DHL will be cutting around 8,000 jobs in Germany this year as part of its strategy to save over €1 billion (S$1.44 billion) by 2027. The job cuts, affecting more than 1 per cent of its global workforce, will happen in the Post & Parcel (P&P) Germany division through attrition, CEO Tobias Meyer said in a Reuters interview on Thursday (March 6).
The decision follows a 7.2 per cent drop in DHL’s annual operating profit. The decline comes as the logistics industry is expected to see weaker profit growth.
Before the drop was announced, Parash Jain, HSBC’s global head of transport and logistics research, said this is due to a normalisation of yields, lower demand, and easing supply chain disruptions.
Mr Jain expects logistics companies to cut costs, with global container trade and air freight volume growth likely to slow by half in 2025.
On Tuesday, DHL’s shares fell nearly 11 per cent. Over the past year, it has underperformed compared to the broader logistics sector.
According to Mr Meyer, despite struggles with rising costs and declining letter volumes, there are no plans to separate the P&P division. While Germany’s network regulator approved new stamp price guidelines, Mr Meyer said they are not enough to resolve these challenges.
He pointed to the recent wage agreement with the Verdi labour union as a key reason for the job cuts, adding that the 5 per cent pay rise and extra holidays will cost DHL around €360 million by the end of 2026.
In 2024, the company reported €5.89 billion in earnings before interest and tax, exceeding analysts’ expectations of €5.81 billion. For 2025, the company expects to make over €6 billion in operating profit, lower than the €6.29 billion analysts predicted. This does not factor in possible tariff or trade policy changes.
DHL plans to keep its investor return strategy, keeping its dividend at €1.85 per share for 2024. It is also adding €2 billion to its share buyback programme, bringing it up to €6 billion and extending it until 2026.
Mr Meyer said in an interview with CNA’s Roland Lim that DHL had a “relatively soft” start to 2024 but saw “positive momentum” as the year progressed. While DHL’s annual operating profit fell, its fourth-quarter revenue grew 6.4 per cent to €22.7 billion, with operating profit rising 12.9 per cent to €1.9 billion.
When asked if DHL’s clients are “changing tack” due to the ongoing China-US trade war, Mr Meyer said it has observed manufacturing shift to places like Vietnam, which is playing a bigger role in electronics.
To better serve Chinese customers, DHL has been relocating Chinese staff abroad to destinations in Europe, Southeast Asia, and Latin America under its “China Plus One” strategy. He said, “We do see Chinese companies internationalising as European companies have 50, 60 years ago. And that’s something that I think generally is positive, and we want to be part of that.”
He added that DHL aims to help customers grow their distribution and manufacturing, including setting up electric vehicle plants in Europe. /TISG
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