By Adria Calatayud
DHL owner Deutsche Post forecast earnings for the third quarter to be roughly in line with what it reported for the first two, but said it still expects to deliver on its full-year targets.
The German logistics group, also known as DHL Group, posted lower earnings for the second quarter compared with a year before, hurt by subdued economic activity and global trade. While business volumes at its key Express division showed signs of improvement, the broad-based recovery the group's guidance assumes hasn't materialized yet, it said Thursday.
The company is trying to rein in costs and raise prices to protect profitability until business demand picks up, as political uncertainty, geopolitical tensions and high interest rates continue to weigh on global trade.
The DHL owner continues to expect full-year earnings before interest and taxes of between 6 billion and 6.6 billion euros ($6.50 billion-$7.14 billion), an outlook that also factors in a boost from the peak season in the second half.
For the second quarter, EBIT fell 20% to EUR1.35 billion, which the company said is in line with expectations amid a persistently weak economic environment. Analysts had forecast EUR1.32 billion, according to consensus estimates compiled by the company.
The result for the third quarter seems likely to be aligned with EBIT trends in the first two quarters, Chief Financial Officer Melanie Kreis said on a call with analysts. This means the company would need a strong fourth-quarter performance to reach the bottom of its guidance.
Shares fell about 3.3% in early afternoon trade in Europe, having risen earlier in the session on news the company maintained its expectations.
Some analysts had feared the company would cut its outlook or narrow it to the bottom end of the range. Current consensus estimates put the group's full-year EBIT near the guidance's floor, at EUR6.06 billion, according to the company-provided numbers.
Cost cuts and demand surcharges for the peak season DHL plans to introduce in September should take the group's earnings to the bottom end of guidance and any improvement from there would depend an economic recovery, it said.
"Air and ocean freight volumes further improved in the second quarter from a low starting level. However, we are not observing a broad-based recovery of global trade yet," Kreis said.
Last week, Danish freight forwarder DSV raised its full-year profit guidance, saying it expected to benefit from disruption in the Red Sea in the second half. Results from Swiss peer Kuehne + Nagel International earlier this month showed it benefited from improving demand for air logistics as supply chains became more congested.
Net profit was EUR744 million for the second quarter, compared with EUR978 million a year earlier. Revenue increased 2.7% to EUR20.64 billion, with growth across all segments.
Analysts had forecast the group to report net profit of EUR754 million and revenue of EUR20.275 billion, according to consensus estimates compiled by Deutsche Post.
Write to Adria Calatayud at adria.calatayud@wsj.com
(END) Dow Jones Newswires
August 01, 2024 07:08 ET (11:08 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments