DHL declines Schenker takeover

Just last week, Kuehne + Nagel made it clear that the agent opted against submitting an offer to purchase DB Schenker. Now the DP-DHL Group has followed suit. CFO Melanie Kreis made it clear in the group’s earnings call that DPDHL had decided against a bid for the takeover of DB Schenker. This means that two potential investors are out of the Schenker running.

As far as the annual results are concerned presented by the DPDHL Group on 06MAR24, they reflect the difficult global economic situation, stated CEO Tobias Meyer.

DHL CEO Tobias Meier and CFO Melanie Kreis explained at the annual conference why DHL is not interested in acquiring Schenker – courtesy: DPDHL

Organic growth
According to CEO Meyer, a review showed that Schenker “would not deliver the value [to the DPDHL Group] we are targeting.” Instead, the logistics giant intends to concentrate on organic growth. “This will remain our focus in the future,” emphasized CFO Melanie Kreis during the onsite press meeting held at the company’s headquarters in Bonn. For accelerating and safeguarding this growth path, the Group has EUR 3.4 billion at its disposal. However, Ms. Kreis, who is known for her conservative M&A strategy, has not ruled out future acquisitions, in particular, companies from the SME sector that should complement DHL’s business or fill existing gaps in the group’s portfolio. The takeover of logistics company J. F. Hillebrand on 23MAR23, for which DPDHL paid EUR 1.5 billion, is an example for further acquisitions. From day one, Hillebrand had specialized in transporting beverages this way closing a gap in the portfolio of the DPDHL Group. This was emphasized by Tim Scharwath, CEO DHL Global Forwarding, Freight who spoke of an important contribution to his division’s ocean freight business thanks to the Hillebrand integration.

Higher net profits expected for 2024 and the years after
With regard to DPDHL’s annual results, Melanie Kreis spoke of a setback compared to 2022, but a significantly higher level of profitability compared to the pre-Covid year 2019. This applies to all divisions, except for the Supply Chain unit that achieved an increase in volumes (+3.2%) and sales (+7.6%). In contrast, e-Commerce, Express, Global Forwarding and the Mail and Parcel business in the German home market suffered double-digit declines.

And these are the 2023 annual figures in a nutshell:
Group revenue reached EUR 81.8 billion, resulting in an EBIT of EUR 6.3 billion, which is significantly above pre-pandemic levels.
DHL Group generated consolidated net profit after non-controlling interests of EUR 3.7 billion in fiscal 2023 vs EUR 5.4 billion y-o-y. Basic earnings per share in the same period amounted to EUR 3.09, compared to EUR 4.41 in the previous year.
In 2024, an operating profit of EUR 6.0 – 6.6 billion is expected and free cash flow of approximately EUR 3.0 billion.
For 2026, the Group forecasts an operating profit of EUR 7.5 – 8.5 billion.

Markets will remain flat during H1, 2024, DHL analysts say
Upon announcement of the annual results, the board members emphasized that the year 2023 was characterized by a weak global economy and, above all, poor global trade. “Even under these adverse conditions, we achieved our targets for the year. Our high profitability allows us to continuously invest in our network, sustainability, digitalization, and our e-commerce capabilities and to further improve quality for our customers. Major uncertainty factors such as volatility in demand and geopolitical crises will remain in 2024. However, we are very well positioned for the opportunities and challenges of 2024,” pronounced CEO Meyer.

DHL Express is content although earnings went south
Despite a decline in revenue of -10% to 24.846 bn euros and an even greater slump in EBIT (-19.8%), Express CEO John Pearson was not dissatisfied with his division’s results. DHL Express is the global market leader in 219 countries, he emphasized. Cargo flights achieved an outstanding punctuality rate of 96% on average.

For 2024, he announced that every stone in the Express network will literally be turned over. This applies to cost management, revenue growth and delivery quality. A central focus is the reduction of greenhouse gas emissions. “We are the only integrator that offers customers the use of sustainable fuels for the air transportation of their shipments. In 2024, we will place an even greater focus on sustainability,” announced the Express Chief.

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