Deutsche Post AG

XETRA:DPW

Earnings Call Analysis

DHL Q2'23 Performance Nudges Past Expectations

DHL Group's Q2'23 earnings revealed stability amidst an unsupportive macroeconomic environment, with a steady B2B volume and stronger-than-expected B2C demand, reflecting the robustness of e-commerce. The company achieved a half-year EBIT of EUR 3.3 billion, slightly surpassing market expectations. Divisionally, Express continued its impressive mid-teens margin performance, DGF showed resilience with strong numbers, and Supply Chain demonstrated year-over-year growth. Revised full-year guidance for Post & Parcel (P&P) in Germany is set between EUR 800 million to EUR 1 billion, aligning with consensus. Overall, the Group's guidance has improved, with the lower end raised, projecting a midpoint of EUR 6.5 to EUR 6.6 billion EBIT, indicating effective cost and yield management.

DHL Shows Financial Resilience Amid Unfavorable Macroeconomic Conditions

DHL Group's Q2 performance reveals a company that navigates through challenging macroeconomic conditions, defined by a lack of significant cyclical support. Despite this backdrop, the group demonstrates financial resilience, particularly in its B2C segment, where the persistent strength of e-commerce continues to buoy volumes. B2B volumes have stabilized, mirroring levels seen in Q1. This balance of performance between the two sectors underscores both the capabilities of DHL's diverse operational strategy and the enduring demand for e-commerce, which supports the group's success during the quarterly period.

Q2 Financial Highlights Signal Steady Growth

The group's EBIT of EUR 3.3 billion for the first half of the year slightly surpasses analyst expectations, signaling a modest but important prosperity for investors. The Express division upholds a robust mid-teens margin, reflective of its operational efficiency and market strength. DGF, DHL's freight division, also posts impressive numbers that compare favorably to its peers. The Supply Chain division continues its commendable performance, achieving year-over-year earnings growth in Q2. P&P in Germany is forecasted for a stronger performance in the second half, with the full year outlook adjusted to EUR 800 million to EUR 1 billion. This projection aligns with the current consensus, indicating a careful but optimistic forecast based on existing data.

Guidance Upgraded on Solid First-Half Performance

In light of DHL's first-half achievements, which highlight the company's cost and yield management effectiveness, the guidance for the full year has improved. The group's previous estimates contemplated three different macro scenarios. With the newly updated guidance, the bottom range has been lifted, now placing the midpoint at EUR 6.5 billion to EUR 6.6 billion. This upgrade in guidance offers an encouraging sign for investors, implying that DHL not only manages to meet expectations but can also adeptly adjust its strategy in real-time to deliver financial growth even in less than ideal economic circumstances.

Engagement Opportunities for Stakeholders Provide Insight Beyond Earnings

Stakeholders looking to delve deeper into DHL Group's operations and future outlook have opportunities to engage with the company. Interested parties are encouraged to follow DHL Group's IR updates on their LinkedIn account or participate in their roadshows. This level of transparency and engagement offers additional context and insight into the company's strategic direction, beyond what is gleaned from the earnings figures alone.

Earnings Call Transcript 2023-Q2

[Martin Ziegenbalg, executive]

Thank you for clicking and your interest in the Q2 '23 IR video on the DHL Group Q2 performance.

Well, as expected, in terms of macro backdrop in the second quarter, we have seen little or no meaningful cyclical support materializing yet.

In volume terms for our group, this means in B2B, we have seen a stabilization of volumes on the level reached during Q1. In B2C, you can already see the structural strength of the e-commerce theme as volumes are holding up certainly better than in B2B.

In terms of group earnings, the second quarter brings half year EBIT to EUR 3.3 billion, so slightly ahead of sell-side expectations.

What does it mean on a divisional level? Express has maintained its strong mid-teens margin. DGF is reporting a strong set of numbers, which also measures up well against recent peer reporting. Supply chain is continuing its role of growing earnings year-over-year also in the second quarter.

P&P in Germany is now ahead of a stronger second half of the year. We have adjusted the full year outlook to EUR 800 million to EUR 1 billion, so still capturing current consensus expectations.

Talking about guidance overall for the group, all 3 macro scenarios remain in place. However, given the good performance in the first 6 months, proving the effectiveness of our cost and yield management, we have lifted in the bottom end of the range, bringing the midpoint guidance now from EUR 6.5 billion to EUR 6.6 billion.

So summer is still going on until September. If you want to follow us and what we are hearing back in the roadshow season now ahead of us, you can follow us on our DHL Group IR, LinkedIn account. Looking forward to see you as a new follower or in person. Bye-bye.