DP-DHL half-year results reflects split over normalisation

DHL Express and Eviation, a manufacturer of all-electric aircraft, have announced DHL's move to order 12 all-electric Alice eCargo planes.

According to Melanie Kreis, DP-DHL’s CFO, whilst freight forwarding continues to drive profits for the Group, “Express, eCommerce Solutions and P&P Germany” have gone “through the expected post-pandemic B2C normalisation phase”.

Presenting DP-DHL’s latest second quarter and half-yearly profits last week, she described a situation where B2C traffic in the Express business has declined as the e-retail sector fell back and areas such as parcels and other e-commerce related activity in Germany and neighbouring markets also saw falls in volume. That said, results at DHL Express remained strong in terms of operational profits, with Earnings Before Interest and Tax (EBIT) rising by 12.6% year-on-year over the half-year. However, the pattern of these profits changed as core products, notably Time Definite International, saw a 6% fall in traffic whilst Time Definite Domestic saw a 14.6% fall. Yet DHL Express was still able to drive-down costs, improve utilisation of assets and so deliver increases in profit. The other part of DP-DHL’s e-retail exposure, namely ‘Ecommerce Solutions’ and ‘Post and Parcel Germany’, saw falls in EBIT for the half-year of 9.4% and 31.5% respectively, as lucrative B2C business fell away. This noticeably hit results at Group level.

The contract logistics business, DHL Supply Chain, did not experience such a e-retail boom over the past two years and so is not seeing a bust in its results either. For the half-year, EBIT was 23% higher compared to the first half of 2021, with an expansion across a broad range of sectors.

All of this, however, was over-shadowed by the performance of the freight-forwarding business. Even though the volumes handled were, in the case of air freight, down 2.5% and sea freight up 5.9% year-on-year for the half-year, profit catapulted upwards with EBIT more than doubling to €1.3bn for H1 2022 on a revenue increase of 55.4%. DP-DHL explained that these results were “due primarily to the continued high freight rates in the first half of 2022”. By the elevated standards of the leading freight forwarders these results are respectable and comparable with ‘Global Forwarding, Freight’s’ major competitors.

The whole DP-DHL Group saw a result of EBIT up by 12.6% at €4.49bn before exceptional items on revenue up 21.6% year-on-year for the half-year. The performance is a reflection of different macro-economic trajectories, with forwarding benefitting from continuing exceptional conditions in freight markets whilst the e-retail exposed businesses hit normality with a bump. It is a good question what this will means for the rest of the year.

Source: Transport Intelligence, 11th of August 2022

Author: Thomas Cullen