Record results for DHL but uncertain times lie ahead

Deutsche Post DHL Group’s record results for 2021 were scant comfort against the background of the war in Ukraine, said group chief executive Frank Appel. “We can no longer take peace in Europe for granted,” he told a press conference on March 9.

He told the gathering that everyone at DHL was clearly shocked by the turn of events and was doing everything they could to support its 400-450 Ukraine-based staff. In answer to a question, he said he did not know how many of the group’s 400-450 employees in Ukraine had returned to their home country or what their fate was.

DHL did benefit from the e-commerce boom and the global economy’s swift recovery from the Covid crisis. Revenue is a third bigger than it was before Covid in 2019 and, said Appel: the Group “achieved the best performance in the company’s history”.

Group revenue rose to €81.7 billion in the 2021 financial year, operating profit hit €8.0 billion – up 65% – and free cash flow almost doubled to €4.1 billion.

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

Now, though the future is very uncertain, depends on the progress of the war and whether the world can avoid a global recession.

Appel said that the Ukraine war could hit consumer confidence and there is already a significant effect on fuel prices, coupled with the need to avoid Russian airspace and hence longer sector times between Europe and Asia.

The loss of business in Russia and Ukraine is however limited – the two countries make up less than 1% of the group’s total revenues though the war’s effect on the global economy was clearly of great importance.

Appel said DHL’s Express and Global Forwarding arms would be most affected by the increase in fuel prices, with express shipments already subject to a fuel surcharge.

DHL is continuing to operate postal and courier services to the Ukraine border with local carriers taking over from there, but business volumes have shrunk some shipments, mostly humanitarian supplies such as medicines were also still moving into Russia but the future of DHL’s wholly-owned Russian subsidiary and its 3,500 employees had yet to be decided, he added.