GERMAN forwarding giant dhl suffered an operating profit loss of 20.5 per cent in the second quarter, but said it was on track to meet full-year targets, reports New York FreightWaves.
The Bonn-based forwarder blamed sluggish economic activity that weighed on international trade and freight movement.
DHL revenue increased 2.7 per cent to EUR20.6 billion (US$22.3 billion) while earnings before interest and taxes slumped to US$1.5 billion, in line with internal projections. Operating profit, however, was significantly better than the $857 million in the second quarter of 2019, before the Covid crisis.
A persistently sluggish global economy has made it difficult for the German express parcel and logistics provider to improve results in recent quarters, but management forecasts a recovery in the second that will create tailwinds next year.
Although industry-wide air and sea freight demand and rates grew substantially during the first half of the year, the gains were largely due to businesses shipping orders earlier than normal.
This was due to uncertainty related to Red Sea shipping delays, a looming dockworkers strike in the US and low inventory levels rather than an economic upturn. One school of thought is that retailers pulled forward international volumes to ensure delivery for busy holiday shopping periods later this year, which could result in a less robust peak shipping season.
Said chief financial officer Melanie Kreis: 'Air and ocean freight volumes improved in the second quarter. We are also seeing a modest improvement in B2B volumes at Express, but not yet a significant acceleration.'
UPS and FedEx have also struggled with lower parcel volumes in the past couple years. UPS last week reported a 29 per cent drop in operating profit for the second quarter. FedEx posted a modest one per cent revenue gain in its quarter that ended May 31 after six quarters of revenue declines.
DHL retained full-year guidance for EBIT of $6.5 billion or more, saying it expects a good peak season to boost financial results in the second half. It also forecast 2026 operating profit to eclipse $8.1 billion.
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The Bonn-based forwarder blamed sluggish economic activity that weighed on international trade and freight movement.
DHL revenue increased 2.7 per cent to EUR20.6 billion (US$22.3 billion) while earnings before interest and taxes slumped to US$1.5 billion, in line with internal projections. Operating profit, however, was significantly better than the $857 million in the second quarter of 2019, before the Covid crisis.
A persistently sluggish global economy has made it difficult for the German express parcel and logistics provider to improve results in recent quarters, but management forecasts a recovery in the second that will create tailwinds next year.
Although industry-wide air and sea freight demand and rates grew substantially during the first half of the year, the gains were largely due to businesses shipping orders earlier than normal.
This was due to uncertainty related to Red Sea shipping delays, a looming dockworkers strike in the US and low inventory levels rather than an economic upturn. One school of thought is that retailers pulled forward international volumes to ensure delivery for busy holiday shopping periods later this year, which could result in a less robust peak shipping season.
Said chief financial officer Melanie Kreis: 'Air and ocean freight volumes improved in the second quarter. We are also seeing a modest improvement in B2B volumes at Express, but not yet a significant acceleration.'
UPS and FedEx have also struggled with lower parcel volumes in the past couple years. UPS last week reported a 29 per cent drop in operating profit for the second quarter. FedEx posted a modest one per cent revenue gain in its quarter that ended May 31 after six quarters of revenue declines.
DHL retained full-year guidance for EBIT of $6.5 billion or more, saying it expects a good peak season to boost financial results in the second half. It also forecast 2026 operating profit to eclipse $8.1 billion.
SeaNews Turkey
