By Chiara Holzhaeuser
(Reuters) -DHL reported third-quarter free cash flow well below market expectations on Tuesday, in another hit to its shares that have lost nearly a fifth of their value this year.
The German logistics giant last week lowered its full-year and mid-term forecasts, citing a weaker macroeconomic environment in Europe and low business-to-business mail volumes, as it pre-announced its operating earnings for the quarter.
DHL’s shares were down 2.5% by 0915 GMT.
A local trader said the free cash flow of 723 million euros ($787.2 million) was underwhelming, falling 32.7% from last year and missing a consensus estimate of 984 million euros.
DHL is in a growth phase, particularly in its global freight forwarding business, which requires higher working capital and thus impacts cash flow, Chief Financial Officer Melanie Kreis said in a press call.
While the company’s revenue grew by 6.2% in the quarter, its net profit fell 6.9% to 751 million euros, missing analysts’ forecast of 787 million euros in the company-compiled consensus.
DHL’s Post & Parcel Germany division saw letter volumes fall while staff and energy costs “literally exploded”, explaining the divisional drop in quarterly profits, CEO Tobias Meyer said in an interview published on the company’s website on Tuesday.
He also commented on the recent decision by the Federal Network Agency to allow DHL to raise postage prices, saying the granted increases were insufficient.
“We had expected a proposal that would consider inflation and the decline in letter volumes,” Meyer told reporters in the call, adding Germany was the only European country where letter costs had risen more slowly than inflation.
($1 = 0.9184 euros)
(Reporting by Chiara Holzhaeuser in Gdansk; editing by Milla Nissi)
