Deutsche Post Plans Further Expansion

German postal and logistics group Deutsche Post AG plans to continue with its expansion course this year despite the difficult economic environment.

“In 2002 and the following years we will take a significant step towards our goal of becoming the world’s leading logistics group,” said Chief Executive Klaus Zumwinkel at the company’s annual news conference on Monday.

Zumwinkel said that Deutsche Post’s global expansion plans entailed partnerships and takeovers. A clear strategy for the future had been drawn up for all of the group’s divisions. In its letter-delivery business, Deutsche Post plans to strengthen its “quality and cost leadership” and expand outside Germany as part of the ongoing liberalization of Europe’s postal markets.

To this end Zumwinkel did not rule out investments in other European postal services providers. He said the possibility of an investment in Greece’s national postal services group had already been examined and then ruled out. Zumwinkel said a strategy on exploring the European letter-delivery market would be presented in the summer.

Deutsche Post also plans to combine its leading position in express parcel deliveries in Europe (Euro Express) with its global express business (DHL), taking a similar route to the one that its major rivals UPS and Fedex have followed in the United States.

In logistics, Deutsche Post plans to build on its “number one position” in air freight, in particular in Asia and the United States. Postbank, the group’s banking arm, is to focus on retail banking and logistics financing.

But for 2002, Zumwinkel still sounded a word of caution, saying that it would be “a challenge” to increase earnings this year. “Our goal for 2002 is, of course, to avoid a decline in earnings,” he said. He forecast that sales in 2002 would rise by more than 20% to 41 billion euros following the full consolidation of DHL.

In 2001, the group missed its sales target. In its letter-delivery business, earnings and sales came in slightly below the previous year’s levels. After the company forecast growth of 5%, sales actually rose by just 2.1% to 33.4 billion euros. But earnings before interest and taxes rose by 7.3% – above the group’s 5% growth forecast – to 2.55 billion euros. Deutsche Post plans to increase its dividend by 37% to 0.37 euros.

Zumwinkel also said that he did not expect the government to place a second tranche of Deutsche Post shares in the market this year. Deutsche Post Chief Financial Officer Edgar Ernst added that the group will ask shareholders at the annual meeting in June to approve a buyback of shares.

Shares in Deutsche Post on Monday closed down 2.43% at 16.43 euros.