Global integrator DHL Group had a strong fourth quarter across most segments that offset a year facing the global geopolitical and macroeconomic headwinds of 2024. Where in Q4 the company had a 12.9% y-o-y operating profit growth to €1.9bn, over the year its operating profit fell 7.2% to €5.89bn. Revenue in the quarter was up 6.4% y-o-y to €22.7bn but over the year, a relatively modest 3.0% to €84.19bn.
Tobias Meyer, DHL Group CEO said that overall, “In a strong fourth quarter with good service quality for our customers, we achieved substantial revenue and earnings growth.” The company has five divisions that we will look at separately.
DHL Express
The premium global express delivery company had an operating profit fall of 0.7% to €3.1bn in the full year but a 42.2% y-o-y growth to €1,083m in Q4. Revenue in the full year was €25.13bn, up 1.2% y-o-y.
DHL’s leadership spoke of a ‘volatile market development’ and the division countered the declining volumes with ongoing yield discipline, productivity improvements and capacity management. On the last point, it increasingly focused on higher yield B2B shipments, particularly on the transpacific trade lane.
The dramatic Q4 EBIT growth was in a large part due to the newly imposed for 2024 Peak Season Surcharge that helped discourage lower value shipments on its aircraft.
Global Forwarding, Freight
For the freight forwarding arm of DHL Group, EBIT fell sharply over the full year by 24.5% y-o-y to €1.074bn on revenues that grew 1.8% to €19.649bn. Capacity bottlenecks due to the Red Sea crisis impacted air and sea freight rates and ultimately the company’s margins.
Where it came to road freight, the European market is very weak and according to DHL, “Did not recover even in months when volumes are usually high for seasonal reasons.”
Supply Chain
In terms of revenue and profit growth, DHL Supply Chain was the star the show in the full year 2024. Its EBIT was up 11.1% y-o-y to €1.068bn on revenues that grew 4.3% to €17.693bn. Over the fourth quarter, EBIT was up 17.7% y-o-y to €259m on revenues that grew 5.0% to €4,581m.
The CEO said “Supply Chain, our new member of the billionaires club exceeding for the first time the billion in EBIT and being really on a good structural trajectory. So we’re very pleased with the actions that have been taken over the last years. We have good signings and thereby a good pipeline also for the year to come. So we see ourselves on a good trajectory both from a top line growth perspective but also as it relates to the necessary measures to ensure we are profitable.”
eCommerce Solutions
Meyer has rather fondly referred to this division as ‘DHL’s smallest child’ in the past in reference to it being the youngest division of the five. In Q4, operating profit was up 39.5% y-o-y to €106m on revenues that went up 10.5% to €2,017m. Over the year, on revenues up 10.2% y-o-y to €6,962m it saw EBIT fall 3.1% y-o-y to €281m.
The CEO continued, “I find it particularly noteworthy [that the] 61% that we have grown volumes in eCommerce over the last five years. So whilst the division is still not a full adult, it is getting there and we intend to keep a good growth momentum, especially in eCommerce, but also in the other areas where we have exposure to the B2C trend.”
Post & Parcel Germany
EBIT fell 5.6% y-o-y in the full year to €821m on revenues that grew 2.7% to €17,347m. DHL stated, “Revenue increases in the parcel business and merchandise shipping were not able to compensate for the declining mail volumes and rising costs, particularly because of wage agreements.”
Over the full year Parcel Germany revenue increased 8.2% y-o-y to €7,339m while Post Germany’s revenue fell 2.4% to €7,370m. In Q4, Parcel Germany’s revenue surpassed that of Post Germany, growing 7.8% y-o-y to €2,151m while Post Germany’s revenue fell 3.6% to €1,948m.
It is notable that perhaps due to the wage agreements in question, under the new strategic plan there are to be quite large scale staff cuts in the coming years in the German postal operator. This is part of a global trend due to the way the global letter mail market is changing.
Author – Richard Shrubb
Source: Ti Insight
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