News / Contract logistics the star performer for DHL, but weak rates take a toll

German logistics giant DHL saw group operating profit (Ebit) in the first quarter decline by nearly 20% year on year as trading in the early months remained sluggish and returns tumbled from €1.6bn last year, to €1.3bn.

Group-wide revenue was relatively stable, at €20.3bn, compared with €20.9bn in the first quarter of 2023, as “a broad and dynamic economic upturn failed to materialise in the first three months of the year”, the company said.

It reconfirmed its full-year forecast of an Ebit of between €6bn and €6.6bn and free cash flow, excluding acquisitions and divestments, of around €3bn.

“We are in an unusually long phase of low momentum in global trade,” said CEO Tobias Meyer.

“In this environment, we continue to focus on consistent capacity and cost management. However, we also see further growth potential. The demand for omni-shoring and ecommerce solutions remains high and our customers are becoming increasingly aware of sustainable logistics – we can clearly see this in the demand for GoGreen Plus.

“With our portfolio, we are ideally positioned to benefit from an upturn in global trade. Despite all the challenges, 2024 is a year of opportunities,” he added.

Revenues in its e-Commerce division grew 8.5%, to reach €1.63bn, however its Ebit was down some 26% to €60m, as capex was ramped up, resulting in “higher costs due in part to the ongoing investments in the expansion of the networks”.

There were large declines in both revenues and profits at DHL Global Forwarding, Freight, due to weak first-quarter freight rates, despite rising volumes.

“The division once again recorded volume growth in air and ocean freight compared with the weak prior-year period,” company said. “Air freight volumes rose by 5.1%, with the improvement primarily attributable to trade routes between Asia and Europe.

“Ocean freight volumes increased 6.6%, compared with the same quarter of the previous year, with the volume of trade routes from Asia increasing in particular,” it explained.

During the quarter it shipped 435,000 tonnes of air freight and 359,000 teu in ocean freight. However, forwarding revenues were down 16%, to €4.6bn, and Ebit declined 32%, to €263m.

In contrast, its contract logistics operation – DHL Supply Chain – saw revenues grow 5.5%, to €4.33bn, “supported by new business wins, contract renewals and growing e-commerce business”, it said, adding that additional contracts worth some €3.5bn were concluded during the period.

Ebit grew 12.8%, to reach €259m.

However, it largest division remains Express, where it is intent on introducing higher productivity and better yield management to counter what it described as a “sluggish” market – revenues were down 4.4%, to just over €6bn, while Ebit plummeted by a third, to €632m.

And, despite the long-term decline of German postal volumes continuing, its Post & Parcel division surprisingly saw revenues climb 1.6%, to €4.26bn, and Ebit jump 40.6%, to €194m, which it said was solely due to the performance of parcels and the fact that Q1 23 was “burdened by additional staff costs due to the wage dispute”.