Deutsche Post studying restructuring
Deutsche Post is considering its options for retail bank Postbank and its loss-making DHL Express unit in the United States but has not reached any decisions, a source close to the supervisory board told Reuters on Friday.
“There are considerations, but no decisions yet,” the person said. A second source familiar with the matter confirmed this.
Deutsche Post is exploring ways to stem losses from DHL in the United States, where economic weakness has stalled its recovery as it tries to take on dominant domestic rivals UPS and FedEx.
The company said this week it would write down around 600 million euros (USD879 million) on the value of the business after previously abandoning a target to break even at DHL in the United States in 2009.
And Deutsche Post’s chief executive, Klaus Zumwinkel, has said the role of Postbank in the group could be considered following the deregulation of the German mail market at the start of 2008. Many banks are interested, Zumwinkel told analysts in November.
His comments have been taken as a signal in the market that the bank would be sold.
The Financial Times Deutschland said on Friday that Postbank would be merged with another bank and not sold, while Post is in talks with FedEx about the U.S. package delivery business.
Teaming up with FedEx in the domestic U.S. business whilst offering FedEx a joint venture in Europe to enable it to deepen its presence could be the “most elegant solution for the massive profitability problems of DHL in the U.S.”, ING analysts wrote.
Deutsche Post is considering its options for retail bank Postbank and its loss-making DHL Express unit in the United States but has not reached any decisions, a source close to the supervisory board told Reuters on Friday.
“There are considerations, but no decisions yet,” the person said. A second source familiar with the matter confirmed this.
Deutsche Post is exploring ways to stem losses from DHL in the United States, where economic weakness has stalled its recovery as it tries to take on dominant domestic rivals UPS and FedEx.
The company said this week it would write down around 600 million euros (USD879 million) on the value of the business after previously abandoning a target to break even at DHL in the United States in 2009.
And Deutsche Post’s chief executive, Klaus Zumwinkel, has said the role of Postbank in the group could be considered following the deregulation of the German mail market at the start of 2008. Many banks are interested, Zumwinkel told analysts in November.
His comments have been taken as a signal in the market that the bank would be sold.
The Financial Times Deutschland said on Friday that Postbank would be merged with another bank and not sold, while Post is in talks with FedEx about the U.S. package delivery business.
Teaming up with FedEx in the domestic U.S. business whilst offering FedEx a joint venture in Europe to enable it to deepen its presence could be the “most elegant solution for the massive profitability problems of DHL in the U.S.”, ING analysts wrote.
RIGHT DIRECTION
“Shareholders should be interested in a solid and sustainable solution for DHL’s problems rather than wanting any solution straightaway,” the analysts said. “The new information again suggests that the company is moving into the right direction.”
But some analysts on Friday suggested merging Postbank with another bank and keeping it within the group was a less probable move.
“We do not believe these new suggestions would be the most likely outcome, given the capital injection that would be required for a sizeable merger and the rationale behind such a restructuring,” Bear Stearns analysts wrote.
But, “there is a high level of politics involved in this process and predicting an outcome is difficult.”
Deutsche Post and Postbank declined to comment on Friday.
On Wednesday Deutsche Post’s finance chief, John Allan, said he had nothing to add about Postbank.
Asked about U.S. express delivery, he told reporters work was continuing to identify the best way of improving performance and that a variety of options were being considered. But it was too early to give any details.
But he said Post was committed to maintaining a significant presence in the U.S. market, which remained of strategic importance to the group.
Shares in Deutsche Post were 3.2 percent higher at 22.12 euros by 1227 GMT on Friday, putting it among the top gainers in the DAX index .GDAXI, which was 1.7 percent firmer. (Reporting by Matthias Inverardi; Writing by James Regan; Editing by Greg Mahlich)
