The DHL Group is raising its mid-term targets further after reporting record earnings as it anticipates the structural growth in e-commerce and rises in shipment volumes in national and international parcel business to continue.

In a statement, it said operating profit (EBIT) is projected to increase to more than EUR 5.6 billion in 2021, and an improvement to more than EUR 6 billion earlier planned for 2023. The number of its employees is also anticipated to increase to 570,000 worldwide.

“2020 was an exceptionally challenging year for Deutsche Post DHL Group. Our services were in demand more than ever. We not only posted record earnings but also created 20,000 new jobs worldwide ... we focused on our profitable core logistics businesses by consistently aligning our company towards e-commerce and investing in our logistics network and digitalization,” said Frank Appel, CEO of Deutsche Post DHL Group.

Continuation of profitable growth trajectory expected

For the financial year 2021, the Group anticipates a further significant increase in EBIT to more than EUR 5.6 billion — the guidance it said, is "based on the assumption that e-commerce will continue to grow in the current year from a structurally higher starting point, while growth rates should normalize in the course of the year."

"World trade is also likely to recover further during 2021, leading to increased volumes in our global logistics activities. At the same time, intercontinental transport capacities are expected to remain limited due to the slow recovery of belly space cargo capacities in passenger aircraft," it added.

For 2021, DHL said the company is also forecasting gross capital expenditure of around EUR 3.4 billion for investments focus on modernizing the aircraft fleet at Express and expanding the national and international parcel infrastructure to efficiently handle rising shipment volumes as well as on the continued digital transformation. 

DHL said as announced, the Group updated its medium-term financial targets each year and has now extended its guidance to 2023.

In January the company had raised its previously announced medium-term targets for the period through 2022 in light of its positive business performance.

"EBIT is targeted to increase to more than EUR 6.0 billion in 2023. The Group plans to generate a cumulative free cash flow of EUR 7.5 to 8.5 billion between 2021 and 2023," from an earlier forecast of EUR 6 billion from 2020 to 2022.

“The strategic investments in our core business and the digitalization of Deutsche Post DHL Group are paying off. Our fundamentally improved position is also reflected in the raised medium-term targets. The structural improvement in cash flow increases our investment power and dividend payment ability”, said CFO Melanie Kreis.

Growth in e-commerce anticipated 

DHL said it expects positive performance in all its divisions with e-commerce set to record the biggest expansion. 

"In 2020, shipment volumes grew significantly faster than expected in all regions, especially in B2C e-commerce. With the impact of the pandemic varying considerably in some regions, the division recorded particularly dynamic volume growth in multiple countries in Europe and the United States," DHL said.

It noted that aside from "very good" revenue trend, improvements in cost management led to efficiency increases. DHL said the EBIT margin of the Group’s youngest division finished with 3.3% from -1.3%, moving to the positive territory for the first time.

"Strong growth in revenue and earnings was driven by a substantial increase in parcel volumes, with a record volume of more than 1.6 billion parcels," DHL said. "The long-term trend toward rising parcel volumes accelerated significantly with volume growth of 15.3% in 2020 and will normalize in the future from this elevated base."