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Deutsche Post Shares Decline Following Lackluster Q3 Results
Investing.com — Deutsche Post experienced a drop in its share value on Tuesday after the company released its third-quarter earnings, which fell short of analysts’ predictions.
As of 3:31 am (0831 GMT), Deutsche Post’s stock was down by 2.1%, trading at €36.565.
The company’s reported EBIT was €1.37 billion; however, this figure was bolstered by a one-time gain of €70 million from reversing a legal provision in its Post & Parcel (P&P) segment. When excluding this adjustment, the EBIT amounted to €1.3 billion, which was 4% below the €1.35 billion forecast provided by Stifel analysts.
While some divisions experienced growth, the earnings report painted a mixed picture overall. The Freight Forwarding segment reported higher volumes than expected, with ocean freight seeing an increase of 8.2% and air freight up by 8.5% year-over-year. Yet, these gains came at a price, as yields experienced a significant decrease, evidenced by a 12% drop in gross profit per unit for ocean freight and a 22% decline for air freight.
In contrast, the Express and German letter segments faced challenges, with Express shipments declining by 6% compared to the previous year. Analysts from UBS noted that “Express B2B volumes were flat year-over-year, which shows a sequential deterioration versus +1% in Q2,” indicating that the downward trend persisted through September.
This decline was particularly influenced by a reduction in B2C shipments and Deutsche Post’s withdrawal from lower-margin contracts concerning Asian shipments with clients such as Shein and Temu. Additionally, P&P letter volumes dropped by 11.5%, marking a more substantial decrease than analysts had expected.
The company’s free cash flow also fell short of projections, recording €723 million against a consensus estimate of €984 million. Stifel analysts attributed this discrepancy to rising working capital demands within the freight forwarding operations, which experienced a surge in volumes.
Moreover, Deutsche Post revised its EBIT guidance for 2024 downward, now anticipating earnings to exceed €5.8 billion, a drop from the earlier range of €6 to €6.6 billion. Long-term projections for 2026 have also been adjusted, with expected EBIT now anticipated to surpass €7 billion, down from a prior target of €7.5 to €8 billion.
J.P. Morgan analysts commented, “We expect the full update to reassure on the Express EBIT evolution given active yield management, even amidst a subdued trading environment, while the market looks ahead to a potential turning point for growth.”
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