DHL Group reports 16.4% revenue drop

Amid a soft air cargo market, DHL Group posted revenue of 20.1 billion euros ($22.1 billion) in the second quarter, a decline of 16.4% year over year. [caption id="attachment_57137469" align="alignright" width="300"] DHL Group’s headquarters is in Bonn, Germany. (Photo/DHL Group)[/caption] THE BIG PICTURE: As expected, the second quarter, which continued to be characterized by lower volumes and declining freight rates, did not match the record earnings of the previous year — a trend seen across the air cargo industry . BY THE NUMBERS: Despite the drop in revenue, DHL executives said they are pleased with the company’s Q2 and first-half operations announced today: Q2 EBIT was $1.9 billion, a 27.2% YoY decrease; H1 revenue was $44.97 billion, a 12% YoY decrease; and H1 EBIT was $3.7 billion, a 25.7% YoY decrease. Divisional revenue in Q2 saw some YoY improvements and some reductions: Express revenue was $6.7 billion, a 12.5% YoY decrease; Global Forwarding, Freight revenue was $5.3 billion, a 40.7% YoY decrease; Supply Chain revenue was $4.6 billion, a 4% YoY increase; eCommerce revenue was $1.7 billion, a 0.3% YoY decrease; Post & Parcel Germany revenue was $4.4 billion, a 0.8% YoY increase; and Group functions and consolidations “revenue” was a loss of $661.2 million, an improvement from the loss of $728.1 million in Q2 2022. WHAT THEY’RE SAYING: While the Express and Global Forwarding, Freight, divisions correlated more strongly with the global economy, long-term Supply Chain customer contracts ensured a continuously stable earnings situation and further growth in the second quarter, according to the company. “Thanks to our balanced portfolio and global presence, we were once again able to demonstrate our resilience,” DHL Group Chief Executive for Global Business Services Tobias Meyer said in the earnings report. “This is particularly evident in times of a weak global economic momentum. We took the right measures at an early stage to deal with the current macro environment. This, along with the dedicated efforts of our employees, is reflected in the high earnings level, which is well above those of the pre-pandemic years.” FLASHBACK: DHL took the No. 2 spot on Air Cargo Next ’s Power 25 list of top freight forwarders this year, in addition to opening new facilities, making acquisitions and more. Just in July: DHL and the Kentucky government announced yesterday that DHL Express plans to expand its operations at Cincinnati/Northern Kentucky International Airport (CVG) with an investment of $192 million to build a 305,000-square-foot aircraft maintenance facility; DHL signed an agreement to acquire 100% of Turkish parcel delivery company MNG Kargo and its subsidiaries; and DHL’s newest U.S.-based warehouse at Hartsfield-Jackson Atlanta International Airport (ATL) opened July 7, complete with advanced threat detection and security screening. MARKET REACTION: DHL Group ( NASDAQ: DHLGY ) stock slipped following the company’s earnings call. The company ended the day at $48.81 per share, a 5.22% drop from market open. “The results are 2% ahead of both JPME and company consensus at EBIT,” JP Morgan analysts said in a statement following the release of DHL’s earnings. “Within the mix, freight forwarding and Supply Chain were better than expected, with P&P, Express and [eCommerce] worse. “Our impression is that freight forwarding is the current area of strength vs. prior expectations,” the analysts said. FUTURE LOOK: DHL Group raised the lower end of its EBIT guidance for 2023 to $6.8 billion from $6.6 billion. The group continues to plan with the three scenarios presented at the 2022 annual results press conference in March: In the favorable event of a recovery of the global economy early in the second half of the year, the group expects EBIT of about $7.7 billion, unchanged from March; In the event of a recovery at the end of the year, the group expects EBIT of about $7.2 billion, an increase from the March forecast of $7.1 billion; and In the unfavorable event of no significant recovery in the global economy in the remainder of the year, the group expects EBIT of at least $6.8 billion, increased from the March forecast of $6.6 billion. THE BOTTOM LINE: Despite seeing losses in Q2, DHL executives remain optimistic for the remainder of 2023 and about the company’s ability to invest in new initiatives. “Even though we are keeping a close eye on our costs in the current challenging environment, our strengthened earnings power puts us in a position to continue investing significantly in future growth,” Chief Financial Officer Melanie Kreis said in the earnings report. Join Air Cargo Next for the second annual Air Cargo Tech Summit on Monday, Sept. 18, and Tuesday, Sept. 19, at the Brussels Marriott Hotel Grand Place in Belgium. For more information on the summit and to register, click here .

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