Deutsche Post sees DHL contributing 90 Million Eur loss in FY

Deutsche Post World Net AG unit DHL International, together with its US unit, is expected to contribute a loss of 90 mln eur to its German parent for the 2001 full year, Deutsche Post chief financial officer Edgar Ernst told analysts in a telephone conference.

“DHL International including the US is expected to generate a negative contribution to Deutsche Post of some 90 mln eur,” Ernst said.

Ernst said excluding the US unit, the full year EBIT margin for DHL International would be “approximately 2 pct”.

DHL’s US unit, however, is expected to generate a loss for the full year due to economic conditions and the effects of the September 11 terrorist attacks, he said.

Ernst said Deutsche Post holds 46.6 pct in DHL International and will raise this to around 51 pct in early 2002.

The business development of DHL International for the first nine months was “clearly following the trend” and revenue growth year on year was 7 pct, he said.

In its nine-months report released early today, Deutsche Post said EBITA of DHL International, excluding the US operations, was lower than planned and network capacities are being adjusted.

Ernst declined to disclose details on capacity adjustments but said the planned five-year capital expenditure announced in 1999 will be reduced from the original 3 bln eur, as some options to acquire new aircraft will not be exercised due to the weaker economic outlook.

“We will not exercise options on the plans because the growth rate (of the business) is lower than anticipated,” he said.

Asked about cost cutting plans, he said DHL has taken measures to freeze hiring, decrease salaries and increase productivity.

Ernst said DHL was split into the US company and DHL International, which handles all non-US activities, because non-US citizens are not allowed to hold more than 25 pct stake in the US firm.

He said he expects the current capital structure in DHL as a whole to remain as it is.