DHL used the phrase “persistently muted” to describe logistics markets over the past quarter and this probably accurately describes DHL’s performance in the third quarter as well. Results published earlier this week showed Revenue edging-up by 6.2% and Earnings Before Interest and Tax (EBIT) up 0.1% year-on-year.
In describing the demand environment generally, DHL said that “freight volumes” had continued to “bounce back from last year‘s double-digit declines” with “Ocean Freight seeing growth throughout its peak season” but “no significant acceleration in Air Freight yet”. Express volumes remained “less volatile but do not show meaningful change in dynamic yet”.
In what now can possibly be described as DHL’s core business, DHL Express, saw volumes in terms of weight and numbers of consignments increase by 4% year-on-year, with Asia-Pacific seeing the strongest growth. However, rates must have been weaker as Revenue grew by 3% and even with what DHL describes as “continued yield discipline and core TDI focus”, EBIT was only up 2.8% year-on-year.
The air freight forwarding market was more dynamic but not necessarily in a good way. Here ‘DHL Global Forwarding, Freight’ saw higher revenue, up 14% year-on-year, with air freight seeing a 9% increase in volumes and sea freight an 8% rise compared to the same quarter last year. However, for both markets there was, in the words of DHL, a “significant increase in buying rates”, with both container rates and air freight asset owners demanding higher prices, and this led to a 9.5% fall in EBIT year-on-year.
DHL Supply Chain had the best performance of the businesses of the Group. It saw revenue rise by 4% but EBIT jump by 13.2% year-on-year, something the company ascribed to “digitalization & automation, standardization and focus on more profitable solutions”.
As is so often the case, ‘Post and Parcel Germany’ suffered from the decline in mail in Germany which the increase in parcel volumes could not compensate for. Despite Revenue edging-up, EBIT fell by 17.4%. The last mile ‘eCommerce’ business saw higher sales but EBIT fell by 9.1% as high investment demand continued.
Overall, the underlying sentiment from DHL was pessimistic. Although DHL’s CEO, Tobias Meyer emphasised the significant increase in revenue year-on-year and that the company had initiated “a turnaround in EBIT compared to the prior-year quarter”, DHL still reduced modestly its 2024 and 2025 profit forecasts.
Source: Ti Insight
Author: Thomas Cullen
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