Deutsche Post AG (DHLGY) Q1 2025 Earnings Call Highlights: Strong Earnings Growth Amid Volatile ...

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Thu, May 1, 2025, 1:02 AM 4 min read

Earnings Growth: Approximately 5% growth in earnings.
Revenue Growth: Slight growth in revenue.
Free Cash Flow: Delivered a good free cash flow.
EBIT Improvements: Notable improvements in Express supply chain and P&P Germany.
DHL Supply Chain EBIT: Solid EBIT growth.
DHL eCommerce Revenue Growth: 6% organic top line growth.
P&P Germany EBIT Guidance: Expected to reach a minimum of EUR1 billion for the full year.
Express Division EBIT: Year-over-year increase in EBIT despite volume decline.
Aviation Net Supply Cost: Declined by 7%.

Warning! GuruFocus has detected 3 Warning Signs with OISE:ICEAIR.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Deutsche Post AG (DHLGY) reported a 5% growth in earnings for Q1 2025, indicating a strong start to the year.
The company saw EBIT improvements in its Express and Supply Chain divisions, showcasing operational efficiency.
Deutsche Post AG (DHLGY) continues to execute its growth strategy with acquisitions in the life science and healthcare sectors.
The company has managed its capacity well, particularly in the Express division, contributing positively to results.
Deutsche Post AG (DHLGY) maintains a strong market position in Southeast Asia, which is beneficial amid shifting global trade dynamics.

Negative Points

The macro environment remains volatile, with changes in US trade policies impacting operations.
There is a 'wait and see' approach among customers, delaying investment decisions and affecting consumer confidence.
The company faces challenges in its road freight business in Europe, with additional costs from system transitions.
Deutsche Post AG (DHLGY) has reduced its exposure to the China-US trade lane, but this has led to a decline in B2C shipments.
The ongoing trade policy changes create operational challenges, particularly with customs and tariff adjustments.

Q & A Highlights

Q: Can we interpret the unchanged 2025 guidance as April tracking in line with expectations at the ACS and EBIT level? Also, it seems like you've lost share in forwarding volumes. Why is that, and what are you doing to address it? A: We don't see a reason to change the 2025 guidance as the overall development is in line with our plan. We assumed a relatively weak macro environment for the year, and the effects of changes in trade policy are balanced across our portfolio. Regarding airfreight, we see it as a sectorial topic with different exposures to industries like e-commerce and tech. We are analyzing competitor figures to understand our position better.

Q: What are you seeing in terms of bookings out of China, and do you think the current situation provides more opportunities than challenges given your low exposure to the China-US trade lane? A: We see fluctuations by mode and week, with four main elements impacting us: structural decline in China-US trade, wait-and-see behavior affecting consumer confidence, intra-Asia inventory repositioning, and supply chain reconfiguration. The latter two could be positive, increasing logistics complexity and costs, which is beneficial for us. However, how these factors balance out for the rest of the year remains uncertain.

Q: Could you provide some color on your expectations for Q2 Express, given a competitor's guidance of revenue declines and margin erosion? Also, what percentage of your Express imports into the US are clearing customs under de minimis? A: We don't provide quarterly guidance but remain confident in our full-year guidance. Regarding Express exposure to de minimis, we have a mix of B2B and B2C, including de minimis, but have already reduced our exposure through pricing measures. The impact will be managed, and we expect some de minimis volume to find other channels.

Q: How should we think about the evolution of the conversion margin in the freight forwarding business, which took a hit in Q1? A: You need to separate land freight from air and ocean freight. The European land freight market is weak, with demand weakness and extra costs from system transitions. We expect improvements but are dependent on market developments. In airfreight, we see higher competitiveness and uncertainty, while ocean freight is performing well. Structurally, we are on a good path with productivity enhancements.

Q: Is the current volatility delaying execution on your 1 billion plus cost-out program? A: No, the volatility is not delaying our cost-out program. We are executing day-to-day structural cost improvements and are satisfied with the first quarter's performance, although we aim for more growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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