DHL Layoffs: DHL plans to cut 8,000 jobs in Germany this year, the biggest staff reduction programme in its home market in at least two decades, responding to falling letter volumes. According to news agency Reuters, the planned cuts account for just 1.3 per cent of the global workforce of DHL, in which Germany still holds a 16.99 per cent stake via state lender KfW.
The cuts will be made this year "in a socially responsible manner", logistics giant DHL, which owns the postal service. Last year, "the number of traditional, document-carrying letters continued to decline," said DHL.
DHL Layoffs: Why is the German logistics major cutting jobs?
While parcel revenues increased, this could not "compensate for the declining mail volumes and rising costs", particularly due to pay agreements struck with unions, it added. Deutsche Post has about 187,000 employees in Germany, out of some 500,000 staff who work for DHL worldwide.
DHL reported its net profit in 2024 fell 9.3 per cent to 3.3 billion euros while revenues increased three per cent to 84.2 billion euros. On the layoffs news, which includes savings of more than one billion euros ($1.1 billion) by 2027, DHL shares rose to their highest level since February 6, 2024.
DHL shares were last up 12.3 per cent, the biggest gainer among German blue-chip stocks. DHL Chief Executive Officer (CEO) Tobias Meyer said that even though DHL raised letter postage prices recently, it was not enough to shore up quarterly earnings due to limits set by German regulators.
The Verdi labour union criticised the planned job cuts and urged politicians to act, blaming regulation and insufficient stamp price increases. Parash Jain, HSBC's global head of transport and logistics research, said ahead of the results that logistics companies are likely to see slower profit growth this year due to softer demand and easing supply-chain disruptions.
Jain expects transportation companies to cut costs, with growth in global container trade and air freight tonnes expected to halve in 2025. CEO Meyer said that DHL has little exposure to US President Donald Trump's pause on the decision to scrap the "de minimis" duty exemption for low-value packages.
DHL shares have underperformed the wider logistics sector over the past year. Meyer told Reuters there were no plans to separate the P&P business, although it has struggled for years with cost inflation and declining letter volumes.
DHL's 2024 earnings before interest and tax declined seven per cent to 5.89 billion euros, still surpassing analysts' expectations of 5.81 billion euros in a company-provided consensus. For 2025, the group expects an operating profit of more than six billion euros, below analysts' expectations of 6.29 billion euros.
The forecast does not account for potential impacts from changes in tariff or trade policies. DHL maintained a 1.85 euro dividend per share for 2024 and increased its share buyback program by two billion euros to six billion euros, extending it until 2026
With inputs from AFP and Reuters
