In This Article:
DHL Group continues to feel the pressure of international macroeconomic trade headwinds, with the company’s air and ocean freight forwarding division pulling down both revenue and earnings for the logistics giant.
The Germany-based company saw total revenue decline 3.2 percent in its first quarter to 20.3 billion euros ($21.8 billion), with net profit coming down 18.4 percent to 743 million euros ($799 million).
More from Sourcing Journal
“We are in an unusually long phase of low momentum in global trade. In this environment, we continue to focus on consistent capacity and cost management,” said Tobias Meyer, CEO, DHL Group in a statement, calling 2024 a “year of opportunities.”
DHL still expects more positive global economic momentum in the second half of 2024, with Meyer saying, “we are ideally positioned to benefit from an upturn in global trade.” The World Trade Organization is backing up Meyer’s predictions, recently forecasting that world merchandise trade volume would grow by 2.6 percent in 2024, a swing from the 1.2 percent decline in 2023.
The company’s attitude reflects that of U.S. logistics competitor UPS, which expects a return to volume and revenue growth later this year despite a 5.3 percent revenue decline in the second quarter and plummeting net income of 41 percent due to higher labor costs. Like DHL, UPS and rival FedEx are both sharing a focus on keeping costs down, with both implementing their own long-term cost-cutting plans expecting to slash billions of dollars each.
Overall, the group reiterated its 2024 fiscal forecast, expecting earnings before interest and taxes (EBIT) between 6 billion euros ($6.5 billion) and 6.6 billion euros ($7 billion) and free cash flow excluding acquisitions and divestments of around 3 billion euros ($3.2 billion).
Volumes across the company’s expedited delivery branch, DHL Express, reflect the wider weakness in demand. International volumes dipped 1.2 percent to 1.05 million packages per day, reflected in the lower B2B volumes moved in the quarter, while domestic volumes declined 7.8 percent to 472,000 per day.
The declining volumes at the unit have resulted in sinking sales of 4.4 percent to 6 billion euros ($6.5 billion).
DHL’s global freight forwarding division had the worst revenue performance, seeing sales decline 15.8 percent to 4.6 billion euros ($5 billion). EBIT declined 32.4 percent to 263 million euros ($283 million).