Deutsche Post AG (OTC:DPSGY) DHL said Wednesday that it raised its 2020 earnings guidance following solid third-quarter results and heading into what will likely be a strong peak shipping season.
The Bonn, Germany-based transport and logistics conglomerate said it expects 2020 operating earnings before interest and taxes (EBIT) to range between US$4.8 billion and $5.1 billion, up from an earlier range of $4.1 billion to $4.4 billion. EBIT for its four DHL operating businesses was revised upward to between $3.8 billion and $4.2 billion from $3.3 billion to $3.65 billion. The parent's intra-German post and parcel business, which is not part of the DHL reporting infrastructure, will report earnings of $1.77 billion, the parent said.
The higher guidance came after the company posted a 45% increase in third-quarter EBIT to $1.6 billion. All but one of the parent's four DHL operating businesses will report year-over-year profit gains during the quarter. The exception will be the company's DHL Supply Chain contract logistics unit, which will post a $61 million year-over-year decline, the parent said.
Much of the unit's customers were shut down in the second quarter as government shelter-in-place orders designed to stop the spread of the novel coronavirus were in effect in Europe, North America and parts of Asia. Those businesses reopened during the third quarter, the company said.
DHL Express, Deutsche Post DHL's air and ground parcel unit and the parent's largest, will post third-quarter EBIT of $882 million, a material year-over-year increase from 2019 levels of $534 million. DHL Express has benefited from the strong growth in parcel delivery demand as e-commerce replaced in-store buying during the pandemic. The unit serves the U.S. mostly on inbound deliveries from international points. DHL Express discontinued U.S. domestic operations in January 2009.
The third-quarter forecast is based on preliminary data, the parent said. Final third-quarter and nine-month results will be released Nov. 10. The company did not disclose revenue forecasts.
CEO Frank Appel said in a statement that the company expects an "exceptionally strong" peak period as seasonal demand converges with continued spikes in e-commerce volumes due to the pandemic. The parent acknowledged the difficulty to secure adequate warehouse and