Tobias Meyer, the CEO of DHL Group ($DHL (+0,1%) ), and Melanie Kreis, the Chief Financial Officerpresented the results and provided detailed insights into the company's strategies and expectations.
The conference began with an overview of the highlights of the year 2024. The DHL Group recorded an EBIT of 5,886 million euros and a strong year-end spurt driven by a successful peak season in all divisions.
Particularly noteworthy are the targeted measures to increase returns and cost efficiency, especially in the express business, as well as a high cash flow of around EUR 3 billion. The company reaffirmed its policy of a stable dividend of EUR 1.85 per share, increased the share buyback program by EUR 2 billion and extended it by one year. To further increase efficiency and secure the necessary funds for future growth, a Group-wide program called "Fit for Growth" was launched.
Meyer emphasized that the fourth quarter results are in line with the historical shares of full-year sales, with the Express and Post & Parcel (P&P) divisions in particular contributing to this. Express and Post & Parcel (P&P) Germany benefited from a strong end to the year. Despite a volatile start to 2024 with declining revenue in the first half of the year, the company achieved revenue growth in the third quarter and also increased earnings in the fourth quarter. Meyer was confident about 2025 despite the continued volatile conditions, particularly with regard to growth in geographical and industry segments with high growth potential.
There was a particular focus on the e-commerce businesswhich has recorded impressive volume growth of 61% over the last five years. Although this area is not yet fully mature, DHL Group plans to maintain the pace of growth, especially in the B2C segment.
The Supply Chain division exceeded the the EUR 1 billion mark in EBIT for the first time for the first time and, according to Meyer, is on a good structural growth path. Good contract conclusions and a promising pipeline make the company optimistic for the coming years.
Meyer also addressed the the effects of trade barriers and emphasized that although these have a negative impact on volumes, trade is often more resilient than expected. For example, Brexit led to an increased need for customs declarations, which created additional business opportunities for DHL Group. The company's geographic focus on high-growth regions that are less affected by the US government's new trade policies also gives Meyer confidence.
Another important point was the positioning of the express business compared to the general air freight market. Meyer emphasized that the express model has historically gained market share from the carrier-forwarder model and is expected to continue to do so in the future. Particularly in sectors such as life science and healthcare, where smaller, higher value shipments are increasing, he sees a natural advantage for the integrated express model.
Meyer also explained the Strategy 2030 and the "Fit for Growth" program, which aims to increase profitability through various measures in the areas of aviation, airfreight and structural simplification. In Germany, this will unfortunately also lead to staff reductions due to the structural decline in letter volumes.
The outlook for 2025 envisages EBIT of more than EUR 6 billionwith DHL contributing more than EUR 5.5 billion, P&P around EUR 1 billion and Group Functions minus EUR 0.4 billion. Cash flow is expected to remain stable at EUR 3 billion, and investments and the tax rate are also expected to be at a similar level to the past. In the medium term, the company is aiming for EBIT of over EUR 7 billion, relying on its structural growth levers but also taking into account the effects of the macroeconomic environment.
With regard to the distribution to shareholders Meyer reaffirmed the commitment to a stable dividend of EUR 1.85 per share and increased the share buyback program by EUR 2 billion.
In the Post & Parcel Germany division, the successful peak season was unable to fully compensate for the known negative effects of the decline in letter volumes and cost inflation. However, the company expects P&P EBIT to increase in 2025, as regulated letter pricing and continued parcel growth should have a positive impact. However, due to the accelerated decline in letter volumes, cost inflation and the regulatory environment, cost reduction measures had to be accelerated.
The following topics were covered in the subsequent Q&A session:
Muneeba Kayani (Bank of America) asked about the moving factors in the outlook for 2025 and whether the latest developments in Germany have already been taken into account. Meyer replied that the outlook is based on the momentum of 2024 and the short-term changes in Germany will not yet have a significant impact. He pointed out that it is mainly about spending on defense and infrastructure and that the agility of the German administration has suffered in recent years, so it is questionable whether the funds will actually flow in 2025. In terms of reorganization or adapting the legal structure to the management structure, the company believes it is making good progress. Kreis added that at the Capital Markets Day on April 3 will show how the portfolio complements each other and can be used for future growth.
Alexia Dogani (JPMorgan Chase & Co.) asked whether the Fit for Growth" program mainly aimed at cost reduction or whether some of the savings will also increase EBIT, and asked for more details on the shipment mix and weight shipment mix and the weight increase. Kreis explained that the program includes a wide range of measures, some of which will directly change the cost position, while others are intended to help achieve solid guidance for the current and medium-term year. Meyer pointed out that the life science and healthcare sectors are particular areas of focus, while there are gradual changes in other areas. In terms of engagement with the defense sector, Meyer explained that the company is engaging with the sector in different ways, both through civilian and military manufacturers and through engagements with governments, but this is nothing new.
Cedar Ekblom (Morgan Stanley) asked about the impact of the changes to the de minimis rules and the impact on the cost base as well as the positioning of the company in the e-commerce market in the USA. Meyer explained that the short-term suspension of the de minimis rule has caused significant disruption and that the consolidation of shipments usually means that the de minimis rule is no longer applicable. He emphasized that the company has a relevant share of volumes with Express, but does not transport cheap goods by air to the US on a large scale. With regard to the e-commerce market in the USA, Meyer reaffirmed the partnership with the USPS, which handles last-mile delivery. Kreis added that the very good performance of the e-commerce division in the fourth quarter also included a good performance in the USA, which proves the good and healthy relationship with the USPS.
Cristian Nedelcu (UBS) asked for an explanation of the underlying assumptions for volume growth in the EBIT bridge for 2025 and 2027 and the impact of pricing versus inflation. Kreis replied that a more subdued environment is expected for 2025, but a normalization in the long term in line with the guidance expectations of Strategy 2030. She emphasized that the company is fundamentally committed to offsetting inflation through pricing and referred to DHL Express' disciplined annual GPI mechanism. With regard to cost savings, she specified that the target of over EUR 1 billion is to be achieved by the end of 2026 and that the savings will be spread evenly over the years 2025 and 2026.
Marco Limite (Barclays) asked about the outlook for P&P against the background of the wage agreement and whether the staff reduction is part of this agreement. Kreis explained that 2026 will be a more challenging year for P&P, which is why the structural reduction of the workforce by 8,000 employees will be initiated to ensure the division's profitability. She emphasized that this will be done in a socially responsible manner and that no conflicts with the union are expected. With regard to the EUR 1 billion, she emphasized that this will support the result regardless of the macroeconomy.
Patrick Creuset (Goldman Sachs) asked about the potential for an increase in profitability in the Freight Forwarding division and whether the cost reduction program can contribute to achieving the the goal of a 35 percent conversion rate conversion rate. Meyer acknowledged that the division has made great progress in terms of cost efficiency, but that the conversion rate is also influenced by the GP per unit. He emphasized that the company is well on its way to closing the gap with competitors and achieving the long-term goal of exceeding the balance between volume growth and conversion rate.
In summary, DHL Group had a successful 2024 with a strong year-end spurt. The company is well positioned to continue to grow and increase its profitability in the future, even if the macroeconomic environment remains volatile. The focus on increasing efficiency, strategic investments and distributions to shareholders should create long-term value.
