DHL Group: Updating Estimates to Account for the Potential Middle East Impact
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UBS has updated its earnings forecasts for DHL Group to reflect the potential financial ramifications of the ongoing Middle East conflict. The firm anticipates that disruptions to Middle Eastern shipping routes could generate one-time incremental EBIT in the second and third quarters of 2026. Consequently, UBS adjusted its EBIT projections for fiscal years 2026, 2027, and 2028 by +2%, -2%, and +1%, respectively. The estimated first-quarter 2026 EBIT stands at EUR 1.331 billion, slightly below market consensus, while the full-year 2026 forecast exceeds consensus by 2.5%.
UBS notes that the impact of the Middle Eastern disruptions is fundamentally temporary, warranting only a 1x profit multiple in valuation models, thereby limiting its effect on overall valuation. The logistics giant is expected to capture incremental freight volume on Middle Eastern and Asia-Europe routes, contributing at higher-than-normal margins. Additionally, fuel surcharge mechanisms are projected to pass through most of the increased jet fuel costs by the second quarter.
The report estimates that DHL Express could realize approximately EUR 300 million in incremental EBIT related to these disruptions. However, UBS cautions that if the conflict persists and crude oil prices remain elevated, it could ultimately suppress broader demand and lead to the normalization of air freight rates.
UBS maintains a Neutral rating on DHL Group, raising the 12-month target price to EUR 46.0 from EUR 42.5, reflecting improved supply chain valuations and reduced pension liabilities.