Deutsche Post DHL improves earnings, beats peers, still cutting costs

Logistics provider Deutsche Post DHL has provided preliminary Q2 EBIT figures that show growth of 25% year over year when excluding one-offs. The firm has also introduced full year guidance for EBIT growth of 4% to 11% in terms of operational performance, making it one of the first logistics firms to do so. A longer term guidance for 2022 has a significant range depending on the post-COVID “recovery shape” which still yields a 13% range depending on whether there is a “V” or “L” shaped recovery.

The group’s global forwarding business managed to expand profitability to 190 million euros ($215 million) from 124 million euros a year earlier. The latter is notable given that there hasn’t been a notable recovery in global trade activity as of May as indicated in Panjiva’s research of July 3.

Panjiva’s data shows that DP-DHL has likely outperformed its competitors at least on U.S.-seaborne import routes with shipments in Q2 that fell by 5.5% year over year compared to an 11.3% slide for total shipments. Among DP-DHL’s major Europe-based competitors there was an 8.0% slide in traffic linked to K+N while Deutsche Bahn’s Schenker experienced a 16.6% downturn and DSV-Panalpina a slide off 18.0%.

DP-DHL BEATS PEERS BUT STILL EXPERIENCES DOWNTURN

Chart segments U.S. seaborne imports by freight forwarder. Source: Panjiva

It’s not all plain sailing, however, with continued business disruptions in some sectors putting pressure on DP-DHL to cut costs – one potential driver of the improved profits in the face of weaker volumes. One tangible example is the decision, reported by Reuters, to cut 40% of its embedded staff at Tata Motors’ Jaguar Land Rover.

Other European based users of DP-DHL’s services on U.S.-seaborne lanes that have experienced a marked downturn in shipping in Q2 include machine tool maker Trumpf with a decline of 56.7% year over year and leisure products maker Technogym with a 48.4% slide. That’s been partly offset by notable successes including a 46.3% rise in shipments linked to Novo Nordisk – helped by demand for healthcare products in the wake of COVID-19 – and a 20.6% rise in shipments for LVMH’s Christian Dior.

TRUMPF, TECHNOGYM SHIPMENTS DRAG ON DP-DHL PERFORMANCE