Appel: We have proven our full strength in challenging times
Deutsche Post DHL Group has announced it grew profitably in the past fiscal year. The Group’s sales increased by 22.5 percent year-on-year to EUR 81.7 billion.
The company thus achieved the highest turnover in the Group’s history. All five business units contributed to the best business performance ever. Demand for the Group’s logistics solutions reached a new all-time high last year. The drivers were the significant increase in world trade and the continuing strong online trade with further growth in shipment volumes. As a result , network capacities could be used even more efficiently. The dynamic development led to a record result of 8.0 billion euros (2020: 4.8 billion euros) and an EBIT margin of 9.8 percent (2020: 7.3 percent). The Group was thus more profitable than ever before.
Frank Appel, CEO of Deutsche Post DHL Group commented: “We have proven our full strength in challenging times and achieved a new record in sales and earnings. Never before has Deutsche Post DHL Group transported so many freight, express shipments and parcels worldwide. With vaccine logistics, we are also making an important contribution to society. We would like to thank the employees for their extraordinary commitment in a challenging year.”
Forecast for 2022: Continuation of profitable growth course expected
For the 2022 financial year, the Group expects EBIT of EUR 8.0 billion with a deviation of + / – 5 percent. The forecast is based on the assumption that e-commerce will maintain its strength and continue its structural growth after a period of normalization. Following the dynamic recovery of world trade over the course of 2021, growth in global logistics activities should continue at a slower pace. A relaxation in intercontinental transport capacities is not expected until the second half of 2022 at the earliest.
“Our forecast does not include the current impact of the conflict in Eastern Europe on global economic growth and global transport markets. Now it’s all about helping the people in the war zone, ensuring the safety of all our employees and keeping global supply chains running,” said Frank Appel.
High investments in digitalization and sustainability
In the past fiscal year, the Group invested a record sum of EUR 3.9 billion (2020: EUR 3.0 billion) in its operating business, digitalization and sustainability. Most of the investments went into the modernization of the Express Division’s aircraft fleet and the expansion of the national and international parcel infrastructure in order to ensure the efficient handling of significantly higher transport demand. Deutsche Post DHL Group again made strong progress in cash generation in 2021. Despite higher investing activities, free cash flow improved significantly to EUR 4.1 billion (2020: EUR 2.5 billion).
For 2022, excluding acquisitions such as the planned acquisition of Hillebrand, the company forecasts free cash flow of 3.6 billion euros with a deviation of a maximum of + / – 5 percent and gross capital expenditures of around 4.2 billion euros. These investments continue to focus on the expansion of transport and sorting capacities for the further increase in shipment volumes as well as the digital transformation that the company continues to drive forward.
Medium-term targets published: further EBIT growth forecast until 2024
With the presentation of the annual report, the Group presented its medium-term financial targets up to 2024. EBIT is expected to rise to around EUR 8.5 billion in 2024. Excluding acquisitions, such as the planned acquisition of Hillebrand, the Group expects a cumulative free cash flow of around EUR 11 billion in the period from 2022 to 2024. In the same period, the company forecasts cumulative investments (capex) of around 12 billion euros.
“I am very pleased that we were able to close the third financial year in a row with a record result. We have fundamentally improved the Group’s financial strength with a massive leap in growth in all financial dimensions. This strengthens our ability to distribute and creates scope for the use of the remaining free cash flow,” said CFO Melanie Kreis.
The record result is also reflected in a significantly higher net profit for the year. Consolidated net income after non-controlling interests increased significantly to EUR 5.1 billion (2020: EUR 3.0 billion). Basic earnings per share thus amounted to EUR 4.10 (2019: EUR 2.41).
Dividend proposal greatly increased; Renewed share buyback resolved
Against the background of the positive earnings development, the Executive Board and Supervisory Board will propose to the Annual General Meeting on May 6, 2022 that the dividend be increased from EUR 1.35 per share in the previous year to EUR 1.80 per share this year. Subject to shareholder approval, the Group would thus distribute a total sum of EUR 2.2 billion. Based on the dividend proposal, the adjusted payout ratio would be 43 percent.
In addition, against the background of the positive business development, the Executive Board and Supervisory Board have decided on a share buyback program of up to EUR 2 billion.
Last year, Deutsche Post DHL Group operationalized its sustainability roadmap and set measurable non-financial targets for fiscal year 2022, which will be used in the future to calculate Executive Board compensation:
- Environment: In line with its accelerated roadmap for decarbonisation, the Group aims to achieve an absolute reduction in its greenhouse gas emissions to below 29 million tonnes by 2030 in line with the Paris Climate Agreement. In this way, targeted measures to save around 1 million tonnes of CO2 are to be implemented in the 2022 financial year.
- Social: The Group is convinced that a high level of employee satisfaction is the basis for the economic success of a company. Accordingly, the development of “employee engagement” will continue to apply to Executive Board compensation and is expected to exceed 80 percent.
- Governance: The Group has set itself the goal of maintaining the highest governance standards worldwide , and progress is measured by a certification rate for compliance training in middle and upper management. This should be at least 95 percent in 2022.
In 2021, the Group invested 156 million euros in decarbonization measures, consolidated its position as one of the world’s best employers and increased employee engagement to 84 percent and the proportion of women in middle and upper management to 25.1 percent. Further information on progress and measures in the areas of environment, social affairs and governance can be found in the Annual Report .
All divisions record significant sales and earnings growth
Express: Revenue and earnings of the Express division developed exceptionally positively in 2021, with EBIT rising by 53.4 percent to EUR 4.2 billion. At EUR 24.2 billion (2020: EUR 19.1 billion), sales were significantly higher than in the previous year. This was mainly due to the growth of 10.3 percent in international time-accurate express shipments (TDI) and an increase in the average weight per shipment. Network capacities were used at a consistently high level over the course of the year, further improving the efficiency of shipment processing in the global network. This led to a further increase in profitability. Express achieved a record EBIT margin of 17.4 percent (2020: 14.4 percent).
Global Forwarding, Freight (GFF): The division mastered the still challenging conditions on the international transport markets extremely successfully. EBIT more than doubled to EUR 1.3 billion (2020: EUR 0.6 billion). Sales rose dynamically to 22.8 billion euros (2020: 15.8 billion euros). The continued sharp reduction in transport capacities met with significantly higher demand in 2021 – the driver was world trade, which has regained momentum. This led to a corresponding price and margin dynamic in the competition for available transport capacities. Thanks to its international network and market-leading position in air and sea freight, GFF has been able to provide its customers with the necessary access. Volumes in air and sea freight increased by 25.7 percent and 8.7 percent respectively. Shipment volumes in road freight also grew by 7.8 percent. The division’s EBIT margin improved to 5.7 percent (2020: 3.7 percent).
Supply Chain: Reliable supply chains were in great demand in the past fiscal year, with the division posting a significant jump in earnings to EUR 705 million (2020: EUR 424 million). This was based on an increase in sales to EUR 13.9 billion (2020: EUR 12.5 billion) and continued efficiency improvements. The division was able to successfully scale its standardized business model thanks to significant new business.With the continued establishment of special e-fulfillment locations dedicated to the processing of online orders , the division strengthened its position in online retail. Targeted digitization and automation projects as well as successful cost management increased the EBIT margin to 5.1 percent (2020: 3.4 percent).
eCommerce Solutions: In fiscal 2021, the division more than doubled its earnings under the excellent leadership of Ken Allen. EBIT amounted to EUR 417 million (2020: EUR 158 million). The dynamic growth in shipment volumes in online retail made a significant contribution to this. Almost all regions achieved double-digit growth rates. The volume of business developed particularly strongly in the Netherlands and India. Shipment volumes for cross-border transport in Europe also increased by 21.6 percent. The unabated strong growth in the international parcel business made it possible to utilize the networks more efficiently. After achieving a positive EBIT margin for the first time in the previous year, the division achieved a remarkable 7.0 percent in 2021 (2020: 3.3 percent). With the retirement of Ken Allen on July 31, 2022, Pablo Ciano will join the Group Board of Management as Head of the DHL eCommerce Solutions division on August 1, 2022.
Post & Parcel Germany: The division successfully increased earnings and revenue. EBIT increased significantly to EUR 1.75 billion (2020: EUR 1.6 billion). The division transported a record volume of over 1.8 billion parcels in 2021 (2020: 1.6 billion parcels). Accordingly, revenue developed positively to EUR 17.4 billion (2020: EUR 16.5 billion) with volumes in the Post Deutschland business segment remaining virtually unchanged at 14.2 billion letters. At 10.0 percent (2020: 9.7 percent), the EBIT margin was stable at the previous year’s level.