The postal group DHL’s business in Germany is picking up, while other areas of the group are not doing well. Sales in the Post & Parcel Germany division increased by 2.8 percent to around 8.4 billion euros in the first half of 2024, the group, which has almost 600,000 employees worldwide, announced in Bonn. The operating result (EBIT) increased by almost a quarter to 324 million euros. One reason for the better business was the high demand for parcels.

The Express division, which has its focus abroad and has long been significantly more important for the logistics company than its core domestic business, was weakened: Express’s operating result fell by more than a quarter to 1.3 billion euros.

Express shipments are more expensive than normal letters and packages, delivery is faster and customers are guaranteed a specific delivery window. Companies in particular use express services to send important documents or urgently needed spare parts. As the global economy weakens, express business is doing worse. The logistics company’s separate freight business also developed negatively.

Across all divisions, the group achieved sales of 40.9 billion euros in the first half of the year – a decrease of 0.3 percent compared to the same period last year – and an operating result of around 2.7 billion euros (minus 20.1 percent).

Letter volume decreases in the Internet age

The core domestic business now plays only a minor role for DHL, which used to be called Deutsche Post. In the digital age, demand for letters continues to fall; last year the drop in the volume of shipments was around six percent. After all, booming online trade is a growth driver for the separate parcel business.

The dark clouds in the core business are now clearing somewhat. Thanks to the recently completed reform of the postal law, DHL will soon be able to save costs: the legislator has reduced the time pressure for letter delivery.

Letter delivery changes

From January, 80 percent of letters will no longer have to reach the recipient on the next working day. Instead, 95 percent will have to arrive on the third working day after they have been posted – on average, the majority of letters will be allowed to take two working days longer than before.

Does this mean that the postman will appear on the street less often in the future than before? CFO Melanie Kreis says that they are currently working on a new delivery system. They want to bundle the mail more closely. According to her, this could mean that the postman will no longer put advertising letters in a mailbox every day, but will wait until several advertising letters have accumulated.

Postage will probably become more expensive

Consumers can also expect postage to rise in January – that is almost certain. A standard letter within Germany currently costs 85 cents, but in January it could rise to one euro.

However, this is not certain, as the Federal Network Agency is still carrying out a calculation process to determine a price increase corridor. The post office can then use this to calculate the postage for different types of shipments. A decision is expected to be made in the autumn.

Core business should make more profit

The legal reform and the foreseeable postage increase ensure that the core business is becoming more attractive for DHL again. The company is confident that thanks to the new framework conditions, it will post more than one billion euros as operating profit in the Post & Parcel Germany division next year, says Chief Financial Officer Kreis. In 2023, it was 870 million euros and this year it is expected to be more than 800 million euros.

A higher operating result is important in order to be able to invest sufficiently in climate-friendly technology and other measures. The Post & Parcel Germany division is not expected to make a “major contribution” to the dividend, says Kreis. “But it has to earn what it wants to invest, and to do that we have to get over a billion.”