DHL owner Deutsche Post forecasts no recovery this year after 25% decline in annual profit

By Louis Goss

Shares in DHL owner Deutsche Post fell on Wednesday after the German package courier posted a sharp drop in its full-year profits and said it expects to post similar results at the end of 2024.

The Bonn headquartered company performed in-line with analysts' expectations, posting a 10% drop in its full-year sales, to EUR81.76 billion, as it blamed a slump in the global economy for its underwhelming performance compared to the record results it reported in 2022.

Shares in Deutsche Post (XE:DHL) fell 5% on Wednesday having lost 11% of their value in 2024 so far.

The international parcel courier, which was formed out of Germany's state-run postal company Deutsche Bundespost, saw its full-year profits drop 25%, to EUR6.35 billion, as it said it expects to post similar profits this year of between EUR6 billion to EUR6.6 billion.

Deutsche Post, which trades under the name DHL Group, however, vowed to increase its share buyback with a view to acquiring another EUR1 billion of its shares from shareholders on top of the EUR4 billion it had already planned to purchase between now and 2025.

"The year 2023 was characterized by a weak global economy and, above all, weak global trade. Even under these conditions, we achieved our targets for the year," Deutsche Post CEO Tobias Meyer said.

The German firm's full-year sales were hit by a sharp drop in revenue from its DHL Global Forwarding air and ocean freight transportation segment, which saw its sales drop 36.1%, to EUR19.31 billion, as it suffered from lower volumes and a global slump in shipping rates.

The combination of a slump in the global economy and a glut in the supply of freight capacity following the end of a boom during COVID-19 caused freight shipping rates to fall sharply throughout 2023.

Deutsche Post's DHL Express parcel delivery service also reported a 10% drop in revenue as a slump in sales to business-to-business customers - caused by destocking and a weak macro environment - saw the segment's volumes drop 2.5%.

Looking forward, Deutsche Post CEO Meyer said he expects "macro uncertainty" to continue impacting the parcel courier's business into 2024, as the company predicted a sharp uptick in its operating profits to EUR7.5- EUR8.5 billion by 2026.

-Louis Goss

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03-06-24 0427ET

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