Germans court NZ Post
New Zealand Post is talking up its prospects of selling half of its Courier Post and other express freight businesses to Deutsche Post-owned DHL.
The sale would give the Government a financial windfall and link NZ Post to a global player that has been expanding in Asia.
It would also put Deutsche Post in the box seat in any future privatisation of NZ Post.
The rundown on the potential joint venture came as NZ Post reported a 35 per cent rise in annual profit to $36.5 million yesterday, handing the Government a $21.9 million dividend.
Postal companies are responding to threats to their traditional mail operation from deregulation and new technologies by expanding into new areas of business and new geographies.
Deutsche Post wants to be the world’s biggest logistics company and has spent US$6 billion ($9.15 billion) on acquisitions since 1997.
The improvement in NZ Post’s profit came from its express freight and international letters business and a move to break even from loses by Kiwibank.
NZ Post’s brands, Courier Post, SkyRoad and Pace, compete with Freightways’ New Zealand Couriers, Castle Parcel, Poste Haste and Sub 60 brands.
NZ Post and Freightways have more than 85 per cent of the overnight express freight market, although Toll Holdings of Australia is seen as a looming threat.
NZ Post chief executive John Allen said the Government had been briefed on talks of a joint venture with DHL and had yet to give a formal response.
Half of the holding company of the express freight businesses would be sold to DHL, effectively turning it into a joint venture. An announcement was possible by the end of the year.
He would not say what the business was worth.
“What I can say is that the conversation is going very well. The key for us is how do we best grow our freight business,” he said.
“That market is becoming more international and this is an alliance with a serious international player.”
The rise in NZ Post’s profit was its largest profit increase in a decade.
“The economy has proved to be extraordinarily robust,” Allen said.
There had been no sign of a downturn in the business and the company expected to be able to continue to improve its profitability over the next three years.
NZ Post chairman Jim Bolger said the underlying strength of the company positioned NZ Post well for further investment in Kiwibank and in infrastructure.
“The extraordinary success of Kiwibank is an example of sensible business decisions made to grow the assets of the New Zealand Post Group,” Bolger said.
Allen said NZ Post delivered 96.8 per cent of mail on time in the June year, which placed it among the world’s best providers.
During the year, the price of mailing a standard letter increased 5c to 45c to offset the rising cost of providing mail services.
Domestic parcel volumes grew by 8.2 per cent, while the number of airmail packets and parcels sent out of New Zealand rose more than 10 per cent.
