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Coronavirus costs DHL more than $100 million last month

In the Deutsche Post-DHL’s group 2019 financial results, the logistics company said it achieved record earnings but sees significant effects following coronavirus.

DHL Group stated it had a very good year 2019 and a successful start to 2020 in January.

However, on Friday 28th February the company stated that the impact of coronavirus has cost DHL’s group between €60m-€70m ($107m-$119m) in February, with further impacts expected.

The group will publish its 2019 full-year results on March 10, but stated preliminary results showed revenues up 2.9 per cent to EUR 63.3bn (AU$107.8bn). This was boosted by all five divisions and operating costs (EBIT) improved by over 30 percent at EUR 4.13bn (AU$7bn).

Frank Appel, the group’s CEO stated that a worldwide crisis like the Coronavirus “does not leave us unaffected” and it is currently hard to judge how strong the impact will be on the business.

“Implications for the Group results for full year 2020 cannot be currently concretely assessed” due to the undetermined impact of Coronavirus he said.

“We have reached record earnings in 2019 despite the challenging macroeconomic environment. All divisions continued to grow, and we took a big step forward with regards to our profitability,” Frank said.

DPDHL Group said its been consistently monitoring the volume development in its networks.

“In recent weeks, trade volumes have weakened, not only on the inbound and outbound China trade lanes but also in other countries of Asia; constraints on industrial production are increasingly expected also outside of China,” the group said in a statement.

The Group said it currently sees more significant effects for the DHL Express and DHL Global Forwarding divisions, where the business is particularly affected with regards to cross-border trade flows into and out of China.

“In case of a longer duration or a worsening of the current situation over the coming months, the negative impacts for the Group are likely to outweigh the positives,” the group stated.

“Against the background of the global economic uncertainties” the group decided to not further actively pursue the current exploratory talks regarding partnership options for the StreetScooter activities.

Allan said further scaling of the business without the right partner does not fit our long-term strategic goals and “we do not want to be a car manufacturer”.

“Thanks to our StreetScooter we have one of the biggest electric delivery fleets in the world and have made a significant contribution to the development of e-mobility,” Allan said.

“Independent from the decision today, we will further foster the transition of our fleet towards e-mobility.”

The 2020 guidance for a Group EBIT of more than EUR 5.0 billion is now excluding any still to be quantified effect induced by coronavirus implications, as well as charges related to the decision on StreetScooter the groups stated.

2022 guidance for a Group EBIT of minimum EUR 5.3 billion is not at all affected by this the group said.

This follows last week’s announcement of DHL Express receiving six new Boeing 777F-200 cargo aircraft this year.

The first of these planes to come in 2020 landed last Thursday at its future base of operations, the Cincinnati/Northern Kentucky International Airport (CVG).

Travis Cobb, EVP Global Network Operations and Aviation at DHL Express said the group can expect further growth in cross-border e-commerce trade and, as a result, increased demand for our express logistics services. Although in the group’s preliminary results, eCommerce made a loss of EUR 51m (AU$87m).

DHL Strategy 2025 focusses particularly on ‘E-commerce’ as a growth driver and ‘efficiency’ for further increasing its profit.

With a payload capacity of 102 tons and a range of 9,200 km, the B777F has the largest capacity and range of all twin-engine freighter aircraft.

DHL Express operates over 260 dedicated aircraft with 17 partner airlines on over 3.000 daily flights across 220 countries and territories.

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