Confirmed Forecast: Deutsche Post Stock Goes Negative: Deutsche Post Rises Double Digit Earnings | news

With transportation capacities still limited, demand will continue, the DAX group announced in Bonn on Tuesday. Although parcel volumes decreased due to normalization in online commerce, the global logistics activity with corporate customers more than compensated for this development. According to the board, this momentum is not expected to slow down anytime soon.

Management around CEO Frank Appel now assumes that freight activity will only normalize in the last quarter of this year. Up to now, the Management Board had foreseen a normalization starting from the second half of the year. The company’s management confirmed the forecasts for the year and the objectives for 2024.

Deutsche Post stock rose temporarily more than three percent in the morning, but later regained the significant price gains. On Tuesday afternoon, the stock turned negative and therefore underperformed the main index, which rose slightly. At times, Deutsche Post’s share was slightly lower by 0.07% at EUR 40.30. JPMorgan analyst Samuel Bland pointed out that the good results of competitors DSV and Khne + Nagel did not particularly help stock prices.

From March 2020 to September 2021, the Post’s share price more than tripled and benefited from krona-related restrictions and the boom in online trading. After the record eight months ago at 61.38 euros, the air was gone. Since the start of the year, the price has dropped nearly 30 percent, making the stock one of the biggest losers in the DAX.

In the three months to the end of March, the Bonn-based company achieved operating income before interest and taxes (EBIT) of nearly € 2.2 billion, exceeding the previous year’s record figure by 13 percent. Net profit rose even more sharply to € 1.35 billion. Sales even grew by a fifth to nearly € 22.6 billion.

In particular, DHL’s freight business grew and, with growth of more than half to 7.4 billion euros, was the division with the highest turnover for the first time. The operating result of the sector almost tripled, exceeding 600 million euros. On the one hand, crown-related blocks in Shanghai, for example, have reduced transport capacities. At the same time, Swiss Post benefited from the resulting fierce competition in the freight space, which led to higher prices and margins. This business area also includes the purchase of Mainz shipping specialist JF Hillebrand, which Swiss Post completed at the end of March.

However, the acquisition has not yet had an effect on Q1 economic data, CFO Melanie Kreis explained in a conference call with reporters Tuesday. The Post announced last August that it plans to buy the Hillebrand group for € 1.5 billion. At 1.4 billion euros, most of the purchase price went into effect in the first quarter. As a result, free cash flow in the first quarter was less than EUR 197 million. Adjusted for the acquisition, however, it was at the level of the same period last year.

Kreis did not rule out further acquisitions: “Our focus remains on operational growth, but we are also open to inorganic things, as long as conditions are favorable”. The conditions stipulate that the potential acquisition candidate is part of Swiss Post’s core logistics business, is “clear and easy to integrate” and can make a positive contribution to earnings.

Conversely, things were pretty weak in the Post & Parcel Germany and eCommerce Solutions areas in the first quarter. Management expected this, Kreis said. Although online trading stabilized at a higher level, shipping volumes normalized after the boom phase during the pandemic. The volume of parcels transported to Germany decreased by almost a fifth in the first quarter compared to the same period of the previous year. Post chief Appel has not yet wanted to estimate whether the volume of parcels will also decrease for the whole year.

According to his estimates, in the face of a crisis such as the war in Ukraine, people do not want to go shopping. Swiss Post has already observed similar reluctance in the first phase of the pandemic in early 2020. The group has also undergone a change of strategy at online retailer Amazon. Because the major major customer now relies more on their own delivery, which has reduced the volume of Amazon packages transported by DHL. The significantly higher costs in the German postal and parcel sector due to cancellations due to corona diseases and the necessary tests on delivery personnel also had a negative impact.

But there was also a ray of hope for the division: The mail business, which had long since shrunk in the digital age, proved surprisingly solid and even grew – volume here increased by seven percent. This was due to corporate customers again sending more advertisements than in the first quarter of 2021, when many stores were closed or consumers generally avoided urban centers out of fear of Corona.

In addition, the postal group had to devalue its Russian operating sites in the first quarter. As already known, the logistics group achieves less than one percent of sales in Russia, Belarus and Ukraine. Reduced business expectations in Russia led to write-downs of 30 million euros in the first quarter. Most of this was attributable to the business with urgent express shipments.

/ lew / stw / tav / eas

BONN (dpa-AFX)

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