Deutsche Post DHL Group closes 2021 with record earnings
Profitable growth course continued in all divisions, the group revenue rose to EUR 81.7 billion in FY21
Deutsche Post DHL Group, the world's leading logistics company has delivered profitable growth during the past financial year. The Group revenue was up 22.5 percent year on year to EUR 81.7 billion, which is the highest revenue figure in the group's history.
While all five business units contributed to record business performance, the demand for the Group's logistics solutions reached a new all-time high last year. This was driven by the significant increase in global trade and continued strong e-commerce with further growth in shipment volumes. That in turn enabled the more efficient utilization of network capacities.
The rapid pace of development led to record earnings of EUR 8.0 billion (2020: EUR 4.8 billion) and an EBIT(Earnings before Interest & Taxes) margin of 9.8 percent (2020: 7.3 percent). The Group was thus more profitable than ever before. "We have demonstrated our full strength in demanding times and achieved a new revenue and earnings record. Never before has Deutsche Post DHL Group transported so much freight, express shipments, and parcels world wide. We also make an important contribution to society through vaccine logistics," said Frank Appel, CEO of Deutsche Post DHL Group.
Speaking on the year that went by, Appel in an interview said, "2021 was an extraordinary year. The pandemic still had a strong impact on public life and thus also influenced our business. E-commerce has continued to grow, and global trade has recovered very quickly. We profitably transported record volumes of freight, express shipments, parcels and operated more efficiently than ever before. At the same time, we helped fight the coronavirus in the second year of the pandemic with our vaccine logistics. After the first nine months, we had already exceeded the previous year's operating profit. Furthermore, we registered our best Christmas season ever in the fourth quarter of 2021. The drivers of our success are intact. In March 2021, we issued an EBIT guidance of EUR 5.6 billion for the full year; the actual figure was an outstanding EUR 8.0 billion."
Profitable growth course likely to continue in 2022For the financial year 2022, the group expects EBIT of 8.0 billion (+ / – 5 percent). The guidance is based on the assumption that e-commerce will maintain its strength and continue its structural growth after a phase of normalization. Following the dynamic recovery in global trade over the course of 2021, growth in global logistics activities will likely continue, although at a slower pace, cited a press release from the group. Intercontinental transport capacity is expected to ease earliest in the second half of 2022.
"The outlook remains positive even from the new altitude reached. For 2022, we expect EBIT of EUR 8.0 billion + / - 5 percent, while we anticipate an earnings growth to around EUR 8.5 billion until 2024. The impact of the conflict in Eastern Europe on global GDP growth and the world's transportation markets are currently hard to assess. Our priority now is to help the people in the war zone, to ensure the safety of all our employees and to keep global supply chains operating", said Frank Appel.
High investments in digitization & sustainabilityThe Group invested a record sum of EUR 3.9 billion (2020: EUR 3.0 billion) in its business, digitalization, and sustainability in 2021. Most of this gross capex went into modernizing the Express division's aircraft fleet and expanding the domestic and international parcel infrastructure to ensure the efficient handling of significantly higher transport demand. Deutsche Post DHL Group made good progress in cash generation again in 2021.
Free cash flow improved significantly to EUR 4.1 billion (2020: EUR 2.5 billion) despite higher gross capex. Without taking into account acquisitions, like the planned take-over of Hillebrand, the company expects a free cash flow of EUR 3.6 billion (+ / – 5 percent) and gross capital expenditure of around EUR 4.2 billion for 2022. These investments will continue to focus on the expansion of transport and sorting capacities for the further increase in shipment volumes as well as the further implementation of the digital transformation.
Medium-term targets & further EBIT growth forecast through 2024With the presentation of the Annual Report recently, the Group communicated its mid-term financial targets through 2024. EBIT is expected to increase to around EUR 8.5 billion in 2024. Without taking into account acquisitions, like the planned take-over of Hillebrand, the Group expects to generate a cumulative free cash flow of around EUR 11 billion in the period between 2022 and 2024. Over the same period, the company anticipates cumulative gross capital expenditure (Capex) of around EUR 12 billion.
"I am very pleased that we were able to close the third consecutive financial year with record results. We have fundamentally improved the Group's financial strength with a massive leap in growth across all financial dimensions. This strengthens our ability to pay dividends and creates opportunities for the use of excess free cash flow", said CFO Melanie Kreis.
The record performance is also reflected in significantly higher net profit. Consolidated net profit after deduction of non-controlling interests increased notably to EUR 5.1 billion (2020: EUR 3.0 billion). Basic earnings per share thus amounted to EUR 4.10 (2020: EUR 2.41).
Sustainability roadmap operationalizedLast year, Deutsche Post DHL Group defined its sustainability roadmap and set measurable non-financial targets for the fiscal year 2022 that will be taken into account in calculating the future. The Group is targeting an absolute reduction in its greenhouse gas emissions to below 29 million metric tons by 2030. In this way, concrete measures to save around 1 million metric tons of CO2 are targeted to be implemented in 2022. Further, in 2021, the Group invested EUR 156 million in decarbonization measures.
Significant revenue and earnings growth in all divisions1. Express: The Express division saw an extremely positive revenue and earnings trend in 2021. EBIT increased by 53.4 percent to EUR 4.2 billion. At EUR 24.2 billion (2020: EUR 19.1 billion), revenue was significantly higher than in the previous year
2. Global Forwarding, Freight (GFF): The division was extremely successful in overcoming the persistently challenging conditions in the international transport markets. EBIT more than doubled to EUR 1.3 billion (2020: EUR 0.6 billion), while revenue increased sharply to EUR 22.8 billion (2020: EUR 15.8 billion).
3. Supply Chain: Reliable supply chains were in very high demand in 2021. The division posted a significant jump in earnings to EUR 705 million (2020: EUR 424 million) based on an increase in revenue to EUR 13.9 billion (2020: EUR 12.5 billion) and continued efficiency improvements.
4. eCommerce Solutions: The division more than doubled its earnings in 2021. EBIT came in at EUR 417 million (2020: EUR 158 million), driven by the rapid pace of growth for shipment volumes in e-commerce. Almost all regions posted double-digit growth rates, with particularly strong volume development in the Netherlands and India.
5. Post & Parcel Germany: The division successfully increased earnings and revenue, with EBIT up significantly to EUR 1.75 billion (2020: EUR 1.6 billion). Post & Parcel Germany transported a record volume of more than 1.8 billion parcels in 2021 (2020: 1.6 billion parcels).