Deutsche Post reports third-quarter profit jump, upbeat for holiday season

Deutsche Post DHL reported an almost tripling of third-quarter operating profit on Tuesday and said it expected a strong fourth quarter buoyed by e-commerce and growth in its freight division despite slowing global trade.

The German post and logistics group company reported especially strong growth in its international express business and German parcel business and confirmed its operating profit guidance for 2019 through 2022.

“For the fourth quarter, we anticipate a traditionally strong holiday season and we reaffirm our guidance for the full year 2019,” Chief Executive Frank Appel said.
Deutsche Post shares were up 1.6% in early Frankfurt trade.

Deutsche Post expects to handle 11 million parcels a day during the peak season ahead of Christmas, up from a normal average of about 5 million, finance chief Melanie Kreis told journalists.

U.S. rival FedEx Corp warned in September that full-year earnings would miss analysts’ estimates, as the U.S.-China trade war exacerbates a global economic cooling.
Kreis said there were some signs of hope that trade tensions were easing, but said the company was focusing on what it could control and was not relying on a re-acceleration of the global economy.

She noted that the global forwarding and freight division still managed to grow revenue 0.9% and increase its operating profit by 17% to 124 million euros due to cost cuts, even as the global air freight market contracted in the quarter, while the ocean and overland freight markets lost momentum.

Operating earnings jumped to 942 million euros from 376 million a year earlier, topping the 890 million expected by analysts.

Revenue rose 4.7% to 15.6 billion euros.

Deutsche Post DHL last month set a 2022 target for operating profit of 5.3 billion euros and said it would invest heavily in areas such as warehouse automation and analytics.

While letter shipments are in long-term decline, e-commerce has buoyed Deutsche Post’s parcel volumes.

Costs have risen due to a tight labour market and higher German tolls on trucks.

The company has been restructuring and raising prices after missing profit targets in 2018, allowing it to lift its forecast for 2019 in August despite global trade tensions.