DHL Group: we were able to significantly increase revenue in the third quarter
DHL Group increased its revenue by 6.2 percent to EUR 20.6 billion in the third quarter of 2024 (Q3 2023: EUR 19.4 billion) despite the persistently weak global economy.
Operating profit (EBIT) remained stable at €1.373 billion (Q3 2023: €1.372 billion) and was thus not only in line with market expectations, but also significantly above the pre-pandemic level (Q3 2019: €942 million).
Tobias Meyer, CEO DHL Group commented: “The weak momentum of world trade runs like a red thread through the first nine months of 2024. Nevertheless, we were able to significantly increase revenue in the third quarter and initiate a turnaround in EBIT compared to the previous year. Now it is important to offer our customers in heavy traffic the usual high quality and to deliver corresponding profitability.”
Continued focus on cost and revenue management
The Group’s gross capital expenditure (capex) amounted to EUR 690 million in the third quarter (Q3 2023: EUR 871 million). Free cash flow was €723 million (Q3 2023: €1,074 million; Q3 2019: EUR 507 million).
Melanie Kreis, CFO DHL Group said: “We have been working without any economic tailwind since the end of 2022. This makes our continued focus on cost and capex control, price adjustments and fine-tuning of our network all the more important. Our sales and earnings development as well as the strong free cash flow in the third quarter show that our measures are taking effect.”
Overall, DHL Group generated consolidated net income in the third quarter of 2024 after non-controlling interests of €751 million (Q3 2023: €807 million). In the same period, basic earnings per share were 0.64 euros, compared to 0.68 euros in the third quarter of 2023.
In the first nine months of 2024, the Group generated revenue of €61.5 billion (9M 2023: €60.4 billion), slightly above the prior-year period. At EUR 4.0 billion, operating profit developed in line with expectations (9M 2023: EUR 4.7 billion).
Typical increase in B2C shipment volumes expected due to heavy traffic
In the fourth quarter, DHL Group expects the typical seasonal increase in e-commerce deliveries to consumers (B2C, business-to-consumer) in the context of heavy traffic. The Group’s divisions have made preparations to be able to offer high quality despite the expected shipment volumes. Express, for example, is deploying additional Boeing 777 freighters on the important routes between Asia and Europe. Supply Chain plans to deploy nearly 500 additional robots in addition to around 5,000 temporary workers. The Post & Parcel team is being strengthened by around 10,000 temporary workers. In Germany, the division expects over 11 million parcels per day at peak times.
Forecast adjusted due to weak economic momentum in B2B volumes and significant decline in letter volumes
In the national parcel businesses, the seasonal acceleration of e-commerce deliveries to consumers since the end of September seems to be occurring as expected. B2B (business-to-business) volumes, on the other hand, continue to be characterized by weak economic momentum. In the third quarter, the accelerated structural decline in the mail business with its high fixed costs also had an impact.
The Management Board continues to assume that the Group will benefit from a seasonal increase in B2C shipment volumes until the end of the year. However, based on the development in October, there are still no signs of a more positive dynamic for the development of B2B volumes and the mail business. In air freight forwarding, too, margins continue to fall short of expectations – despite a slight seasonal increase in volumes.
The Management Board has therefore decided to adjust the Group EBIT forecast for 2024 to EUR >5.8 billion (previously: EUR 6.0 billion to EUR 6.6 billion). The DHL divisions >5.5 billion euros (previously: >5.7 billion euros) and the Post & Parcel Germany division ~0.8 billion euros (previously: >0.8 billion euros) are expected to contribute to this.
In line with market developments, the Group has also reduced its expected capital expenditure (excluding leasing) for the full year 2024 to EUR 3.0 billion to EUR 3.2 billion (previously: EUR 3.0 billion to EUR 3.6 billion). The Group expects free cash flow (excluding net M&A) to remain high at EUR 2.8 billion to EUR 3.0 billion (previously: ~EUR 3.0 billion).
Based on the adjusted expectations for 2024 and the weaker macroeconomic environment, especially in Europe, the Management Board has also adjusted the forecast for medium-term growth in Group EBIT to EUR >7.0 billion (previously: EUR 7.5 billion to EUR 8.5 billion) for the 2026 financial year. Expectations for capital expenditure and free cash flow remain unchanged in the cumulative ranges for 2024 to 2026.
Express: Revenue and earnings increase
The Express division recorded revenue and earnings growth in the third quarter. In view of the continued low market momentum, daily TDI shipment volumes declined by 5.9 percent in the third quarter, while daily TDI revenues remained at the previous year’s level. The division continues to counter the weak volume development with effective revenue and cost management as well as the optimization of network capacity.
Global Forwarding, Freight: Revenue growth due to higher volumes and freight rates
Revenue in the Global Forwarding, Freight division increased in the third quarter of 2024 due to higher volumes and ocean freight rates, while operating profit declined due to margin development. Air and sea freight volumes increased, especially on routes from Asia.
Supply chain: sales and earnings growth
The Supply Chain division was once again able to significantly increase both revenue and EBIT. Contract signings and renewals as well as the growing e-commerce business led to sales increases in almost all regions and sectors. In the first nine months of the year, the division was able to conclude additional contracts worth 6.4 billion euros. The Energy, Retail, Life Sciences & Healthcare and E-Fulfillment Solutions sectors accounted for a significant share of the deals.
eCommerce: Increase in sales and network expansion
The Group’s youngest division, eCommerce, continues to benefit from the structural e-commerce trend. Sales increased significantly in the third quarter. The EBIT development is attributable, among other things, to higher depreciation and amortization as a result of continuous investments in the expansion of the networks. eCommerce continues to invest specifically in the expansion of the network and service quality in structural growth markets.
Post & Parcel Germany: Parcel business grows, letter business continues to lose ground
Post & Parcel Germany recorded an increase in revenue in the third quarter. The driver of this development remains the Parcel Germany business segment. Parcel volumes grew (+5.4 percent year-on-year), while the German postal business declined (Mail Communication: -2.9 percent year-on-year; Dialog Marketing -18.9 percent year-on-year). EBIT was lower than in the same period of the previous year because the increase in revenue in the parcel business and shipping of goods could not compensate for the overall increase in material and personnel costs with declining letter volumes.
