Deutsche Post may buy back shares to boost price

Deutsche Post World Net, the parent of DHL, plans to raise dividends and may buy back stock to boost its share price. The announcement by chief executive Klaus Zumwinkel pushed shares of Europe’s biggest postal service to their largest increase in three years. Deutsche Post intends to increase the payout ratio from the current 37.4 percent of net income as earnings rise, Zumwinkel told shareholders at the company’s annual meeting Wednesday in Cologne. The company forecast operating profit will rise to least 5 billion euros $6.4 billion by 2009. Deutsche Post affirmed its 2006 earnings and sales forecasts. It has spent about $20 billion on foreign acquisitions since 2000, ahead of the loss of its German mail monopoly in 2008. In the U.S., DHL is expected to turn a profit by 2009 as it wages a costly battle against UPS and FedEx Corp. Deutsch Post acquired the former ground operations of Airborne Express in 2003. Shares of Deutsche Post rose as much as 5.1 percent, to 23.49 euros, the biggest jump since Feb. 10, 2003. Shares fell 7 percent on March 14, the most in almost four years, after the company said full-year earnings will stall and DHL’s U.S. business will post a loss. The U.S. operations will post losses again in 2006 and 2007 after a 400 million-euro loss last year, according to the company. Deutsche Post reiterated that it expects the unit to contribute to earnings by 2009. We have to accept that becoming profitable in the U.S. will take longer than planned,’ Zumwinkel said. We are convinced that we can establish ourselves there as a strong and profitable No. 3 by 2009.’ Problems at DHL’s new hub in Wilmington, Ohio, undercut profits in the fourth quarter of 2005, and are still having an effect, putting a painful strain on our earnings,’ Zumwinkel said, adding that DHL is focused on winning back customers lost due to the service breakdowns. Deutsche Post expects groupwide 2006 earnings before interest and taxes of at least 3.7 million euros and sales exceeding 60 billion euros. Operating profit last year rose 25 percent to 3.76 billion euros following one-time gains. The company is also recommending Juergen Weber, Deutsche Lufthansa AG’s supervisory board chairman and a former chief executive of the airline, to become Deutsche Post’s supervisory board chairman. The German government, which sold Deutsche Post shares in a 2000 initial public offering, owns a 41.7-percent stake held by state-owned development bank KfW Group.