DHL CEO: The recovery of the global economy has failed to materialize so far
DHL Group has announced Q3 results. DHL Group did not match the prior-year figures with revenue of EUR 19.4 billion (Q3 2022: EUR 24.0 billion) and operating profit (EBIT) of EUR 1.4 billion (Q3 2022: EUR 2.0 billion).
Financial overview
- Group revenue in the third quarter at EUR 19.4 billion
- Operating profit amounts to EUR 1.4 billion
- Group generates free cash flow of EUR 1.1 billion in third quarter and EUR 2.5 billion in first nine months
- Group narrowed 2023 EBIT forecast to EUR 6.2-6.6 billion in line with the two remaining macroeconomic scenarios – previous scenario for a rapid V-shaped recovery of the global economy no longer applies
- 2025 EBIT expected between EUR 7.0 and EUR 8.0 billion
- Gross investments of EUR 871 million in the third quarter for further international growth
Lower freight volumes and rates as well as exchange rate and fuel cost effects impacted the DHL business. Earnings for the Post & Parcel Germany division reflect cost increases and the detrimental regulatory environment for the mail business. Despite these external effects, the Group achieved free cash flow of EUR 1.1 billion in the third quarter and EUR 2.5 billion in the first nine months of 2023. This proves DHL Group’s structurally improved performance and financial strength even in a weak economic environment.
Tobias Meyer, CEO DHL Group commented: Global trade has continued to normalize after the pandemic-related boom and the recovery of the global economy has so far failed to materialize, also against the backdrop of higher interest rates and geopolitical crises. We have planned for different scenarios early on and are therefore well on track to achieve our targets for the year. In the current market environment, we will keep a close eye on our costs and continue to invest in growth areas of our global business and our service quality. We are well prepared for the moment when the global economy recovers.
DHL Group generated total net profit after non-controlling interests of EUR 807 million in the third quarter of 2023 (Q3 2022: EUR 1.2 billion). Basic earnings per share in the same period therefore amounted to EUR 0.68, compared with EUR 1.01 in the previous year.
Further continuous investment in international growth markets
In the third quarter of 2023, DHL Group generated operating cash flow of EUR 2.5 billion (Q3 2022: EUR 3.5 billion). Free cash flow was EUR 1.1 billion (Q3 2022: EUR 1.8 billion). In the first nine months of this year, DHL Group achieved free cash flow of EUR 2.5 billion (9M 2022: EUR 2.3 billion).
The Group further invested in growth markets and trends, while investments and costs in Germany were adjusted to the detrimental regulatory environment. Gross capital expenditure (capex) amounted to EUR 871 million in the third quarter (Q3: 2022: EUR 958 million). In addition to investments in sustainable business activities such as low-emission logistics infrastructure, the focus was on the automation and digitalization of operational processes. By strengthening the global DHL network, the Group also offers its customers solutions for their omnishoring strategies to reduce their dependencies on individual locations and to increase their diversification. Strategic investments include, for example, programs of the DHL Supply Chain division in Latin America and Southeast Asia. By 2028, the company will have committed EUR 500 million (Latin America) and EUR 350 million (Southeast Asia) to strengthening these strategically important logistics markets.
Forecast for 2023 narrowed – two macroeconomic scenarios remaining
DHL Group generated consolidated revenue of EUR 60.4 billion in the first nine months of 2023 (9M 2022: EUR 70.7 billion). Operating profit also developed in line with expectations in the same period, at EUR 4.7 billion (9M 2022: EUR 6.5 billion).
The Group narrowed its earnings forecast for 2023 to EUR 6.2 to EUR 6.6 billion as a recovery of the global economy has not materialized yet. The macroeconomic scenarios were narrowed as follows:
- V-shaped recovery: The scenario for a recovery of the global economy from the beginning of the second half of 2023 and an EBIT of around EUR 7.0 billion is no longer applicable.
- U-shaped recovery: In the event of a recovery at the end of the year, DHL expects an EBIT of around EUR 6.6 billion (scenario unaltered).
- L-shaped scenario: In the unfavourable case of no significant recovery of the global economy in the remainder of the financial year, an EBIT of at least EUR 6.2 billion is expected (scenario unaltered).
For the DHL divisions, DHL Group is expecting an EBIT between EUR 5.7 and EUR 6.1 billion (previously EUR 5.7 to EUR 6.5 billion) in 2023. For Post & Parcel Germany, the company still plans for an EBIT between EUR 800 million and EUR 1.0 billion.
For 2025 DHL Group expects an EBIT between EUR 7.0 and EUR 8.0 billion (previously more than EUR 8.0 billion).
