Analyst Note| Matthew Young, CFA |
Narrow-moat Deutsche Post DHL’s second-quarter organic revenue expanded a solid 25% year over year, with all segments contributing meaningfully. Small-parcel B2C volumes are now facing very tough comparisons, but underlying demand remains quite healthy thanks to the secular e-commerce shift, with high volume levels likely to remain in place. Recall that the pandemic has driven a surge in residential package-delivery demand over the past year for DHL’s German parcel business, the eCommerce Solutions segment, and Express (robust Asia-Pacific TDI activity), while reviving global trade. Of note, B2B shipments are now bouncing back nicely for Express. Also, constrained airlift capacity (out of Asia) is driving solid sell-rate increases (to shippers) for the global forwarding operations, while heavy retailer restocking has lifted air and ocean volume. At the same time, soaring e-commerce activity and new contract wins are driving strong demand for DHL’s supply chain segment.