US express challenge for Deutsche Post

DEUTSCHE Post has called the turnaround in its US express service business one of the major challenges for the next year.

Chief executive Klaus Zumwinkel underlined, though, that the postal and logistics group has no intention of withdrawing from the US.

‘The setbacks in 2005 in connection with the integration of the hubs do not lead to a change in direction. Rather, they lead to a strengthening of our efforts,’ he said.

DHL’s US express business suffered a loss of €400m ($512m) last year, which was less than a year earlier but more than expected. Mr Zumwinkel underlined that as a global logistics player, a presence on this market was inevitable. 20% of Deutsche Post’s express volumes were coming from or destined for the US. The chief executive added that the division should be profitable from 2009.

For the logistics business, which also comprises newly acquired Exel, Deutsche Post forecast turnover ‘clearly above € 18bn’ and operating profits of more than €500m. Logistics had shown dynamic growth last year.

Deutsche Post DHL US express ops to reach profitability in 2009 – report
AFX International ProFeed 05-11-2006

FRANKFURT (AFX) – Deutsche Post AG’s DHL US express business will achieve a profit in 2009, Handelsblatt reported without saying where it obtained the information.

The newspaper also wrote that Deutsche Post has lost up to 1.7 bln eur in the US in the last three years and it is could lose about 1.0 bln eur more before 2009.
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Deutsche Post delivers poor profit as DHL struggles in US market
European Intelligence Wire 05-14-2006
GERMAN logistics company Deutsche Post, which owns DHL, is expected to announce first-quarter profits in line with last year on Tuesday, confirming company predictions that earnings will be flat in 2006.

Analysts expect the former state letter carrier to reveal earnings (before interest and tax) of about or even below E870m ($1bn, GBP600m), similar to the first three months of 2005. Although sales for the period have been significantly higher than last year, difficulties with US operations and the integration of new companies have hit profits.

Chief executive Klaus Zumwinkel is under pressure from shareholders disappointed with the share price, which is only slightly higher than when it was first privatised in 2000. Deutsche Post has announced a 2005 dividend of E0.70 and Zumwinkel has hinted he may further boost the payout or even buy back stock. The dividend announcement pushed the shares to a five-year high, but this sounds like a hollow victory.

Deutsche Post is wrestling with the US market, where losses continue to mount. Zumwinkel says the companyis presence in the worldis largest express mail market is iindispensablei. DHL has come up very short over the past two years in the US, a market firmly controlled by local competitors FedEx and UPS. Ongoing losses have raised the ire of investors, but Zumwinkel says it will continue operating in the US, as it is important for increasing business in countries like China. Deutsche Post is said to be so concerned about the weakness in its core business n delivering post n that it may now focus on recycling, according to recent media reports.