Deutsche Post DHL reports strong 2022 results, moderating Q4 performance

German transport and logistics giant Deutsche Post DHL reported Thursday somewhat slack fourth-quarter 2022 results as macroeconomic growth slowed. However, the numbers did little to obscure the strong year that the company experienced.

In the fourth quarter, total revenue came in at $24.7 billion (23.77 billion euros), a 1.7% year-on-year gain. Profits from operating activities dropped 13% to $2.02 billion. Diluted earnings per share was $1.15, a 7.6% year-on-year decline but above analysts’ estimates of $1.02 per share.

Like virtually every transport and logistics provider, Deutsche Post DHL was affected by a more muted peak season than in 2021 as customers dealt with bloated inventory levels and end customers’ were concerned about inflation. A company spokesman said the quarter was still solid in absolute terms and reflects more the unusual environment of 2021 than last year’s.

For the year, revenue for the five-unit group came in at $99.75 billion, a 15.5% year-on-year increase, the company said. The revenue jump was due entirely to increases in the international businesses of the five divisions, even though fourth-quarter global trade and e-commerce activity slowed as international shipping and e-commerce activity normalized considerably.

The company posted a record full-year operating profit of $8.9 billion, up from $8.45 billion in 2021.

Deutsche Post DHL (OTCUS: DPSGY) said it leveraged its diversified global network to offset the impact of a decline in volumes from an all-time high in 2021. Deutsche Post operates time-definite air express, air and ocean freight forwarding, the world’s largest contract logistics provider, an e-commerce solutions provider and an intra-German mail and parcel division.

The company is considered the most diversified of any in the transport and logistics business, a testament to the efforts of CEO Frank Appel, who steps down this May after 15 years at the helm.

Deutsche Post DHL said it experienced strong tailwinds in the first half of 2022 from surging demand for its contract logistics services, as well as high air and ocean freight rates. 

DHL Express, the company’s time-definite air division and its largest, posted a 2.5% fourth-quarter revenue gain to $7.44 billion. The freight forwarding unit reported revenue of $7.18 billion, down 4.6% from the 2021 period. The DHL Supply Chain contract logistics arm reported a 19.4% top-line gain to $4.6 billion. The e-commerce solutions division posted revenue of $1.8 billion, up about 2% year on year.

The company laid out three scenarios for 2023 guidance depending on macroeconomic factors: None of the scenarios will result in the company achieving the operating income levels of 2022, however.

In a scenario of a favorable recovery starting around midyear, the group expects operating profit of about $7.39 billion. Less favorable scenarios will result in operating profits of $6.86 billion or $6.33 billion, respectively, the company said. 

“The slowing macroeconomic growth momentum is reflected in our [earnings before interest and taxes] outlook,” said CFO Melanie Kreis in a statement accompanying the results. The company uses EBIT as its gauge for operating income.

The company has targeted $8.9 billion in EBIT to support its 2025 outlook. It did not include 2024 projections in its public multiyear forecast.

Free cash flow — excluding mergers and acquisitions — came in at $4.86 billion, exceeding expectations, the company said. Deutsche Post said it has proposed a modest increase in its annual dividend to $1.95 per share from about $1.89 per share, as well as a $1.6 billion increase in share buybacks between 2022 and 2024.

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