Logistics giant, DHL, intends to significantly expand its business within the next five years and beyond. The ambitions are specified in a new scheme called ‘Strategy 2030 – Accelerate Sustainable Growth’. Its key points were presented to the media last Tuesday (24SEP24) by Group CEO, Tobias Meyer and CFO, Melanie Kreis.
It is the logistics heavyweight’s third strategy, after the ‘2020 – Focus Connect Grow’-scheme aimed at improving quality, followed by the ‘Strategy 2025’ that promised ‘Delivering excellence in a digital world’. In its new action plan stretching until 2030, management intends to increase revenue by 50% compared to 2023, to surpass 120 billion euros annually. In fiscal 2023, the Group generated revenue of just under 82 billion euros.
“We want to grow faster and more profitably, and significantly exceed the global gross national product,” stated Group CEO, Tobias Meyer, when presenting the plans on 24SEP24. The aim is to gain market share in the logistics sector. This is to be achieved primarily by expanding business in the pharmaceutical and healthcare sectors as well as in the energy sector.
Stark e-Trade
However, in the coming years, online retail will continue to be the most important contributor to DHL’s service portfolio offered to the markets. According to Meyer, more than a quarter of the Group’s revenue is already linked to e-Trade.
But much sought-after products are fast gaining ground. In its 2030 strategy, DHL has put the pharmaceutical industry in the spotlight, which it defines as a thrilling growth market. Specialized logistics solutions such as temperature-controlled deep-freeze or cryogenic storage, are a requirement for providing customers with tailored services. The company also wants to capture market shares in the business with renewable energies and the transformation of the automotive industry from fossil to electric vehicles and provide first-class services for battery storage systems and wind turbine blades.
Organic growth beats M&As
The sales targets are to be achieved primarily through organic growth, Mr. Meyer said. He did not rule out acquisitions, but only in cases where takeovers strengthen the company’s own business areas and accelerate the targeted growth. This particularly applies to potential candidates that promote DHL’s growth in niche markets and widen its regional presence. Asked by CargoForwarder Global whether the looming takeover of Schenker by DSV would trigger a new wave of mergers and acquisitions in global logistics, Meyer replied cautiously. “I can’t say that, today. But some customers will certainly ask themselves whether the structure resulting from the merger will still suit their expectations and needs.”
Further to this, the executive announced that DHL intends to focus on fast-growing regions such as India, Southeast Asia, Africa, the Middle East, and Mexico. He did not mention China at all.
Targeting SMEs
According to Mr. Meyer, the e-Commerce business accounts for 28% of his Group’s total sales. 70% of corporate customers said that digital channels contributed 40% to their revenue. In this context, the executive announced that DHL would be setting up special courier services for the first and last mile.
As far as customers are concerned, he sees growth potential above all in small and medium sized enterprises (SME) whose core business is e-trading in line with producers of industrial goods that want to grow internationally.
DHL will consistently adhere to its goal of decarbonizing all business processes. “Today, we are still pouring money into it, as the number of customers who are contributing to the additional costs is manageable. In the longer term, however, green transport chains are a competitive advantage,” the DHL boss emphasized.
Kreis promises reliable dividends
DHL manages five business units: the transportation of time-critical documents and goods (DHL Express), the international transport of consignments by air, ocean and land (DHL Global Forwarding, Freight), supply chain solutions (DHL Supply Chain), national parcel transport outside Germany (DHL e-Commerce), and the transport of letters and parcels in the domestic German market (Post & Paket Deutschland). He indicated that the e-Commerce and Post & Parcel Germany divisions are to become independent entities. CFO, Melanie Kreis pointed out to shareholders that DHL is aiming for a payout ratio of 40-60% of adjusted net profit. For shareholders, this means that they can count on reliable dividend continuity. This news should also please the German government. The state holds a 16.99% stake in DHL/Deutsche Post via KfW Development Bank.
