German transport and logistics giant Deutsche Post DHL Group (OTCUS: DPSGY) reported on Wednesday lower results in its fiscal 2023 first quarter, with revenue of $23.1 billion, down from $24.94 billion in the same period a year ago, operating profit down 24.1% to $1.77 billion and operating margin down to 7.8% from 9.6%.
The marked slowdown in the global economy hit its two largest divisions: DHL Express, the time-definite air operation, and DHL Global Forwarding, the air and ocean freight forwarding division. Revenue in Express declined 1.4% to $6.96 billion, driven by a decline in time-definite volumes. Excluding the tailwind of higher fuel surcharges in the quarter, revenue fell 4.7%.
Revenue in Global Forwarding fell 25.5% to $6.07 billion, as slowing volumes and lower rates took their toll. Air freight forwarding volumes were hit hardest on the trans-Pacific and Asia- to-Europe routes. In ocean freight, lower volume was due to a volume of decline in trade routes from China.
DHL Supply Chain, the world’s largest contract logistics provider, increased revenue by 7.7% to $4.97 billion, with gains posted across the board.
The full-year EBIT forecast is based on three macro scenarios: In the case of a strong recovery commencing by midyear, earnings before interest and taxes should come in around $7.7 billion. In case of a recovery tilted toward year-end, EBIT will come in at $7.1 billion. In case of no meaningful recovery, EBIT should come in at least at $6.6 billion.
Melanie Kreis, the company’s CFO, said in an internal Q&A that at the start of the year, the company saw business-to-business volumes begin to slow and international markets normalize in the face of weaker demand.
“At the same time, inflation has weakened consumption and dampened online commerce,” Kreis said.