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Germany’s DHL is set to cut 8,000 jobs in its home market this year, marking its most significant workforce reduction in over two decades. The decision comes as the company grapples with declining letter volumes and stringent regulatory constraints, which have limited its ability to offset losses despite recent postage price hikes. While the move is expected to generate savings of over 1 billion euros by 2027, it has drawn criticism from the Verdi labor union, which has called for political intervention to address the regulatory challenges and insufficient postal rate adjustments.
Despite the job cuts, investors responded positively to the news, with DHL’s shares climbing 12.3%—making it the best-performing stock among German blue chips. Analysts point to broader industry trends, where logistics firms are bracing for slower profit growth amid weakening demand and stabilizing supply chains. Although CEO Tobias Meyer ruled out any plans to separate the struggling Post & Parcel business, cost-cutting measures remain crucial as the company seeks to maintain financial stability in a shifting economic landscape.
Looking ahead, DHL anticipates an operating profit exceeding 6 billion euros in 2025, slightly below analysts’ forecasts. However, its performance in 2024 surpassed expectations, despite a 7% drop in earnings before interest and tax. To maintain shareholder confidence, DHL has upheld its dividend payout and expanded its share buyback program to 6 billion euros, extending it until 2026. While regulatory and market pressures pose ongoing challenges, the company remains focused on long-term profitability and operational efficiency.
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(Source: DW | Economic Times)
