DHL beats profit forecasts aided by cost and capacity management

By Matthias Inverardi and Amir Orusov

April ‌30 (Reuters) - German logistics ​giant ​DHL reported a higher-than-expected quarterly operating profit on Thursday, as capacity management and structural cost improvements helped it weather geopolitical uncertainty stemming ‌from the Middle East conflict.

Analysts were expecting European logistics companies' earnings ⁠to benefit from higher freight rates and supply chain complexities amid the U.S.-Israeli war with Iran, ‌with DHL seen as a ‌key beneficiary due to the expected spillover effect from sea to air freight.

But the German company is taking a slightly more conservative approach for now, given ​uncertainty over how the conflict could affect its business, CEO Tobias Meyer told reporters.

The impact of the war on the first-quarter results was limited, with ⁠higher fuel costs having been passed on to customers, Meyer said.

"Despite blocked sea routes and closed airspace, we ​keep cargo moving and our customers' supply chains running," Meyer said in the earnings statement that also confirmed DHL's full‑year guidance.

European ​airlines warned of potential jet fuel shortages ‌within weeks after the conflict disrupted supplies through the Strait of Hormuz. DHL remains optimistic, however, as it has been in "very ⁠good talks" to secure fuel supplies for the coming months, Meyer said in the media call.

OPERATING PROFIT BEATS EXPECTATIONS

DHL's quarterly earnings before interest and taxes of 1.48 billion euros ($1.73 billion) ⁠beat analysts' average forecast of 1.38 billion in a company-provided consensus. Operating margin rose to ​7.3%, from 6.6% in the same period last year.

Organic revenue grew 2% in the quarter, slightly slower than the 2.4% growth a year ago, when the company saw strong front-loading demand ‌ahead of U.S. import tariffs.

The results demonstrated a strong outperformance despite a volatile environment, J.P. Morgan said in a note ‌to investors. DHL's shares rose 2% in the first hour of trading.

DHL a year ⁠ago launched its largest cost-cutting programme ‌in two decades, as ​it sought to protect margins against trade disruptions.

($1 = 0.8573 euros)

(Reporting by Amir Orusov in Gdansk and Matthias Inverardi in Duesseldorf, editing by ‌Milla Nissi-Prussak)

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