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DHL singled out its Global Forwarding division for a weaker-than-expected third quarter, and confirmed it was lowering its profit forecast for the year.
Despite growing group revenues, up 6.2% year on year over the three month period to October, at €20.6bn $22.4bn), DHL was only able to translate this into a barely noticeable 0.1% uptick in profits, to €1.37bn, failing to eat into the 14.2% year-to-date decline in EBIT of €4bn.
Chief financial officer Melanie Kreis told investors forwarding activities were the “main disappointment” against expectations, with a “decent” ocean showing not reflected in air.
“On the positive side, forwarding volumes continue to recover from the double-digit declines last year; we have seen a good peak season in ocean freight and that has also driven a good profit contribution,” said Ms Kreis.
On the air side, she said the group had been hoping for improved demand and a stronger peak season would bolster profitability.
Global Forwarding’s decent volume growth, of 8.5% year on year, failed to translate as profit, said Ms Kreis, noting that the volume development seen so far in the final quarter had done little to suggest a “significant improvement” before the year closes out.
GF Q3 profits fell 9.5%, year on year, to €277m, despite a 14% revenue bump to €5bn, while year-to-date profits were down 24.4%, year on year, to €819m.
Again, it was airfreight that appeared to be most to blame, with gross profit tumbling 15.2% against a 17.2% increase in revenue, while ocean freight profit fell just 4.4%, bolstered by a 27.9% surge in revenue.
The result was the revision of the DHL group’s 2024 profit forecast from €6-6.6bn to around €5.8bn. And achieving this, CEO Tobias Meyer told investors, would require an increase of “at least 8%” in the final quarter.
But he added that “we are confident” of being able to deliver that, and noted the group’s particular focus on yield management “across the divisions, particularly Express, where we’ve a demand surcharge for the first time in place, as have many of our competitors”.
He said: “Similarly, for the parcel business in Germany and some of the other domestic businesses we are present in, we have such a surcharge for the fourth quarter, or slightly longer. So, it is this that is providing us with confidence that we’ll see progress on yield.”
Express may not have been singled out, but its performance, as one analyst noted, was “also not doing too well”.
Quarterly profits for the division did climb 2.8%, to €686m, on the back of a 3% upswing in revenue, to a little over €6bn, but year-to-date profitability lags 2023 by some 19%, at just north of €2bn, with revenue for the period flat, at €18.3bn.
Mr Meyer said the Express division’s premium product on the B2B side remained “quite subdued”, with the wider express market also subdued as far as volumes were concerned.
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