Optimism from DPDHL even as markets slow


Optimism in the face of a slowing market is what is striking about Deutsche Post -DHL’s (DPDHL) recent set of results. For the nine months to the end of Q3, DP-DHL saw revenue grow by 21.1% to €70.6bn and EBIT (Earnings Before Interest and Tax) rise 13.4% to €6.5bn.

Yet despite this, Frank Appel, the company’s CEO, admitted that markets were slowing, commenting that “the first three quarters of the year were the most successful in our company’s history” yet “even if global growth is losing momentum, we are well on track to achieve the best result ever with an EBIT of around EUR 8.4 billion”.

Within the company, particularly good results have been delivered by the ‘business-to-business’ exposed divisions, as opposed to those previously driven by e-retailing. For example, ‘Global Forwarding and Freight’ saw revenue leap by 49.1% for the nine-months, and even the past quarter has seen year-on-year revenue increase by 38.2%. And this growth remains profitable, with a 58% rise year-on-year in EBIT just for the Q3, with results for the nine-months more than doubling. Underlying demand was not strong, with falls in volumes in some areas however DP-DHL explained that “overall, freight rates remained at a high level even though the expected normalisation has meanwhile begun.” What profits will look like after this normalisation has been achieved is an important question.

Probably more sustainable is the growth the ‘Supply Chain’ contract logistics business, which saw a 32% growth year-on-year in EBIT for the nine months and a 54.9% increase for Q3. The drivers of growth seemed broad-based, however it is also a good question what the impact of the recovery in production at the automotive sector will look like for DP-DHL.

The contrast in these numbers is provided by the Express business. Previously the best performer, real growth has slowed into single digits and EBIT has fallen year-on-year by 0.8% for the first nine-months of the year. Despite of talk of ‘disciplined yield management’ what is depressing the market is the cooling of e-retail demand.

Frank Appel and his team have bullishly increased their projections for EBIT for full year 2023 to €8.4bn, however it might suggest that key markets are changing direction and they might be less profitable in the coming quarters.

Source: Transport Intelligence, 10th November 2022

Author: Thomas Cullen

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