DHL Owner Deutsche Post Expects Limited Earnings Growth This Year

DHL owner Deutsche Post cautioned that earnings could remain relatively flat this year as economic headwinds weigh on volumes through the first half.

The German logistics group, also known as DHL Group, doesn’t expect to see a broad economic upturn in the first half of 2024 and expects volumes to decline further in some markets before global economic momentum picks up in the second half of the year.

“The year 2023 was characterized by a weak global economy and, above all, weak global trade,” Chief Executive Tobias Meyer said. “Major uncertainty factors such as volatility in demand and geopolitical crises will remain with us in 2024.”

Logistics providers saw earnings surge in 2022 as strained supply chains sent freight rates soaring. But conditions normalized in 2023 as inflation and higher interest rates saw consumer demand wane while easing supply chains saw freight markets swing to overcapacity, pressuring freight rates.

Deutsche Post said the weak market environment experienced last year, with lower business-to-business volumes driven by ongoing destocking by customers and a weak economic environment, has continued into 2024, so earnings are expected to decline in the first half before growing in the second half.

The company expects earnings before interest and taxes in 2024 of between 6 billion and 6.6 billion euros (between $6.52 billion and $7.17 billion), rising to between 7.5 billion and 8.5 billion euros in 2026.

It posted EBIT of 6.35 billion euros for 2023 and a company-compiled consensus had seen EBIT in 2024 at 6.6 billion euros—the top end of its new guidance.

Analysts at 

 noted the lack of any sign of a recovery in the business-to-business market and inventory restocking by customers is disappointing.

“The stock…will re-rate quickly ahead of any restocking but the issue is that there are no green shoots of that happening,” the analysts said in a note.

The company confirmed after releasing its earnings Wednesday that it won’t participate in the bidding for rival freight forwarder DB Schenker, saying the business is “not the right target.”

“It doesn’t stack up to the value generation that we are looking for,” Meyer said on an earnings conference call.