Deutsche Post shares plummet over North American woes
Deutsche Post shares dropped sharply on the Frankfurt Stock Exchange Wednesday after the company said that its U.S. operations will remain in the red for a year longer than was originally estimated.
Just after noontime, Deutsche Post shares were about 3.3 per cent lower at 15.94 euros – a drop which was running counter to the overall rise of 1.1 per cent on the 30-share DAX.
The negative response by investors came despite an assurance by Deutsche Post that its earnings this year would not be affected because of an upturn in Asia and in other business operations.
Bonn-based Deutsche Post said that its North American express mail division will now only break even in 2006 instead of next year, amid increased marketing and infrastructure investments.
The U.S. unit is now projected to lose 500 million euros (615 million dollars) this year – higher than the previous red-ink projection of 300 million euros.
Deutsche Post’s target for this year is a 7.5 to 12.5 per cent rise in its operating profits, from the 2003 figure of 2.98 billion euros. For 2005, the operating profit target is 3.6 billion euros.
Through its logistics subsidiary DHL, Deutsche Post in 2003 acquired the U.S. company Airborne. The U.S. parcels market is dominated by Federal Express and United Parcel Service, with DHL now holding about an 8 per cent share.
