In keeping with what is clearly a downward trend in much of the logistics sector, DHL saw its revenue and income fall over the past half-year. Year-on-year revenue in the first half of the year was down 0.3% whilst EBIT (Earnings Before Interest and Tax) fell by 20.1% and this was before an asset write-down.
The DHL Express business is generally a strong performer, yet over the past six months it has suffered. Revenue for the business was down 1.4% year-on-year and EBIT fell 27.1%. The hardest falls in were seen in the Asia-Pacific region with revenues from the key ‘Time Definite International’ service falling by disproportionate 2.9%. That these more expensive services fall back in the face of a wider airfreight market that is growing so markedly is significant.
Freight forwarding also suffered over the past two quarters. On air, sea and land revenue fell, with air freight revenue down by 7.1% year-on-year over the half-year although sales do seem to have recovered somewhat in the second quarter. The trajectory of gross profit suggests that airlines are in a stronger bargaining position with volumes 5.2% higher, helping to increase freight capacity utilisation. The situation in ocean freight forwarding was similar. Although volumes increased by 6.5% year-on-year for the first half of the year, revenue fell by 14.5%, although again things seem to improve in the second quarter. As with air freight, pricing power seems to be in the hands of the shipping lines. For the whole ‘Global Forwarding, Freight’ business EBIT fell 30.2% year-on-year in the first half to stand at €279m.
As usual the ‘Supply Chain’ business was more stable. Revenue grew by 4.1% year-on-year in the first half and EBIT was up by 7.2%, sustaining a margin of 6.2%. DHL said the division saw growth across all the sectors it operates in including “expanding e-commerce”. Slightly more surprisingly the ‘Post and Parcel’ business grew, with the health of e-commerce parcel activity outweighing the falls in mail resulting in EBIT 24% higher than the first half of 2023.
Like so many of its rivals in both express and freight forwarding, DHL is suffering from shifts in the market place. The sea freight market continues to be in an extraordinary condition and the airfreight market has moved downmarket. It is hard to know when or if these factors will change.
Source: DHL
Author: Thomas Cullen
