DPSTF - Deutsche Post AG (DHLGY) Q4 2023 Earnings Call Transcript

2024-03-06 16:39:03 ET

Deutsche Post AG (DHLGY)

Q4 2023 Results Conference Call

March 06, 2024 3:00 AM ET

Company Participants

Martin Ziegenbalg - Head of IR

Tobias Meyer - Group CEO

Melanie Kreis - Group CFO

Conference Call Participants

Muneeba Kayani - Bank of America

Tobias Fromme - AB Bernstein

Sathish Sivakumar - Citigroup

Andy Chu - Deutsche Bank

Parash Jain - HSBC

Samuel Bland - JPMorgan

Johannes Braun - Stifel

Sumit Mehrotra - Societe Generale

Nikolas Mauder - Kepler Cheuvreux

Patrick Creuset - Goldman Sachs

Presentation

Martin Ziegenbalg

Thank you, and good morning to everyone out there. We're going to do this in a straightforward fashion. I've got here with me, as announced, Tobias Meyer, Group CEO, and the Group CFO, Melanie Kreis. Both going to take you through the presentation, I take you have in front of you. And then we're going to deal with Q&A.

And with that, over to you, Tobias, please.

Tobias Meyer

Good morning, everybody. Thanks for joining us today for our full year 2023 update, especially with a focus also on the fourth quarter, starting with the headlines on Page 3 of the presentation. We finished the year within our guidance range. And particularly on cash flow, I think we delivered very well also because we spent less CapEx in those areas where growth was a bit weak. I think we can say that the Q4 was characterized by still a relatively soft environment both on the macroeconomic level but also as it relates to global trade, which obviously for us is even more relevant. GDP is an important indicator, but trade is what really matters for us.

And especially on the B2B side, we see continued softness, but we can also say that the structural eCommerce trend is clearly reestablished after the short normalization phase after the pandemic. And we also make good use of technology to drive yield management, better efficiencies and also sustainability and provide some more details on this during this presentation. So the self-help journey in some of our divisions is still very well underway, but we are lacking a bit the support of a reinvigorated global economy. This is also what you see on Page 4 where we take a look at our B2B volumes. You see that across Express, air freight and ocean freight we are still below 2019 levels, especially also in Express, and we haven't really seen a recovery in Q4. We were flat on average or across the Express network in terms of shipments. Now, if we look at it a bit deeper, you will see that there was quite some weakness in Europe, whereas that also had an impact on our network.

And the flow-through air freight is very much I think reflecting the market. And then ocean freight, we basically see a bottoming out and into this year maybe a little bit of growth, which is not yet the case for Express and air freight. So we also see that this year of 2024 is up to a relatively slow start. So that is what we are currently seeing, but we also clearly still expect that we have a better second half where also the comparables become much easier for us given that the second half of 2023 was already quite soft. On Page 5 you see the B2C picture that we hear kept a lot of this enormous upswing during the pandemic. B2C shipments in Express, for instance, up 45%.

So that is something that continues to provide growth. We've also, in Q4, seen a peak mainly out of China, which for us is a lane that isn't as profitable and accretive as other parts of the network. So that peak we would've liked to see a little bit broader, but again that wasn't happening due to the overall macro picture. In eCommerce, we continue to trade up. It's also the case for our business in Germany. Again, that trend towards a higher share of online is fully reestablished and intact for P&P, Post & Parcel Germany.

We have to keep in mind, if we look at this full year graph that we had also the Amazon insourcing, which created that stronger dip post pandemic, that is entirely absorbed and we are back there on a trajectory of growth. Page 6 lays out some of those measures and tools that we use to manage yields. That is very well established in Express, but also in Parcel Germany, and increasingly so in our eCommerce division. It is also increasingly irrelevant for our B2B business where we apply methods like this as well. And in Supply Chain, we can really say that the investments in technology, in the quality that technology also helps us produce is translating into higher GP and more flow-through. So that is a journey that we feel very confident about....

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