DHL Global Forwarding this week revealed that last year’s performance by the division had been below expectations.
But, pointing out that were you to exclude 2023’s one-off €114m ($123m) accounting gain, CFO Melanie Kreis told investors, divisional ebit for 2024 would be up 13%, year on year, rather than down 25%.
Full-year earnings, however, did not remove that accounting gain, with ebit recorded as a little over €1bn, compared with the €1.4bn recorded a year earlier.
Equity research house Bernstein responded to the news noting that “the division missed ebit expectations by 6%, as the forwarding conversion margin was a somewhat lacklustre 26%. Much remains to be done to get to the medium-term target of 35%.”
Again seeking to extrapolate positives, Ms Kreis added that the division had benefited from “good volume growth in Q4”.
Presenting the results alongside her, DHL Group CEO Tobias Meyer said the performance of the group as a whole was best understood “through the lens of post-Covid normalisation” and, excluding those peak years, results were “in line” with what preceded the pandemic.
Mr Meyer added: “We delivered a great peak across all divisions, not only from a financial point of view, but from a quality one too.
“We are quite pleased with Q4 and the good momentum we saw over the year, after what had been a soft start that resulted in declining revenue in the first half. As 2025 begins, we are off to an okay start, but it is very volatile, so hard to see.”
Group revenue was €84.1bn, a 3% increase on 2023, generating group ebit of €5.8bn, down 7.2% year on year, but just shy of 23% up on 2019’s €4.8bn.
Divisionally, DHL struggled to post an increase in profitability for the year, all but one unit posting falls in profitability. The outlier, DHL Supply Chain, posted an impressive 11.1% uptick on 2023, with ebit of a little over €1bn.
“Supply Chain became the newest member of the billionaires’ club for the first time,” said Mr Meyer, adding that it came from a 4.3% year-on-year revenue increase, to €17.7bn.
Marginal year-on-year revenue gains were recorded for DHL Express (+1.2%, to €25.1bn), and Post and Parcel (+2.7%, to €17.3bn). But a 10.2% spike in eCommerce revenue did not translate into positive earnings, its ebit falling 3.1%, to €281m.
Ms Kreis noted the picture was markedly different in the final quarter, however, with DHL Express posting a 43% ebit increase (to €1.7bn) on the back of a 4.4% revenue upturn (to €6.8bn).
Similarly, eCommerce revenues leapt by 10.5% against Q4 23, to €2bn, prompting a 39.5% surge in ebit, to €106m, as the division “took full advantage of peak season, with targeted peak season surcharges contributing to very good Q4 performance”, noted Ms Kreis.
“Similarly, DHL Express experienced strong Q4 growth, even as it saw an 8% decline in volumes. Why was ebit higher, despite shipments being 10% down on 2019’s volumes? There were fewer shipments, but they were of a higher weight.”
