Deutsche Post's Zumwinkel sees Co fully privatised by 2007

Deutsche Post World Net AG management board chairman Klaus Zumwinkel said he expects the German government will have completely privatised the company by 2007.

In an interview with AFX News, Zumwinkel said he considers it a ‘wise’ move to privatise the company in stages until 2007.

Asked when he expects the company to be fully privatised, he said the company now has a free float of around 32% and added: ‘I expect that by 2007, when the exclusive license expires, the free float would be 100%.’

‘I’m very comfortable with that. That’s another three to four years, and I think that it would be a wise decision to do it in a pragmatic and a controlled way,’ he added.

Deutsche Post has an exclusive license for letters weighing up to 100 grams until Dec 31, 2005. From Jan 1, 2006 until Dec 31, 2007, the monopoly will only be for letters weighing 50 grams and less.

The German government sold about 32 pct of its shareholdings at an IPO late in 2000, and two weeks ago, it transferred 334 mln Deutsche Post shares to the state-owned Kreditanstalt fuer Wiederaufbau (KfW) for sale to private investors when the market conditions are favourable.

The transfer to KfW this month means that the government’s direct shareholding is now around 20 pct while Kfw holds 48.3 pct.

Zumwinkel said Deutsche Post faces a major task to integrate its sorting and distribution centres when the population of the EU grows to 450 mln as 10 new countries join next year.

‘In Europe… we have a big integration task to build the network for 450 million people. In the US, we just started the integration process (between) Airborne and DHL. In Asia, that is an area where we are the number one in market position,’ he said.

He said the money raised from the Postbank AG IPO, expected to take place in autumn next year, would be partly used to build new hubs for its sorting and distribution network in an enlarged EU.

Deutsche Post considers Asia a growth market and is therefore investing ‘heavily’ in that region, such as in an air hub facility in Hong Kong as well as in building hubs and distribution networks in China.

Commenting on the integration between Airborne and DHL in the US, Zumwinkel said there will be no ‘big integration costs’ and that these costs have already been factored in the forecast for a breakeven in US operations in 2005.

‘We are now in the middle of the process of integrating it’ and he expects this to be completed by next year.

‘On the quality side, Airborne is focused on the top 500 Fortune (companies) and they have always delivered the right quality for these customers. Therefore we don’t have problems in the quality,’ he added.

Analysts have said Airborne’s services are still not as good as those of UPS and Fedex and may well have to make additional investments to bring it up to par with its competitors.

Zumwinkel said by combining Airborne and DHL under the DHL brand name, the company will be able to offer customers both national and international services, which will be a ‘major factor for the success’ of Deutsche Post.

‘What Airborne had in the past was that they could not offer international products. And vice versa for DHL. In the US, it could not deliver national products,’ he said.