Deutsche Post sees US ops FY loss widening; delays US breakeven target
Deutsche Post World Net AG said it will incur additional spending this year for its US operations, which will result in the expected loss there widening to as much as 500 mln eur from the initially planned 300mln.
It said the additional spending will shift the breakeven target for its US
operations to 2006 from 2005. It said the expected loss in 2005 will be as much as 300 mln eur. The group's earnings targets for 2004 and 2005 however are not impacted by the altered US timetable, it said.
For 2004, the company expects an increase in EBITA of 7.5-12.5 pct year-on-year and 2005 EBITA of at least 3.6 bln eur.It said some 200 mln eur in additional expenses in 2004 will be covered by 'good operating results' in other regions, especially Asia and segments such as logistics.
Deutsche Post said the extra US costs will also be offset by the group's
STAR value-creation programme, which it said will contribute more than 800 mln
eur to earnings during the two-year period since STAR started in November 2002.
This is 100 mln eur more than the 700 mln eur originally planned for the two-year period, it said.
A Deutsche Post spokeswoman declined to say STAR's contribution to group
earnings for the full year 2004 but that in the first-half, it was 178 mln eur.
The company's statement said additional expenditures in the US, mainly for its DHL operations, will be for infrastructure improvement, marketing and service quality.
It said DHL has already completed the initial 'successful' integration measures in the US since the mid-2003 acquisition of Airborne and the extra spending will also strengthen DHL's domestic US transport network by adding further bases on the East and West coasts.
'We will do everything it takes to succeed in the very competitive US market
and generate sustainable profits for our shareholders,' the statement quoted
group chief financial officer Edgar Ernst as saying.
'The Group is well on track and well-positioned to confront the great challenges that lie ahead in North America,' Ernst said.
mog/hjp/jfr
DPWN Press Release 29 Sept
DHL: Increased Expenditures in the U.S.
Marketing drive follows successful integration / 2006 New Target for Breakeven in EXPRESS Americas / Group earnings forecast remains positive / STAR-Program exceeds 2004 plan by more than 100 million euros
DHL, the express and logistics unit of Deutsche Post World Net, has completed initial successful integration measures in the U.S. since the mid-2003 acquisition of express company Airborne. The Group today affirmed it will increase spending on infrastructure improvement, marketing and service quality in a move that will shift the break even target for EXPRESS Americas to 2006 from 2005 and secure sustained positive development.
"We will do everything it takes to succeed in the very competitive U.S. market and generate sustainable profits for our shareholders," said Deutsche Post World Net Chief Financial Officer Edgar Ernst. "The Group is well on track and well-positioned to confront the great challenges that lie ahead in North-America," Ernst said.
The additional expenditures underline the Group's long-term commitment to the important U.S. market. As part of the plan, DHL will strengthen its domestic U.S. transport network by adding further bases on the East and West coasts. It also plans to increase spending on marketing and service quality improvements. The expected loss in EXPRESS Americas will thus widen from the initially planned 300 million euros to as much as 500 million euros in 2004. In 2005, a loss of as much as 300 million euros can be expected.
Some 200 million euros in additional expenses in 2004 will be covered by favorable operating results in other regions, especially Asia, and segments such as logistics. In addition, the STAR value-creation program will contribute in excess of 100 million euros more to earnings this year than originally planned, bringing total savings in the two years since STAR was introduced to more than 800 million euros.
The group's earnings targets for 2004 and 2005 are not impacted by the altered U.S. timetable. For 2004, DPWN had announced a rise in operating profit (EBITA) by 7.5 percent to 12.5 percent year-on-year and 2005 EBITA of at least 3.6 billion euros.
