Deutsche Post Shares Decline After Q3 Results
Shares of Deutsche Post fell on Tuesday following its third-quarter results, which missed analyst expectations.
At 3:31 am (0831 GMT), Deutsche Post was trading 2.1% lower at €36.565.
Although the company reported an EBIT of €1.37 billion, this included a one-time €70 million gain from a legal provision reversal in its Post & Parcel (P&P) segment.
Without this adjustment, EBIT stood at €1.3 billion, falling 4% short of the €1.35 billion forecast by analysts at Stifel.
While some segments showed growth, the earnings report presented mixed results.
The Freight Forwarding division saw volumes exceed projections, with ocean freight up 8.2% and air freight up 8.5% year-over-year.
However, these volume gains came at a cost, as yields dropped, with gross profit per unit down 12% in ocean freight and 22% in air freight.
On the downside, Express and German letter volumes struggled. Express shipments declined 6% year-over-year.
“Express B2B volumes were flat y/y (a sequential deterioration vs. +1% in Q2) which in our view suggests the exit rate in September was weak,” said analysts at UBS in a note.
This was particularly impacted by reduced B2C shipments, along with Deutsche Post’s pullback on lower-margin Asian shipments from clients like Shein and Temu. Meanwhile, P&P letter volumes fell 11.5%, a sharper decline than anticipated.
The company’s free cash flow also missed the mark, coming in at €723 million against a consensus expectation of €984 million.
Stifel analysts attributed this gap largely to increased working capital needs in the freight forwarding business, which saw a spike in volumes.
Additionally, Deutsche Post (OTC:DHLGY) adjusted its 2024 EBIT guidance downward, now expecting a figure above €5.8 billion, compared to the previous €6 to €6.6 billion range.
Long-term forecasts for 2026 were also revised, with EBIT now expected to exceed €7 billion, down from an earlier target of €7.5 to €8 billion.
“We expect the full update to reassure on the Express EBIT evolution given active yield management despite continuation of a muted trading backdrop, while the market focuses ahead on a possible inflection point for growth,” said analysts from J.P. Morgan in a note.
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