Deutsche Post DHL has raised its earnings guidance again for a third time this year, after the ecommerce boom powered one of the world’s largest logistics companies to its best-ever first quarter.
The rebound in world trade was another factor in prompting the Bonn-headquartered group to lift its forecast earnings before interest and tax to more than €6.7bn in 2021 and more than €7bn in 2023.
DHL had in April flagged its increased expectations, after originally raising them in March. But on Wednesday it provided more detail, having previously said only that it expected the figures to be significantly above €5.6bn and more than €6bn, respectively.
“We had the best opening quarter ever,” said Frank Appel, chief executive of the group, which is helping to distribute Covid-19 vaccines globally. “All five of our divisions are on track for growth and are ideally positioned to benefit from the continuing boom in ecommerce and the resurgence in global trade.”
The sharp rise highlights how the pandemic has galvanised the outlook for the logistics industry, as the group was aiming to reach €5bn in ebit in 2020 before the pandemic began. Ebit, adjusted for exceptional items, reached €5.4bn last year.
The uplift came as DHL reported that ebit more than tripled to €1.9bn in the first three months of the year, on revenues that rose 22 per cent to €18.9bn.
The surge in online shopping during the pandemic has boosted its express, ecommerce and German post and parcel units but now the rapid recovery in world trade is helping its forwarding and supply chain divisions, too.
Stretched global supply chains and limited availability for freight on ships and planes had helped push up prices and grow margins, DHL said.
Rival logistics companies are benefiting from the same boom. UPS’ first-quarter revenue beat analyst expectations last week, as the world’s biggest parcel delivery group also gained from the uptick in online purchases during the health crisis. FedEx reported a higher than expected increase in profits in the three months to February 28 after it raised prices and due to online spending during the festive season.
The strong performance for DHL helped it achieve positive free cash flow in the quarter for the first time, rising €1.6bn to €1.2bn. It raised free cash flow expectations for 2021 to more than €3bn, up from €2.3bn.
The company is increasing investment in its network to meet the bigger demand for its services. Capital expenditure is expected to reach €11bn between 2021 and 2023, up from a range of €9.5bn to €10.5bn.
David Kerstens, an analyst at Jefferies, said “consensus is already largely there”, referring to the level of where the group’s ebit forecast now sits.
Shares in Deutsche Post rose 4.4 per cent in morning trading on Wednesday, extending their record high to more than €50 per share.