Deutsche Post to press ahead with U.S plans

Deutsche Post, the German postal and logistics provider, on Wednesday pledged to prevent its US competitors from derailing its expansion plans in the US package delivery market, after lifting its full-year profit forecast on the back of a solid first-half.

Klaus Zumwinkel, the chief executive who has pushed through an ambitious 1.4bn ($1.6bn) savings plan aimed at nearly doubling group profits by 2005, said first-half business was “strong despite the continued economic weakness”.

Mr Zumwinkel said the programme’s 174m in half-year savings were higher than planned. By 2005, Deutsche Post wants to save 1.4bn by integrating numerous assets acquired during a recent 6bn shopping spree.

Deutsche Post, he added, would post at least 2.9bn in operating profits in the full year, 100m more than originally expected. As a result, full-year profit would come in just under last year’s despite the absence of negative goodwill at Postbank, which boosted 2002 profits by 220m, and lower stamp prices which will shave 300m off profits this year

Lower stamp prices were largely behind a 6.6 decline in first-half operating profit to 1.47bn. However, net profit during the six-month period rose sharply to 650m from 155m last year, when the European Union imposed a 850m fine for cross-subsidising parcel services.

FedEx and United Parcel Service, the biggest US express delivery services, have launched a campaign to thwart Deutsche Post’s expansion into the lucrative US delivery market by accusing it of violating foreign ownership rules in the US.

They argue that the German postal operator is the direct owner of DHL Airways, whose biggest customer is DHL Worldwide Express, a unit of Deutsche Post. US aviation laws forbid foreign companies from owning more than 25 per cent of a US air carrier.

Deutsche Post is also acquiring Airborne’s US ground services for $1.05bn.

DHL Airways tried to defuse the row earlier this month by announcing that a US investor group led by John Dasburg, chief executive, purchased all the shares of the air carrier, thus putting it firmly in control of US shareholders.

Nevertheless, the US Department of Transportation is examining the ownership structure of DHL Airways and Deutsche Post for violations and will release a decision by October.

Mr Zumwinkel said he was optimistic about overturning the challenges posed by Deutsche Post’s US competitors.