Integrator share prices slump as oil prices soar

Stock prices of top express companies including DHL parent Deutsche Post World Net, TNT, UPS and FedEx have fallen dramatically over the last six months, primarily due to rising oil prices and worsening economic conditions.

DPWN has experienced the most dramatic fall. Its June 30 share price of EUR 16.60 represented a 17.5 pct fall on the previous month and a 28.5pct slump compared to January 2, 2008.

TNT shares also fell sharply by 14.5pct to EUR 21.72 as of June 30 compared to one month earlier, and ended the first half of 2008 with an overall decrease of 22.2pct. Despite the completion of a EUR 500 million share buyback programme, its stock price was negatively impacted by the weaker economic environment, rising oil prices and a Q1 profit drop of 17.7pct.

UPS suffered a share price drop of 14.1pct to USD 61.47 as of June 30 compared to the previous month. The six-month drop in the share price was slightly lower at 12.5pct. In Q1, the slowing US economy and unprecedented increase in the cost of fuel along with additional charges for aircraft retirement and redundancies caused lower-than-expected US package volume and an accelerating contraction in the use of premium air products which resulted in a double-digit drop in profit.

FedEx is also suffering from the triple impact of soaring fuel prices, the weak US economy and financial charges causing its shares to fall by 14.5pct to USD 78.79 as of June 30 compared to May 30. It had the lowest half-year share price fall of the “Big Four” with 8.55pct.

Trying to compensate for higher fuel costs, the four integrators increased their air fuel surcharges dramatically to the 20pct – 30pct range last month as soaring oil prices drove up operating costs.

Stock prices of top express companies including DHL parent Deutsche Post World Net, TNT, UPS and FedEx have fallen dramatically over the last six months, primarily due to rising oil prices and worsening economic conditions, a CEP-Research analysis shows.

DPWN has experienced the most dramatic fall. Its June 30 share price of EUR 16.60 represented a 17.5 pct fall on the previous month and a 28.5pct slump compared to January 2, 2008. Key factors behind the decline include the high losses of DHL Express in the USA, rising fuel costs, the international financial market crisis and one-off effects. These also contributed to a sharp profit fall of 14.7pct in the first quarter of 2008.

TNT shares also fell sharply by 14.5pct to EUR 21.72 as of June 30 compared to one month earlier, and ended the first half of 2008 with an overall decrease of 22.2pct. Despite the completion of a EUR 500 million share buyback programme, its stock price was negatively impacted by the weaker economic environment, rising oil prices and a Q1 profit drop of 17.7pct. The main factors behind the lower Q1 results were a combination of one-off effects, unfavourable phasing of the Easter week causing 2-3 fewer working days and foreign exchange fluctuations.

The two US integrators, UPS and FedEx, have been hit strongly by the dramatic slowdown in the US economy as well as soaring fuel prices.

UPS suffered a share price drop of 14.1pct to USD 61.47 as of June 30 compared to the previous month. The six-month drop in the share price was slightly lower at 12.5pct. In Q1, the slowing US economy and unprecedented increase in the cost of fuel along with additional charges for aircraft retirement and redundancies caused lower-than-expected US package volume and an accelerating contraction in the use of premium air products which resulted in a double-digit drop in profit.

FedEx is also suffering from the triple impact of soaring fuel prices, the weak US economy and financial charges causing its shares to fall by 14.5pct to USD 78.79 as of June 30 compared to May 30. It had the lowest half-year share price fall of the “Big Four” with 8.55pct.

As a result of the above mentioned factors, FedEx fourth-quarter and full-year profits dropped sharply with a reported net loss of USD 241 million, a 140pct decline on the previous year’s USD 610 million Q4 profit. The group’s operating profit declined by 116pct from a USD 1,012 million profit to a USD 163 million deficit. The bulk of the decline was due to the one-off impairment charge of USD 891 million for FedEx Office (formerly FedEx Kinko’s), but in addition fuel costs rose 54pct and weak US domestic demand hit domestic US express volumes.

Trying to compensate for higher fuel costs, the four integrators increased their air fuel surcharges dramatically to the 20pct – 30pct range last month as soaring oil prices drove up operating costs.