Deutsche Post Posts Gain in 4Q Earnings
Deutsche Post AG, parent of the DHL express-delivery service, has said its fourth-quarter profit rose 25 percent but warned its operating profit likely would be flat this year because of the costs of integrating recent acquisitions.
Bonn, Germany-based Deutsche Post, which is the world’s largest global delivery company, earned 891 million euros (USD1.06 billion) in the quarter that ended Dec. 31, compared with 708 million euros in the year-ago period. The earnings mirrored the preliminary figures it released last month. Sales rose 5 percent to 12.08 billion euros (USD14.4 billion).
For the year, net profit rose 40 percent to 2.24 billion euros (USD2.67 billion) from 1.6 billion euros, while sales rose 3.3 percent to 44.59 billion euros (USD53.2 billion) from 43.17 billion euros.
Shares in Deutsche Post tumbled 7.1 percent to close at 21.11 euros (USD25.20) in Frankfurt trading because of its warning that the costs of integrating recent acquisitions, Britain’s Exel and Williams Lea, would weigh on operating profit.
Chief Financial Officer Edgar Ernst told reporters that operating profit would likely reach at least 3.7 billion euros (USD4.4 billion) through the end of the year, compared with 3.76 billion euros in 2005, when it rose 25 percent.
Deutsche Post, which also provides postal services across Germany, bought Exel PLC for 5.5 billion euros in 2005, a move that made it the world’s largest global delivery company.
Last month, Deutsche Post said it would take a majority stake in Britain’s Williams Lea Group Ltd., paying 370 million euros (USD441.1 million) for 75 percent of the company with an eye toward acquiring it completely. The move was made in part to help it bolster its own document management and logistics business.
Though warning on operating profit, Deutsche Post was hopeful that sales could reach at least 60 billion euros (USD71.53 billion) this year.
Deutsche Post also said it would embark on an initiative aimed at improving quality and customer service to ensure its dominant position in Europe and to compete with other shipping providers such as UPS and FedEx in the United States and elsewhere.
“In strategic terms, no other logistics provider is better placed to compete on a global scale,” said Chief Executive Klaus Zumwinkel. “The acquisition of Exel makes us the world’s largest logistics company. Yet success is not determined by size alone. Satisfying our customers is what counts. And this is why we will focus all of our processes even more firmly on the needs of our customers.”
The company also said it would propose a 2005 dividend of 70 euro cents a share, up 40 percent from a year ago.
Deutsche Post gained a foothold in the U.S. express airfreight business when it bought DHL Worldwide Express in 2002, but that unit has struggled in competition with FedEx Corp. and UPS Inc.
Speaking to reporters in Bonn, board member John Mullen said DHL faced strident competition in the U.S. and would likely post a loss this year in the United States.
The company didn’t provide any figures about DHL’s 2005 loss, but last year Zumwinkel warned it could lose as much as USD300 million in 2006 and likely would not break even until 2008 at the earliest.
“We’re going to get it together there,” he told reporters in Bonn.
