Morningstar | DPW Updated Forecasts and Estimates from 10 May 2019
Narrow-moat Deutsche Post DHL posted 4% top-line growth (for total segment revenue) in the first quarter, which didn’t deviate drastically from our expectations. While global trade has slowed this year, Express continues to post healthy volume gains, global forwarding is executing well on the pricing front, parcel Germany is enjoying e-commerce-related tailwinds, and supply chain has closed solid new business this past year. Since our midcycle revenue growth and margin assumptions remain mostly intact, we don’t expect to materially alter our EUR 28 fair value estimate. At roughly EUR 28.8, the shares are trading in fairly valued territory relative to our long-term forecasts for free cash flow, though this is a more palatable valuation compared with lofty levels in early 2018.Relative to first-quarter 2018, total top-line growth partly reflects positive foreign exchange and ongoing shipment growth at Express, with core TDI volume up 5%. Of note, TDI volume gains slowed from 6.7% last quarter as U.S. and European macroeconomic growth has moderated, and due to U.S. importers pulling forward freight into 2018 ahead of potential tariffs. Global forwarding gross-revenue was up 5% on solid yield management and higher customs brokerage, as air and ocean volume declined on tough comparisons and moderating global trade. Underlying Supply Chain sales increased on previous new business wins. The newly minted post and parcel Germany segment, or P&P, posted a slight 0.7% increase, as healthy expansion in the German parcel delivery unit just offset declines in traditional-mail volume. German parcel volumes rose 8%.
Excluding gains from the sale of the supply chain business in China, and restructuring outlays, we estimate consolidated EBIT margin declined slightly, to 4.5%. We suspect labor cost inflation and optimization investments in the P&P operations more than offset leverage from Express volume growth and continued improvement in global forwarding segment execution.
Deutsche Post is a mail and logistics services group. In its Mail division, Co. provides domestic and international mail and parcels and is engaged in dialogue marketing, nationwide press distribution services and the electronic services related to mail delivery. Co.'s Express division provides courier and express services to business and private customers globally. Co.'s Global Forwarding, Freight division manages the carriage of goods by rail, road, air and sea, ranging from container transport to solutions for industrial projects. Co.'s Supply Chain division provides warehousing, managed transport and services at every link in the supply chain for customers in a variety of industries.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.