DHL increases sales - but only in Germany
DHL generated nearly 41 billion euros in revenue in the first half of the year, a decrease of 0.3 percent. Business is particularly slow abroad, while the domestic business is improving. Even the increasingly challenging postal delivery is showing signs of improvement - much to the dismay of customers.
The business of the postal conglomerate DHL in Germany is booming, while other areas of the company are not performing as well. Revenue in the Post & Paket Germany segment increased by 2.8 percent to around 8.4 billion euros in the first half of 2024, the company announced with its nearly 600,000 employees in Bonn. The operating result (EBIT) increased by almost a quarter to 324 million euros. One reason for the better business was the high demand for parcels.
On the other hand, the Express segment, which focuses on international business and is now much more important to the logistics company than its domestic core business, weakened: The operating result of Express plummeted by more than a quarter to 1.3 billion euros.
Express shipments are more expensive than normal letters and parcels, delivery is faster, and customers are guaranteed a specific delivery window. Especially companies use Express services to send important documents or urgently needed spare parts. Since the world economy is slowing down, Express business is performing poorly. The separate freight business of the logistics company also developed negatively.
Postal business continues to decline
Together, the company generated revenue of 40.9 billion euros in the first half of the year - a decrease of 0.3 percent compared to the previous year - and an operating result of around 2.7 billion euros (minus 20.1 percent).
The core business in Germany now plays only a minor role for DHL, which was formerly known as Deutsche Post. In the digital age, demand for letters continues to decline, with a decrease of around six percent in the volume of items last year. However, the booming online trade is a growth driver for the separate parcel business.
The dark clouds in the core business are now beginning to lift, as the recently concluded reform of the Postal Act allows DHL to save costs: The legislator has reduced the time pressure for letter delivery.
From January, only 95 percent of letters have to be delivered to the recipient by the third working day after posting - on average, the majority of the letter volume can therefore be on the road for two working days longer than before.
DHL is developing a new delivery system
Does this mean that the mail carrier will appear on the street less frequently in the future? Chief Financial Officer Melanie Kreis says that the company is currently working on a new delivery system. The aim is to bundle shipments more strongly. According to her statement, it could come to the fact that the mail carrier no longer puts advertising letters into a letterbox every day, but waits until several advertising letters have accumulated.
Consumers can also expect the letter postage to increase in January - this is almost certain. Up to now, a standard letter within Germany costs 85 cents, it could be one euro in January. However, this is not certain, as a calculation procedure of the Federal Network Agency is still running, which is to determine a price increase corridor for the postage of the different shipment types. A decision is expected in the fall.
The reform of the law and the impending increase in postage costs are making DHL's core business more attractive again. Finance chief Kreis is optimistic that thanks to the new framework conditions, more than one billion euros in operating results - i.e., operating profit - will be achieved in the Post & Paket Germany segment next year. In 2023, this figure was 870 million euros, and this year it is expected to be more than 800 million euros.
A higher operating result is important to enable sufficient investment in climate-friendly technology and other measures. From the Post & Paket Germany division, one cannot expect a "significant contribution" to the dividend, says Kreis. "But it must earn what it wants to invest, and for that, we need to exceed the billion mark".
DHL's Express segment, known for its international business and priority deliveries, continues to struggle, with a significant decrease in operating revenue. Despite this, DHL Germany, a key segment for the company, is thriving, generating a 2.8% revenue increase and an almost 25% boost in operating result.
In the face of global economic slowdown, DHL's Express segment, which includes expensive and time-sensitive shipments, has been negatively impacted. However, the German postal business, which includes parcel delivery, is seeing improvement due to rising online sales, contributing to the overall revenue generation of DHL.
