Deutsche Post takes blows
Deutsche Post, the German postal and logistics operator gearing up to enter the UK market, yesterday warned its profits would slump by 10%-15% this year because of the weak global economy.
The company, which has applied for an interim UK licence to deliver some 40m pieces of business mail a year, said net first-half earnings fell 85% to just euros 155m (pounds 97m) after the EU ordered it to repay euros 572m in state aid.
The group, which is expected to make serious inroads into loss-making Consignia’s previous UK monopoly from early next year, also expects annual earnings to fall euros 300m over the next five years because of price cuts ordered by the new German regulator.
Its chief executive, Klaus Zumwinkel, said: “We have been dealt two hard political blows but we’re not going to be knocked out by them.”
Deutsche Post’s problems scarcely compare with those of Consignia, now becoming the Royal Mail group, which lost pounds 1.2bn last year, is sacking 30,000 and closing 3,000 sub-post offices. But Mr Zumwinkel has already warned that the regulatory squeeze could cost 10,000 jobs among its 320,000 employees and closures among its 13,000 branches.
Yesterday he announced a five-point plan to save euros 300m a year to offset the threat to earnings via charging for previously free services such as redirection and an aggressive expansion of its DHL express delivery service.
DHL, consolidated for the first time, helped boost first-half sales by 15% to euros 19.4bn. But the group was forced to take a euros 850m charge for the Brussels decision which virtually wiped out the euros 1bn profit gained in the first six months of 2001.
Dr Zumwinkel said the group intended focusing increasingly on foreign markets. The UK regulator, PostComm, is expected to rule this month in favour of the application for an interim licence. Viewed as a pilot project lasting 12 months by the German group, it is expected to apply for a “standard” seven-year licence on January 1.
