Record results for DHL – but uncertain times ahead

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Against the background of the war in Ukraine, Deutsche Post DHL Group’s announcement of record results for 2021 – which would be major news under almost any other circumstances – seemed almost irrelevant.

At a press conference on 9 March, group chief executive Frank Appel said that everyone at the company was clearly shocked by the outbreak of war in Europe and was doing everything it can to support its staff there.

However, in 2021, DHL benefited from the boom in E-commerce and the global economy’s swift recovery from the Covid crisis. In fact, said Appel: “In a challenging year, we achieved the best performance in the company’s history.”

However, the future is now uncertain. Much depends on the progress of the war and whether the rest of the world can prevent it from triggering a global recession.

DHL’s figures showed group revenue rising to €81.7 billion in the 2021 financial year, operating profit reaching €8.0 billion – up 65% – and free cash flow almost doubling to €4.1 billion.

The board is proposing an increase in dividend to €1.80 per share and has proposed a new €2bn share buyback program.

Revenue is in fact a third bigger than it was before Covid in 2019.

Appel predicted that the Ukraine war could slow down consumer demand and there would of course be a significant effect from increased fuel prices and the need to avoid Russian airspace, leading to longer sector times on routes between Europe and Asia.

But the immediate impact of the war is limited. Russia and Ukraine together account for less than 1% of the group’s total revenues; of greater importance was the effect on the global economy.

DHL’s Express and Global Forwarding arm would be most affected by the increase in global fuel prices. Express shipments are already subject to a fuel surcharge, but there was no similar mechanism for road freight, said Appel.

In answer to a question, he added that he did not know how many of DHL’s 400-450 employees in Ukraine had returned to their home country or how they were faring.

DHL was operating postal and courier services to Ukraine’s border with local carriers taking over from there, although volumes were clearly depressed.

A few shipments, mainly humanitarian supplies such as medicines were still moving into Russia, with the cooperation of the authorities there, Appel added. The future of DHL’s wholly-owned Russian subsidiary and its 3,500 employees had yet to be decided, he added.

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