Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DHL Group (DHLGY, Financial) reported strong free cash flow generation, supporting attractive shareholder returns.
- The e-commerce segment showed 7% organic growth, with strong performance in markets like the Netherlands and the US.
- The Parcel business in Germany continued to perform well, contributing positively to the group's earnings.
- The company maintained a solid double-digit margin in the Express division, despite a subdued macro environment.
- DHL Group (DHLGY) has implemented effective cost management and productivity measures across divisions, contributing to financial stability.
Negative Points
- DHL Group (DHLGY) had to lower its EBIT guidance for the year due to slower economic recovery, particularly in B2B freight markets.
- The air freight segment underperformed expectations, with elevated buying costs impacting profitability.
- Mail volumes in Germany experienced a stronger than expected decline, affecting the Post and Parcel division's earnings.
- The company faces challenges in achieving its midterm EBIT target due to regulatory decisions and slower economic recovery.
- There is ongoing competitive pressure in some e-commerce markets, impacting yield and requiring further scale development.
Q & A Highlights
Q: Can you explain the decline in B2C volumes in Express and why it underperformed compared to parcel volumes in P&P and e-commerce?
A: Tobias Meyer, CEO, explained that the decline in B2C volumes in Express is due to e-commerce players focusing on cost, leading to a shift towards deferred shipments. Additionally, DHL has consciously reduced exposure to high-risk trades like the Transpacific to avoid volatility and high air freight costs.
Q: With the guidance being lowered for this year and 2025, what are the building blocks for next year and trends for each segment?
A: Melanie Kreis, CFO, stated that guidance for 2025 will be provided in March. The focus is on concluding 2024 strongly, with an expected 8% EBIT growth in Q4. This positive dynamic will provide a good basis for 2025.
Q: What is driving the accelerated decline in mail volumes, and do you expect a catch-up decline in Germany compared to other European markets?
A: Tobias Meyer, CEO, noted that the decline is due to digitalization efforts, particularly in government agencies. While there is some acceleration, it is not expected to catch up to the levels seen in other countries. Advertising mail is more cyclical and influenced by economic conditions.
Q: How are you managing Express resources and capacity in light of B2B and B2C volume expectations for Q4?
A: Melanie Kreis, CFO, mentioned that despite a decline in volumes, DHL is focusing on maintaining high service quality and managing costs and capacity. The expectation is for good EBIT growth and margin expansion in Express for Q4.
Q: Can you discuss the impact of the demand surcharge on your 2024 EBIT guidance and its compliance rate among customers?
A: Tobias Meyer, CEO, stated that the demand surcharge is performing better than expected, with high compliance from customers. It is not expected to change significantly in the coming weeks and is a key factor in achieving the EBIT guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
