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Trang 4 1.1 Business information Name: Deutsche Post DHL Group Headquarters: Bonn, GermanyFounders: Adrian Dalsey, Larry Hillblom, Robert LynnFounded: September 25, 1969, San Francisco,
FOREIGN TRADE UNIVERSITY Faculty of Economics and International Business -*** - MARKET AND FINANCIAL MANAGEMENT TOPIC: ANALYSIS OF THE FINANCIAL REPORT ABOUT DEUTSCHE POST DHL GROUP Student : Le Thi An Chinh Student ID Class Course ID Instructor : : : : 2013530237 English 02 – LOG – K59 TCHE422(HK1-2324)2.1 PhD Nguyen Huy Hieu Hanoi, November, 2023 INTRODUCTION In the context of economic integration and openness for trade, logistics and supply chain is an important service industry in the structure of the national economy, playing a pivotal role in supporting, connecting, and promoting socio-economic development of the whole country as well as each locality, contributing to improving the competitiveness of the economy As one of the leading company in this industry, DHL appears well-positioned for continued growth and success The company's global reach, spanning over 220 countries and territories, provides an unrivaled network of logistics and shipping infrastructure Its strong brand reputation, synonymous with quality and innovation, attracts a loyal customer base And its diversified portfolio of logistics and shipping services caters to a wide range of industries and customer needs To delve into the financial underpinnings of this industry leader, I would like to scrutinize DHL's financial statement report, unveiling the company's financial health, performance trends, and prospects for future growth This study is my personal analyze of data from 2021 to the present in order to evaluate the firm and estimate future business performance Despite making specific effort in the writing process, it is impossible to prevent mistakes owing to several limits in knowledge I hope to receive your comments to make the essay more complete TABLE OF CONTENT INTRODUCTION TABLE OF CONTENT PART I: OVERVIEW OF THE COMPANY 1.1 Business information 1.2 History of company PART II: DHL’S FINANCIAL PERFORMANCE AND PROSPECTIVE 2.1 Analysis of financial reports 2.1.1 Liquidity ratio 2.1.2 Solvency Ratios 2.1.3 Profitability ratio 2.1.4 Efficiency ratios 2.2 FINANCIAL POSITION 2.2.1 Comparision 2.2.2 Prospective of the company in the future CONCLUSION REFERENCES PART I: OVERVIEW OF THE COMPANY 1.1 Business information Name: Deutsche Post DHL Group Headquarters: Bonn, Germany Founders: Adrian Dalsey, Larry Hillblom, Robert Lynn Founded: September 25, 1969, San Francisco, California, United States Number of employees: 586,404 (Q1 2023) Ticker: DHL Stock exchange centers: Frankfurt Type of Business: Subsidiarity Area served: Worldwide Industry: Courier Website: https://www.dhl.com/ 1.2 History of company DHL International GmbH (DHL) is an international courier, package delivery, and express mail service, which is a division of the German logistics firm Deutsche Post Deutsche Post DHL (originally abbreviated Dalsey, Hillblom, and Lynn) Group is a German supply chain management and package delivery multinational company that provides international parcel shipping and contract logistics The company was founded in 1969 by Adrian Dalsey, Larry Hillblom, and Robert Lynnin San Francisco, USA Since its establishment, the company demonstrated a strong growth pattern in its operations and key financial indicators to expand its service throughout the world by the late 1970s In 1979 the company flew under the name DHL Air Cargo with two DC3 and four DC6 aircraft with an inter-island freight service to the Hawaiian Islands Adrian Dalsey and Larry Hillblom personally oversaw day-to-day operations until their final bankruptcy closed in 1983 At peak times, DHL Air Cargo employed just over 100 employers, managers, and pilots In 1998, Deutsche Post began purchasing DHL shares It reached controlling interest in 2001 and acquired all outstanding shares By December 2002, the company then absorbed DHL into its Express division, while expanding the use of the DHL to other divisions, business units and subsidiaries of Deutsche Post Today DHL Express shares its DHL brand with business units such as DHL Global Forwarding and DHL Supply Chain It was established in the United States when Airborne Express acquired it In 2002 DHL introduced a new yellow and red logo with color scheme DHL's airline had more than 550 pilots in active in October 2008 In August 2003, Deutsche Post took over Airborne Express and began integrating it into DHL's group 1.3 Business model : DHL collaborates with various partners such as airlines, shipping companies, customs authorities, and local delivery services to ensure efficient and reliable logistics operations : DHL's key activities include international and domestic shipping, freight transportation, warehousing, customs clearance, and supply chain management They also invest in technology and infrastructure to support their operations : DHL's key resources include a global network of transportation and distribution centers, advanced technology systems for tracking and managing shipments, a strong brand reputation, and a skilled workforce : DHL offers a range of value propositions to its customers, including fast and reliable delivery, end-to-end supply chain solutions, customs expertise, real-time tracking, and personalized customer service : DHL serves a diverse range of customer segments, including individuals, small businesses, e-commerce companies, multinational corporations, and industries such as healthcare, automotive, and retail : DHL focuses on building strong customer relationships through personalized service, proactive communication, and efficient problem-solving They also offer online platforms and tools for customers to track and manage their shipments s: DHL utilizes various channels to reach its customers, including online platforms, sales teams, call centers, and partnerships with e-commerce platforms and retail outlets : DHL generates revenue through various streams, including shipping fees, warehousing and storage fees, customs brokerage fees, value-added services, and supply chain consulting : DHL's cost structure includes expenses related to transportation, warehousing, technology infrastructure, employee salaries, marketing, and regulatory compliance : DHL tracks key metrics such as on-time delivery rates, customer satisfaction scores, revenue growth, market share, and operational efficiency to measure its performance and make strategic decisions 1.4 Main business segment DHL is the global market leader in the logistics industry with a global network of more than 200 countries and territories and around 350,000 employees Their main business segment is focused on express delivery and logistics services, including transportation, warehousing, and distribution DHL is also organized into six operating divisions, each of the divisions is managed from its own division headquarters and is divided into functions, business units and regions for reporting purposes which are: : As Europe's largest postal company, DHL workforce of some 118,600 mail couriers deliver around 49 million letters and 5.9 million parcels in Germany every working day via their nationwide transport and delivery network The products and services in the Letter Communication segment are aimed at both private and commercial customers and range from physical and hybrid letters to special products for the delivery of goods and include additional services such as registered mail, cash on delivery and valuables : Express division, they transport documents and urgent goods reliably and on time from door to door DHL global network includes more than 220 countries and territories, with around 111,000 employees, they serve around 2.7 million customers The division's main product is Time Definite International (TDI) Their TDI services enable delivery at predefined times and their expertise in customs clearance keeps shipments moving as a prerequisite for fast and reliable door-to-door service : Their air, ocean and overland freight forwarding services include standardized transports as well as multimodal and sector-specific solutions, together with customized industrial projects, which are around 43,000 employees in over 150 countries deliver for more than 175,000 customers Their business model is based upon brokering transport services between customers and freight carriers : As a global leader in the contract logistics market, their 168,000 employees support in helping more than 1,400 customers in more than 50 countries manage their supply chains This is their profitable core business and includes warehouse and transport as well as value added services as fulfillment, Lead Logistics Partner (LLP), Real Estate Solutions, Service Logistics and packaging solutions for strategic industrial sectors They also develop innovative and sustainable solutions Since the financial year 2019, DHL has been pooling their international parcel delivery operations in the new eCommerce Solutions division The Document continues below Discover more from: Markets and finance management TCHE422 Trường Đại học Ngoại… 3 documents Go to course Basic finance practice 14 45 Markets and finance management None PHÁT TRIỂN NGÂN HÀNG ĐIỆN TỬ THỜI KỲ 4.0 TẠI… Markets and finance management None Reading- LT TFNGd 10 nguyên lý quản lý kinh tế 100% (1) R - ôn tập 10 13 Lịch sử Đảng CSVN 80% (10) Dân cư - xã hội: 1.1 Dân cư 1.2 Ngôn ngữ 1.3 Tôn giáo 1.… nguyên lý quản lý kinh tế 100% (2) Chapter MCQ dsscvwvwweqwedewvqvvfe nguyên lý quản lý kinh tế new division is geared towards providing high-quality solutions, particularly to customers in the rapidly growing e-commerce sector DHL’s sector-specific expertise spans multiple sectors and specialty areas, offering customer-tailored solutions that best match in industry’s logistics requirements With dedicated teams of experts, they remain at the forefront of sector developments such as Auto-Mobility; Chemicals; Consumer; Energy; Engineering and Manufacturing; Life Sciences and Healthcare; etc which constantly adapt portfolio to customers’demand PART II: DHL’S FINANCIAL PERFORMANCE AND PROSPECTIVE 2.1 Analysis of financial reports Year 2020 2021 2022 Q3 2023 Current Ratio 1.05 1.09 0.99 0.94 Quick Ratio 1.03 1.06 0.95 0.89 Cash Ratio 0.33 0.23 0.14 0.18 The data above shows that there is decreasing trend in Current Ratio and Quick Ratio from 2020 to the third quarter of 2023 may indicate potential challenges in maintaining short-term liquidity.While the increasing trend in the Cash Ratio suggests an improvement in the company's ability to cover short-term obligations with cash The Current Ratio is a liquidity ratio that measures a company's ability to cover its shortterm liabilities with its short-term assets It is calculated by dividing current assets by current liabilities A ratio above indicates that a company has more current assets than current liabilities, suggesting good short-term liquidity A current ratio below indicates that a company may have difficulty covering its short-term liabilities with its available short-term assets In the recent quarter, DHL Group has a current ratio of 0.94 It indicates that the company may have difficulty meeting its current obligations Low values, however, not indicate a critical problem If DHL Group has good long-term prospects, it may be able to borrow against those prospects to meet current obligations 100% (1) The Quick Ratio, is a liquidity ratio that measures a company's ability to cover its shortterm liabilities with its most liquid assets, excluding inventory A further decrease in the quick ratio to 0.89 suggests a potential decrease in the company's ability to cover shortterm liabilities with its most liquid assets The lower ratio may indicate increased risk in meeting short-term obligations without relying on the sale of inventory A liquidity ratio called the Cash Ratio assesses how much cash and cash equivalents a business has available to meet its short-term obligations greater immediate liquidity is indicated by a greater ratio With a cash ratio of 0.14 in 2022, DHL held assets equal to 14% of its current liabilities in cash and cash equivalents Since this is also the lowest level of immediate liquidity during the analysis period, the company's only means of meeting short-term commitments may be credit or other liquid assets Year 2020 2021 2022 Q3 2023 Debt-to-Asset Ratio 0.33 0.31 0.30 0.00 Debt-toEquity Ratio 1.33 1.00 0.92 0.00 Interest Coverage Ratio 7.13 13.46 12.83 8.46 The Debt-to-Asset Ratio measures the proportion of a company's assets that are financed by debt A Debt-to-Asset Ratio of 0.31 in 2021 suggests that around 31% of DHL's assets were financed by debt A decrease in this ratio over the years, from 0.33 in 2020 to 0.030 in 2022, suggests a significant reduction in the reliance on debt for financing A lower ratio typically indicates lower financial risk associated with debt Similar to the Debt-to-Asset Ratio, the decreasing trend in the Debt-to-Equity Ratio indicates a reduction in the use of debt in DHL's capital structure A lower ratio implies less financial leverage and potential lower interest-related financial risk The ratio dropping to approximately 0.00 in Quarter 3, 2023, suggests a significant shift, with little to no debt in the capital structure This can be a positive sign, indicating reduced financial leverage and potentially lower interest-related financial risk Actually, the data of Debt in 2023 has not been updated yet, I thus fill in the table with an approximately blank number The Interest Coverage Ratio calculates how much of a business's operational revenue may be used to pay interest Better coverage is indicated by a greater ratio The Interest Coverage Ratio dropped from 13.46 in 2021 to 8.46 in the first nine months of 2023, indicating a decline in DHL's capacity to pay interest costs out of operating profits Even if the ratio is still positive, a lower number would be cause for concern, and further research is required to determine the causes of the shift The aforementioned data indicates that DHL has lessened its reliance on debt in its capital structure, as seen by the lowering Interest Coverage Ratio, Debt-to-Asset and Debt-to-Equity Ratios On the other hand, the decrease in interest coverage indicates a potential increase in financial risk related to interest payments Year 2020 2021 2022 Q3 2023 Gross Profit Margin 17.65% 18.89% 17.2% 14.58% Net Profit Margin 4.47% 6.18% 5.46% 4.87 % Return on Assets (ROA) 5.54% 8.5% 8.13 % 7.24% Return on Equity (ROE) 21.36% 30.80% 25.35 % 21.71% In the 2021 financial year, despite the pandemic's impacts, global trade overall took off, resulting in increased shipments All divisions of Deutsche Post DHL Group managed to considerably increase revenue, profits and margins in some cases In total, Group EBIT came to €8.0 billion and exceeded the most recent figure of more than €7.7 billion However, the data witnessed some declines in Gross Profit Margin, Net Profit Margin, Return on Assets, and Return on Equity of DHL in the following period from 2021 to second half of 2023 which may indicate challenges in maintaining or improving profitability and efficiency A company's profitability is assessed by its gross profit margin, which shows what proportion of revenue is more than the cost of products sold The gross profit margin's downward trend from 17.65% in 2020 to 14.58% in the third quarter of this year points to possible difficulties in keeping profitability at the gross profit level The fluctuating but generally positive trend in the net profit margin indicates that DHL has been able to retain a portion of its revenue as profit, though there is a slight decrease from 6.18% in 2021 to 4.87% in Quarter 2023 Return on Assets measures a company's ability to generate profits from its assets The decreasing trend in ROA from 8.5% in 2021 to 7.24% in the third quarter of 2023 suggests a potential decrease in the efficiency of DHL in generating profits from its total assets However, the financial year 2023 has not come to an end yet, and there is still a probability that the small distance could be reversed Although DHL has continued to be profitable, the ratios that are supplied show that the company is having difficulty sustaining its gross profit margins and that its net profit margins have somewhat decreased There may be difficulties in turning a profit in relation to assets and equity, as indicated by the declining trends in return on equity and return on assets Year 2020 2021 2022 Q3 2023 Inventory Turnover 134.17 131.30 104.13 24.43 Accounts Receivable Turnover 8.31 8.68 8.71 1.79 Asset Turnover 1.24 1.38 1.43 0.35 A company ideally wants higher turnover ratios, indicating that it is efficiently using its resources to generate sales and collect payments DHL financial statement ratios in the provided period witness decreasing trends in Inventory Turnover, while Accounts Receivable Turnover and Asset Turnover ratios fluctuate, suggesting potential challenges in efficiency and management of working capital The Inventory Turnover ratio measures how many times a company's inventory is sold and replaced over a period A decrease from 134.17 in 2020 to 104.13 in 2022 suggests a potential decrease in the efficiency of DHL in managing its inventory It could be an indication that the company is taking longer to sell its inventory or has experienced changes in sales patterns Opposite to the slight development in 2021 described, EBIT declined by 4.6 % in 2022 to €4,025 million as well as return on sales decreased from 17.4 % to 14.6 % which could related to thís decline The effectiveness with which a business collects money from its clients is calculated by the accounts receivable turnover ratio A rise in 2022 from 8.31 in 2020 to 8.71 in 2022 raises the possibility that the collecting time may be shortened Indicating that clients are paying their bills faster might have a positive effect on the company's cash flow 2.2 FINANCIAL POSITION The nascent post-pandemic global economic recovery suffered a marked decline in 2022 due to the fallout from the war in Ukraine Global industrial production, which is relevant for the logistics sector, reflects the overall economic cool-down: Following growth of 7.4 % in 2021, this figure weakened over the course of 2022 to 2.9 % Global trade also underwent less significant growth in the year under review at 6.8 %, compared with 10.8 % in the previous year For Deutsche Post DHL Group, this slowdown in industrial demand lessened demand and increased inventories, the typical seasonal rise in volumes in the second half of the year was not visible in ocean freight nor in air freight The below table shows the 5-year average financial ratios for the entire logistics industry and three other companies within the same sector, offering a comparison to assess their financial positions in relation to DHL during thís weak global environment period Ratios Whole Industry DHL UPS FedEx Gross Margin 27.84% 16.5% 22.66% 25.19% Net Profit margin 12.24% 5.15% 7.92% 3.6% Return on Equity 34.15% 22.49% 105.66% 13.61% Return on Assets 7.98% 6.88% 11.36% 4.01% Quick Ratio 0.72 0.7 1.07 1.25 Debt to Equity 94.54% 100.34% 132.72% 144.03% It can be obviously seen that, except for Debt to Equity index, DHL appears to lag behind industry averages in terms of the remaining ratios In comparison with the Industry’s average ratios, DHL avarage ratios imply lower profitability at the gross profit level as well as ability to retain profit from its revenue after all expenses and less efficient in generating returns for shareholders based on their equity investment so on Additionally, the industry as a whole has a slightly lower Debt to Equity ratio than DHL, which implies that, on average, companies in the logistics industry have a relatively lower proportion of debt in their capital structure compared to DHL Similar to DHL, FedEx and UPS are one of the major logistics companies worldwide Based on the data, except from the Gross Margin UPS always ranks as the highest point which indicates that it has better financial health and performances compared to DHL UPS may have a better competitive advantage in Logistic industry, allowing it to maintain strong profitability, efficient operations and attracting more investors thanks to effectiveness in delivering returns on shareholders' investments Although FedEx performs well in certain areas, it has the lowest net profit margin and return on equity, making it comparatively less favorable than DHL and UPS This means that DHL falls in the middle in comparisiom to the above company In light of a tense macroeconomic environment, the divisions were faced with a variety of influencing factors Declining shipment volumes caused results in the Express, eCommerce Solutions and Post & Parcel Germany divisions to fall below prior-year figures, whilst revenue increases in Supply Chain and, in particular, in Global Forwarding, Freight resulted in significant profit growth The Group did not match the prior-year figures with revenue of EUR 19.4 billion (Q3 2022: EUR 24.0 billion) and operating profit (EBIT) of EUR 1.4 billion (Q3 2022: EUR 2.0 billion) Lower freight volumes and rates as well as exchange rate and fuel cost effects impacted the DHL business Earnings for the Post & Parcel Germany division reflect cost increases and the detrimental regulatory environment for the mail business Despite these external effects, the Group achieved free cash flow of EUR 1.1 billion in the third quarter and EUR 2.5 billion in the first nine months of 2023 In the third quarter of 2023, DHL Group generated operating cash flow of EUR 2.5 billion (Q3 2022: EUR 3.5 billion) Free cash flow was EUR 1.1 billion (Q3 2022: EUR 1.8 billion) In the first nine months of this year, DHL Group achieved free cash flow of EUR 2.5 billion (9M 2022: EUR 2.3 billion) The Group further invested in growth markets and trends, while investments and costs in Germany were adjusted to the detrimental regulatory environment Gross capital expenditure (capex) amounted to EUR 871 million in the third quarter (Q3: 2022: EUR 958 million) In addition to investments in sustainable business activities such as lowemission logistics infrastructure, the focus was on the automation and digitalization of operational processes By strengthening the global DHL network, the Group also offers its customers solutions for their omnishoring strategies to reduce their dependencies on individual locations and to increase their diversification DHL Group generated consolidated revenue of EUR 60.4 billion in the first nine months of 2023 (9M 2022: EUR 70.7 billion) Operating profit also developed in line with expectations in the same period, at EUR 4.7 billion (9M 2022: EUR 6.5 billion) The Group narrowed its earnings forecast for 2023 to EUR 6.2 to EUR 6.6 billion as a recovery of the global economy has not materialized yet The macroeconomic scenarios were narrowed as follows: V-shaped recovery: The scenario for a recovery of the global economy from the beginning of the second half of 2024 and an EBIT of around EUR 7.0 billion is no longer applicable U-shaped recovery: In the event of a recovery at the end of the year, DHL expects an EBIT of around EUR 6.6 billion L-shaped scenario: In the unfavorable case of no significant recovery of the global economy in the remainder of the financial year, an EBIT of at least EUR 6.2 billion is expected DHL Group forecasts an EBIT for the DHL divisions in 2023 of between EUR 5.7 and EUR 6.1 billion (earlier, EUR 5.7 to EUR 6.5 billion) The business continues to project an EBIT of between EUR 800 million and EUR 1.0 billion for Post & Parcel Germany The DHL Group forecasts an EBIT of between EUR 7.0 and EUR 8.0 billion for 2024 (increased from EUR 8.0 billion earlier) CONCLUSION My analysis of DHL's financial statements reveals a corporation primed for ongoing development and success Its exceptional financial performance, which includes robust revenue growth, impressive profitability, substantial cash flow creation, and a stable balance sheet, lays the groundwork for future development The company's global reach, strong brand recognition, diverse service portfolio, and strategic investments in ecommerce, sustainability, and digital transformation all contribute to its competitive advantage DHL is well-positioned to capitalize on future possibilities and preserve its position as one of the world's top logistics firms as it navigates the transforming logistics and shipping markets Despite the fact that I have only been analyzing the company's financial statements for two weeks, I have a lot of particular opinions regarding the company's structure and financial health Furthermore, being introduced to this subject helped me get an in-depth understanding of finance and its tight and seamless linkages with the company's operation Once again, I would like to thank teacher Nguyen Huy Hieu for creating favorable conditions and providing me with an extremely useful course when conducting company research, allowing me to access and learn more about knowledge and practical experience related to my major, which will help me greatly in my future career Sincere gratitude REFERENCES **DHL Group** (2023, October 4) *DHL Group generated consolidated revenue of EUR 6.5 billion in Q3 2023.* [Online] Available at: [https://reporting-hub.dpdhl.com/downloads/2021/4/en/DPDHL-2021-AnnualReport.pdf](https://reporting-hub.dpdhl.com/downloads/2021/4/en/DPDHL-2021Annual-Report.pdf) (Accessed: [11 November 2023]) **DHL Group** (2022) *DHL Annual Report 2021.* [Online] Available at: [https://reporting-hub.dpdhl.com/downloads/2021/4/en/DPDHL-2021-AnnualReport.pdf](https://reporting-hub.dpdhl.com/downloads/2021/4/en/DPDHL-2021Annual-Report.pdf) (Accessed: [11 November 2023]) **Investing.com** (n.d.) *Deutsche Post AG Ratios - DP.DE - DEU Equity.* [Online] Available at: [https://de.investing.com/equities/deutsche-post](https://de.investing.com/equities/ deutsche-post) (Accessed: [16 November 2023]) **Studocu** (n.d.) *Comparison of financial strategies of DHL and UPS logistics companies.* [Online] Available at: [https://www.studocu.com/row/document/jomokenyatta-university-of-agriculture-and-technology/bachelor-of-procurement-andcontract-management/scm-practice-good-work/76113443](https://www.studocu.com/ row/document/jomo-kenyatta-university-of-agriculture-and-technology/bachelor-ofprocurement-and-contract-management/scm-practice-good-work/76113443) (Accessed: [16 November 2023]) **CSIMarket** (n.d.) *UPS - United Parcel Service, Inc (UPS) - Competitors.* [Online] Available at: [https://csimarket.com/stocks/competitionSEG2.php?code=UPS] (https://csimarket.com/stocks/competitionSEG2.php?code=UPS) (Accessed: [18 November 2023]) **HighRadius** (n.d.) *FedEx vs UPS vs DHL: A Detailed Comparison.* [Online] Available at: [https://www.lateshipment.com/blog/overview-of-fedex-ups-and-dhl/] (https://www.lateshipment.com/blog/overview-of-fedex-ups-and-dhl/) (Accessed: [18 November 2023.]) More from: Markets and finance management TCHE422 Trường Đại học Ngoại… 3 documents Go to course Basic finance practice 14 Markets and finance management None PHÁT TRIỂN NGÂN HÀNG 45 ĐIỆN TỬ THỜI KỲ 4.0 TẠI… Markets and finance management None Recommended for you Reading- LT TFNGd 10 nguyên lý quản lý kinh tế 100% (1) R - ôn tập 10 Lịch sử Đảng CSVN 80% (10) Dân cư - xã hội: 1.1 Dân cư 13 1.2 Ngôn ngữ 1.3 Tôn giáo 1.… nguyên lý quản lý kinh tế 100% (2) Chapter MCQ dsscvwvwweqwedewvqvvfe nguyên lý quản lý kinh tế 100% (1)