Shares in DHL owner Deutsche Post fell on Wednesday after the German package courier posted a sharp drop in its full-year profits and said it expects to post similar results at the end of 2024.
The Bonn headquartered company performed in-line with analysts’ expectations, posting a 10% drop in its full-year sales, to €81.76 billion, as it blamed a slump in the global economy for its underwhelming performance compared to the record results it reported in 2022.
Shares in Deutsche Post
DHL,
fell 5% on Wednesday having lost 11% of their value in 2024 so far.
The international parcel courier, which was formed out of Germany’s state-run postal company Deutsche Bundespost, saw its full-year profits drop 25%, to €6.35 billion, as it said it expects to post similar profits this year of between €6 billion to €6.6 billion.
Deutsche Post, which trades under the name DHL Group, however, vowed to increase its share buyback with a view to acquiring another €1 billion of its shares from shareholders on top of the €4 billion it had already planned to purchase between now and 2025.
“The year 2023 was characterized by a weak global economy and, above all, weak global trade. Even under these conditions, we achieved our targets for the year,” Deutsche Post CEO Tobias Meyer said.
The German firm’s full-year sales were hit by a sharp drop in revenue from its DHL Global Forwarding air and ocean freight transportation segment, which saw its sales drop 36.1%, to €19.31 billion, as it suffered from lower volumes and a global slump in shipping rates.
The combination of a slump in the global economy and a glut in the supply of freight capacity following the end of a boom during COVID-19 caused freight shipping rates to fall sharply throughout 2023.
Deutsche Post’s DHL Express parcel delivery service also reported a 10% drop in revenue as a slump in sales to business-to-business customers – caused by destocking and a weak macro environment – saw the segment’s volumes drop 2.5%.
Looking forward, Deutsche Post CEO Meyer said he expects “macro uncertainty” to continue impacting the parcel courier’s business into 2024, as the company predicted a sharp uptick in its operating profits to €7.5- €8.5 billion by 2026.
Analysts at Deutsche Bank, led by Andy Chu, said Deutsche Post’s results will like be “disappointing” to investors considering the absence of any “green shoots” of a recovery in volumes from its B2B business.
