DHL Beats Q3 Estimates, Reaffirms EBIT View For FY 2019, 2020

DHL Beats Q3 Estimates, Reaffirms EBIT View For FY 2019, 2020
November 13, 2019


Shares of Deutsche Post DHL Group (OTC: DPSGY, XETRA: DPWGn.DE) gained 3.13% or $1.13 on Tuesday to close at $37.30 after the company reported fiscal 2019 third-quarter net income that tripled from last year. The German package delivery and logistics company also stated that it anticipates strong performance in the fourth quarter as the flourishing e-commerce business is expected to drive growth despite a slowdown in worldwide trade. Furthermore, the company reaffirmed its operating profit outlook for 2019 and through to 2022.

The Bonn-based supply chain management company reported third-quarter revenues of €15.55 billion, an increase of 4.7% from €14.85 billion from last year. The reported revenues beat the FactSet Consensus estimate of €15.46 billion.

For the September quarter, the company posted operating earnings (EBIT-Earnings before interest and tax) of €942 million, compared with €376 million in the prior-year period. The FactSet estimate was €890 million for the September quarter. In the year-ago period, the company took a one-time charge of €392 million related to Post & Parcel Germany. That explains the huge increase in operating profit.

The rise in operating profit improved consolidated net profit to €561 million in Q3 2019, from €146 million in the year-ago period. Basic earnings per share in the third quarter increased to €0.45, from €0.12 per share in the comparable quarter of 2018.

Commenting on the impressive results, Frank Appel, CEO of Deutsche Post DHL Group, said: “We had a very good third quarter. All five divisions performed well despite the challenging global economic environment. Thanks to our broad portfolio and the market-leading position of our divisions, we are growing even in uncertain times. For the fourth quarter, we anticipate a traditionally strong holiday season.”

Deutsche Post DHL credited global express delivery business and domestic parcel business as the main reason for the impressive performance. “The international express business and the German parcel business saw especially dynamic growth as e-commerce continued to boom.”

Cost cuts enabled the global forwarding and freight business to report revenues of 0.9% and boost its operating profit by 17% to €124 million.  The Post & Parcel Germany business posted a 5.5% increase in revenue, with e-commerce leading the strong growth in the parcel business.

The company, however, acknowledged that the global air freight market remained sluggish in the quarter. Likewise, the ocean and overland freight markets experienced a slowdown.

Specifically, the airfreight business posted a 5.1% y-o-y decline in volumes to 502,000 tons. Correspondingly revenues declined 4.7% to €1.1 billion, and gross profit increased 2.1% to €238 million.

Notably, all five business divisions of Deutsche Post reported an increase in revenue and operating profit in the third quarter.

The company reaffirmed its FY 2019 operating profit outlook of €4 billion to €4.30 billion and stated that its German post and parcel division is anticipated to generate between €1.10 billion and €1.30 billion operating profit. Deutsche Post also confirmed its 2020 forecast of operating profit of over €5 billion, and the recently announced 2022 aim of achieving operating profit of at least €5.30 billion.

The company also anticipates performing well in the fourth quarter. Appel said, “For the fourth quarter, we anticipate a traditionally strong holiday season and we reaffirm our guidance for the full year 2019.”

The company stated that it anticipates handling 11 million parcels every day during the holiday season ahead of Christmas, an increase from the usual average of 5 million, as per finance chief Melanie Kreis. The strong third-quarter results and upbeat fourth-quarter outlook is anticipated to keep the stock bullish in the short-term.

Technically, the stock is rising after receiving solid support at 37 levels. The next major resistance is anticipated only near 45. The Chaikin money flow indicator is in the positive region. As a result, we can expect the stock to remain bullish in the short-term.

dhl - techncial analysis - 13th Nov 2019

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Ian Maguire

Ian Maguire

Ian is our resident contributor to the latest going ons in the cryptomarket, keeping up to date with the latest icos and coins

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