DHL beats profit forecasts aided by cost and capacity management
Quarterly Performance and Strategic Management
By Matthias Inverardi and Amir Orusov
April 30 (Reuters) - German logistics giant DHL reported a higher-than-expected quarterly operating profit on Thursday, as capacity management and structural cost improvements helped it weather geopolitical uncertainty stemming from the Middle East conflict.
Analyst Expectations and Market Context
Analysts were expecting European logistics companies' earnings to benefit from higher freight rates and supply chain complexities amid the U.S.-Israeli war with Iran, with DHL seen as a key beneficiary due to the expected spillover effect from sea to air freight.
Company Response to Geopolitical Uncertainty
But the German company is taking a slightly more conservative approach for now, given uncertainty over how the conflict could affect its business, CEO Tobias Meyer told reporters.
The impact of the war on the first-quarter results was limited, with higher fuel costs having been passed on to customers, Meyer said.
Maintaining Supply Chains Amid Disruption
"Despite blocked sea routes and closed airspace, we keep cargo moving and our customers' supply chains running," Meyer said in the earnings statement that also confirmed DHL's full‑year guidance.
European airlines warned of potential jet fuel shortages within weeks after the conflict disrupted supplies through the Strait of Hormuz. DHL remains optimistic, however, as it has been in "very good talks" to secure fuel supplies for the coming months, Meyer said in the media call.
Financial Results and Cost Management
Operating Profit Beats Expectations
OPERATING PROFIT BEATS EXPECTATIONS
DHL's quarterly earnings before interest and taxes of 1.48 billion euros ($1.73 billion) beat analysts' average forecast of 1.38 billion in a company-provided consensus. Operating margin rose to 7.3%, from 6.6% in the same period last year.
Revenue Growth and Market Reaction
Organic revenue grew 2% in the quarter, slightly slower than the 2.4% growth a year ago, when the company saw strong front-loading demand ahead of U.S. import tariffs.
The results demonstrated a strong outperformance despite a volatile environment, J.P. Morgan said in a note to investors. DHL's shares rose 2% in the first hour of trading.
Cost-Cutting Initiatives
DHL a year ago launched its largest cost-cutting programme in two decades, as it sought to protect margins against trade disruptions.
($1 = 0.8573 euros)
(Reporting by Amir Orusov in Gdansk and Matthias Inverardi in Duesseldorf, editing by Milla Nissi-Prussak)