona pandemic, the volume of the so-called dialogue mail, such as advertising brochures, has apparently sustainably reduced by 10 percent.
In addition, the Group did not reduce the capacity it had built up to cope with the increased shipment volumes over the summer, but instead maintained it for the upcoming and traditionally strong Christmas business, which has led to increased costs. (dpa / rw)