DHL's Appel Won't Enter Logistics M&A Market
March 17 2019 - 7:29AM
Dow Jones News
By Jennifer Smith
The world's largest logistics provider is steering clear of the
sector's increasingly active mergers-and-acquisitions market.
Frank Appel, chief executive of DHL parent company Deutsche Post
AG, said in an interview that the scale of the DHL's forwarding,
express and supply-chain business means there are few opportunities
for significant combinations that would also pass muster with
antitrust regulators.
This leaves the company looking for growth and service expansion
within its own operations.
"In global forwarding...there is a lot of M&A activity going
on, but we are still the largest," Mr. Appel said. "So we think
it's better to focus on ourselves."
The German postal and logistics group reported $69.83 billion in
revenue for 2018, up 1.8% from the year before, with the strongest
growth in its express and global freight-forwarding divisions.
Operating profit fell 15.5% for the full year, but DHL forecast
that should rise to between $4.42 billion and $4.88 billion in
2019.
The company's freight-forwarding and logistics operation is
among a small group of businesses at the top of a highly fragmented
world-wide market. The largest players, including Switzerland-based
Kuehne + Nagel International AG and DB Schenker of Germany, compete
for global contracts handling and shipping goods for the world's
biggest industrial manufacturers and retailers.
Kuehne + Nagel, second to DHL in forwarding and supply-chain
revenue, according to market analysts Armstrong & Associates
Inc., has made several small acquisitions in recent years to bring
in new services, including the November 2018 purchase of U.S.
time-critical business Quick International Courier.
In recent months, logistics operators in Denmark and Kuwait have
been competing for control of Swiss freight forwarder Panalpina
Welttransport Holding AG in an effort to gain market share and
operations in more international markets.
Mr. Appel said DHL was rolling out technology and software
improvements and is focusing on that instead of mergers, "because
we think it's better to grow organically."
Buying a technology-focused logistics startup would be
expensive, Mr. Appel said, because of the high valuations for
companies such as Flexport Inc., which last month announced a $1
billion round of investment led by SoftBank Group Corp.'s Vision
Fund.
"The prices are high," Mr. Appel said. "That's the reason why we
would rather develop it ourselves," adding that it "doesn't mean
that we won't change our mind in the future."
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
March 17, 2019 07:14 ET (11:14 GMT)
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