Deutsche Post CFO says minimum wage to have 'no immediate effect' on costs

Deutsche Post World Net AG’s chief financial officer John Allan said a minimum wage for postal workers recently approved by Germany’s government will have ‘no immediate effect’ on the company’s cost structure.

‘We pay at least this wage level throughout the German mail services business,’ he told a company newsletter in an interview.

The upper house of Germany’s parliament yesterday approved the introduction of a minimum wage at 8.00-9.80 eur per hour for postal workers. The minimum wage is expected to hurt primarily Deutsche Post’s smaller competitors.

And commenting on government plans to liberalize the letter mail market next year, Allan affirmed Deutsche Post’s previous statements that liberalization could lower earnings before interest and taxes by 10-20 pct.

‘We continue to feel very comfortable with this guidance,’ he said.

Allan also brushed off concern that a possible abolition of Deutsche Post’s exemption from German value-added tax could hurt results.

‘There is no reason for us to speculate about any consequences as there’s no evidence whatsoever that we would lose the exemption,’ he said.

Under current rules, Deutsche Post’s basic postal services are exempt from the 19 pct VAT while comparable services provided by rivals are not, even after Deutsche Post’s monopoly on delivering letters expires at the end of the year.

Deutsche Post obtained the exemption in exchange for the guarantee that it will deliver mail to every household in Germany, whether it is on a North Sea island or in mountainous regions of southern Germany.

For the year as a whole, Allan said there is ‘no reason for us to be concerned about our (2007) outlook,’ but cautioned that he cannot make firm statements on the matter as the last days of the Christmas season are usually the busiest time of the year.

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