Normalization in B2C business almost done - parcel volumes show positive trend

As expected, shipment volumes in the B2C business settled at a structurally higher level compared to pre-pandemic levels. Shipment volumes recorded a significant improvement in the third quarter of 2022, relative to the first half year. Driven by online retail, the number of parcels in Germany rose again slightly. This positive development in parcel volumes was also evident in the European eCommerce Solutions' business.

Financial strength further enhanced - 2022 free cash flow guidance upgraded

The positive earnings momentum has further strengthened the Group's financial power. Operating cash flow increased significantly to EUR 3.5 billion (Q3 2021: EUR 2.6 billion). The key factor behind this was the solid operational dynamic and a very good development in working capital. Accordingly, free cash flow also developed positively, improving to EUR 1.8 billion (Q3 2021: EUR 1.3 billion) despite increased payments for investments and acquisitions. Thus, exceeding the preliminary result published at the beginning of October.

Based on this strong performance, the Group is upgrading its free cash flow guidance (excluding acquisitions and divestments) to more than EUR 4.2 billion in 2022 (previously: EUR 3.6 billion with a maximum variance of + / - 5 percent). The Group is further accelerating its ongoing share buy-back program. The Company has decided on further share buy-backs of up to EUR 500 million until March 2023, after the buy-back of a first tranche of up to EUR 800 million was already successfully completed at the beginning of October 2022. These plans are part of the share repurchase program 2022-24 announced in March 2022 with a total volume of up to EUR 2 billion, which will be carried out latest until December 2024.

The good cash flow development secured investments in projects according to plan without facing any restrictions in the third quarter 2022. Gross capital expenditure (Capex) focused on the modernization of the Express fleet, capacity expansion at Post & Parcel Germany and eCommerce Solutions, and automation initiatives at Supply Chain.

"The cash flow performance in the past quarter was outstanding. We have thus further strengthened our comfortable financial position organically and safeguarded our ability to invest. Thanks to our financial strength, we are well positioned even in an economically weaker environment. In the event of an economic downturn, we can rely on well established group-wide levers to successfully master volatile phases," said CFO Melanie Kreis.

Express: EBIT of EUR 1.0 billion slightly up versus previous year 

The Express division once again achieved very good capacity utilization levels in its globe spanning networks. EBIT increased by 4.2 percent year-on-year to EUR 1.0 billion. Revenue growth was even stronger, up 21.8 percent to EUR 7.2 billion. As in the second quarter 2022, this development was especially driven by pricing measures and higher fuel surcharges. International time-definite express (TDI) shipments per day declined by 2.6 percent. The established pricing mechanisms successfully dampened the increased costs. Accordingly, profitability remained at a high level with an EBIT margin of 14.1 percent (Q3 2021: 16.4 percent).

Global Forwarding, Freight: Another significant jump in EBIT and revenue 

The Global Forwarding, Freight division closed the third quarter with outstanding EBIT growth of 57.0 percent to EUR 584 million. The main reason for this was the strong revenue performance. Revenue increased significantly by 38.2 percent to EUR 7.9 billion due to the continued high freight rates. Air freight volumes decreased year-on-year, but were at a comparable level seen in the second quarter of 2022. In ocean freight, transport volumes grew by 11.9 percent, due to the integration of the acquired beverage logistics company Hillebrand. The EBIT margin improved significantly to 7.4 percent (Q3 2021: 6.5 percent).

Supply Chain: Outstanding EBIT growth with new business remaining strong

Supply Chain once again recorded double-digit growth rates. EBIT improved significantly by 54.9 percent to EUR 220 million. Revenue increased across all regions, rising by a total of 14.5 percent to EUR 4.2 billion. The development was especially pronounced in the Americas region. E-fulfillment solutions in particular saw growing interest here. The balanced portfolio with a high proportion of less cyclical customers had a positive impact on business development. In addition, the consolidation of the acquired Glen Cameron Group, effective from August 2022, increased the results. The new business once more reached a strong result with annualized revenue of EUR 385 million. The EBIT margin of 5.3 percent was again within the target corridor (Q3 2021: 3.9 percent).

eCommerce Solutions: Positive revenue trend continues unabated

eCommerce Solutions also achieved good results in the third quarter. EBIT remained at the prior-year level of EUR 87 million (Q3 2021: EUR 91 million). Largely attributable to price measures revenue increased in all regions, rising by 8.2 percent to EUR 1.5 billion. Parcel volumes grew again in Europe, especially driven by the growth in the Netherlands. Overall, parcel volumes were above the previous year's level by 0.3 percent. The moderate decline in EBIT margin reflected the increasing cost pressure in individual regions with continued investments in additional sorting capacity, but remained at a high level of 5.8 percent (Q3 2021: 6.6 percent).

Post & Parcel Germany: Despite slightly growing parcel volumes the business remains challenging

Revenue and earnings at Post & Parcel Germany were on a par with the previous year. EBIT was EUR 290 million (Q3 2021: EUR 300 million). At EUR 3.9 billion, revenue was just EUR 7 million down on the previous year. While the year-on-year comparison of parcel volumes in the first half of 2022 was still heavily influenced by the pandemic, the parcel business grew slightly in the third quarter. Letter mail volumes declined as expected, as the mail business had been particularly strong in the previous year due to numerous elections in Germany. Overall, volumes in the letter mail business fell by 4.9 percent. EBIT margin remained stable at 7.3 percent (Q3 2021: 7.6 percent) thanks to unchanged high cost discipline.