DHL Group: Lower 2025 Outlook And Uncertainty Ahead (Rating Downgrade)

2025-03-24 02:08:56 ET

Summary

• DHL plans to cut 8,000 jobs in Germany by 2027 to save over €1 billion. A Post & Parcel spin-off is not planned.
• There are signs of a US economic slowdown, as the country accounts for 20% of DHL's top-line sales. However, tariffs and trade wars are not included in the yearly outlook.
• Valuation is aligned with the historical average and considers lower profits. We moved our rating to neutral.

After reporting a drop in profits in 2024, the German logistics player DHL Group ([[DPSTF]], [[DHLGY]]) has announced a plan to cut 8,000 jobs this year as part of a strategy aimed at saving over €1 billion by 2027. Since September 2023, the company has been a strong buy backed by 1) Solid Results Above Pre-Pandemic Levels , 2) exogenous phenomena upside, and 3) a right capital allocation priorities combined with a prudent management approach. As reported in our follow-up note on E.ON, we believe DHL (and the German public equity market) was positively impacted by the CDU/CSU victory, boosting investor sentiment. More importantly, the parliament is lifting a foot off its debt ceiling and also passing a historic spending bill to finance billions of euros in infrastructure & defense. DHL's share price was positively impacted by macro news; however, with a 2025 lower guidance and considering slower profit growth due to weaker demand and supply chain disruptions, we are less optimistic about the German logistic company....

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