DP-DHL exploits its exposure to e-retail with rise in profits


Deutsche-Post DHL annual results saw a not unexpected strong performance led by e-retail exposed parts of the group. Revenue was up 5.5% year-on-year €66.8bn, Earnings Before Interest and Tax (EBIT) was up 17.4% to €4.8bn and consolidated net profit was up 13.6% year-on-year to €3bn.

Unsurprisingly the best performance was that of DHL Express which saw a 34.9% jump in profits (EBIT) for the year to €2,751m on the back of an 11.9% rise in revenue. Of course, much of this was driven by DHL Express’ exposure to ‘Business -to Consumer’ sector underlying e-retail, with DHL Express focussing on lucrative international traffic. Looking at the disparity between revenue and profit growth, it is fairly obvious that the business saw profit margins harden as rates increased and utilisation of assets improved. 

The experience in Global Forwarding and Freight was not dissimilar, with a 13.2% rise in EBIT to €521m and a 5.2% increase in €15,914m in revenue. The explanation from DHL GFF was that “severely limited freight market led to huge capacity shortages”. Frustratingly the relative performances of air and sea freight were not given during the presentation despite references to tight airfreight markets, so it’s difficult to assess the division’s performance in different markets.

The contract logistics ‘Supply Chain’ business was not quite such a happy story. EBIT fell by -53.2% to €426m with revenue falling by 7.4% to €12.5bn. Again, it was not so surprising that such a business suffered in the present conditions, but the profit downturn was still harsh. It appears, judging by the fourth-quarter numbers, that things might be recovering.

The ‘eCommerce Solutions’ more than continued its recovery, entering the black with a profit of €158m and revenue up 19.4%. However, bearing in mind the huge demand for such services this can hardly be surprising and perhaps the business is constrained in exploiting the opportunity to the full through lack of capacity. Similar demand for e-retail services drove the ‘Post & Parcel Germany’ to a 29% increase in EBIT. This represents a significant change in direction for the results of the business but based on a parallel change in the nature of this business, with “double-digit growth rates in parcels”.

Deutsche Post -DHL is one of those logistics service providers that was successful over 2020 due to their ability to exploit market conditions. Some of this was due to luck but a large part was down to the strategic orientation of the group towards e-retail. This is a big part of the future of the logistics sector and probably means that DP-DHL better performance is sustainable over the medium term.

Source: Transport Intelligence, March 11, 2021

Author: Thomas Cullen