Deutsche Post DHL Group achieved record growth in 2022

Deutsche Post DHL Group reported record revenue and EBIT for 2022, which it said was helped by strong growth in international express, freight, supply chain and e-commerce, offsetting a decline in its domestic mail and parcel business in Germany.

Operations and digital investment hit a new high

In 2022, the group's revenue was 94.4 billion euros, up 15.5% from the previous year's record. Although global trade and e-commerce also gradually returned to normalisation in 2022 as the coronavirus epidemic was gradually brought under control, growth momentum slowed in the final quarter of last year. As a result, the jump in group revenue came almost entirely from the contribution of DHL's flexible international business across its divisions. Business volumes for 2022 were slightly below the all-time high for 2021. The company also benefited from increasing demand for its flexible supply chain services from contract logistics customers, especially in the first half of last year, when the company benefited from high rates in the freight business.

Group earnings before interest and tax (EBIT) reached 8.4 billion euros last year and 8 billion euros in 2021. The key driver continues to be the profitable growth of the DHL division operating globally, with DHL generating EBIT of around €7.6 billion and €6.6 billion in 2021. Earnings before interest and tax at Deutsche Post and Parcels were 1.3 billion euros, about 500 million euros less than the previous year. The EBIT margin for the group as a whole was 8.9%, compared to 9.8% in 2021. Group net income increased from €5.1 billion in the previous year to €5.4 billion in 2022.

In a complex global economic situation, Deutsche Post DHL Group invested a record 4.1 billion euros in its operating businesses as well as in digitalisation and sustainability in 2022 and 3.9 billion euros in 2021. The Group has made progress in expanding its electric fleet, increasing the number of electric vehicles worldwide by 7,000, bringing the total to nearly 30,000. It is also investing in its growing e-commerce business to improve its sorting capabilities and the quality of its e-fulfillment services. Investments in automation have made companies more efficient.

Last year, the group's free cash flow reached an all-time high of €4.6 billion (excluding acquisitions), and in 2021 it will be €4.1 billion.

The DHL business contributed the most revenue

Among the group's five main business units, DHL Express revenue increased from €24.2 billion in 2021 to €27.6 billion in 2022. Higher pricing, currency effects and an increase in fuel surcharges also contributed to revenue growth. The increase in average weight per unit shipment had a positive impact on its revenue growth, but DHL Express revenue growth was slowed by a decrease in international time-limited express (TDI) shipments.

Overall, due to increased costs and negative exchange rate effects, DHL Express EBIT decreased by 4.6% year-on-year to 4 billion euros, and profitability remained at a high level.

DHL's global freight division saw a significant jump in revenue and earnings in 2022, driven by operational improvements and higher freight rates. Ebit rose sharply to €2.3bn, almost double the previous year. Revenue jumped significantly to 30.2 billion euros, compared to 22.8 billion euros in 2021. Air freight volumes fell 9.3 per cent year on year, while road freight volumes fell 4.8 per cent. On the sea side, traffic increased by 4.8% due to the integration of logistics company Hillebrand. The global freight segment's EBIT margin improved to a high 7.6%.

In 2022, the global demand for reliable supply chain services increased, and DHL Supply Chain's new business recorded its strongest ever revenue of €1.5 billion, compared to €1.4 billion in 2021. The total revenue of this business unit increased to €16.4 billion, compared with €13.9 billion in 2021. Ebit reached a high level of €893 million, compared to €705 million in 2021, and EBIT margin increased to 5.4%. The division's performance was enhanced by process specifications and multiple digitization and automation projects, which further improved efficiency. The DHL supply chain has further enhanced its dedicated electronic fulfillment service. In the fourth quarter of 2022, the company acquired a majority stake in the Dutch company Monta, aiming to further accelerate the growth of e-commerce.

Following strong growth in the previous year, DHL's e-commerce Solutions segment maintained a high level of revenue in 2022. Revenue climbed to 6.1 billion euros, compared with 5.9 billion euros in 2021. This was mainly driven by higher pricing. As expected after the COVID-19 pandemic, business volumes are reaching their previous normal levels, down 6.3% from the previous year. Its parcel volume in India has grown significantly. The segment's 2022 EBIT was €389 million, slightly lower than 2021.

In contrast, revenue and earnings at its domestic post and parcel company in Germany remained below 2021 levels. Revenue fell to €16.8 billion, compared with €17.4 billion in 2021. This was mainly due to the return of parcel volume to normal from the high level during the pandemic, while the price adjustment of the letter and mail business was limited. Overall, parcel volume in the sector was down 8.3 per cent from the previous year. This decline is not surprising, given the severe impact of the epidemic, especially the decline in business volumes in the first half of last year, the volume of letters once again showed a structural decline, down 0.7%. In addition, increased costs due to the significant increase in energy prices had a negative impact on earnings. Ebit fell sharply to €1.3 billion, compared with €1.7 billion in 2021.