Fanfare for Deutsche Post fizzles

When it comes to the mail, Germany's postal monopoly can deliver – after all, its carriers voted last week not to go on strike. But when it comes to delivering a smile to shareholders – well, investors are still waiting.
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Shares in Deutsche Post AG, issued with great fanfare in a blockbuster offering in November 2000, have traded below their E21 issue price for more than a year. They finished Monday at E14.10 ($13.33), down 34 cents and far below their 12-month peak of E19.81.
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Mail carriers staged a series of warning strikes before settling last week for a 3.5 percent raise in 2002 as part of a two-year contract. Deutsche Post escaped a full-blown strike, but it must now reckon with higher wage costs that are eating into margins, according to Martina Jung, analyst in Frankfurt at Metzler Equity Research.
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"We do not see much potential for the shares in the short term," Jung said.
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Investors were still reacting to the wage settlement when another potential blow came in reports last week from Brussels that the European Commission might force Deutsche Post to pay back E500 million in state aid. In response, Deutsche Post offerred Monday to cut stamp prices to avoid the repayment, sending the stock to a nine-month low Monday. The commission has been trying to determine whether the company used profits from its monopoly domestic mail delivery services to subsidize its unprofitable parcel and express activities.
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Even good news seems to leave shareholders glum. The stock has lagged even though Parliament last year extended Deutsche Post's monopoly on mail delivery, which was to expire this year, until 2007.
.
Last week, shareholders aired their grievances about Deutsche Post's strategy at their annual meeting. Since 1997, the former Bonn-based government agency has been transforming itself into a global company through a spectacular E7.6 billion buying spree that swept up 52 companies from around the world. The acquisitions included DHL World Wide Express and the Swiss-based Danzas AG, Europe's biggest freight-forwarding company. Deutsche Post bought seven U.S.-based rivals and now owns ground carriers and air-cargo operators all across Europe.
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The goal, according to Klaus Zumwinkel, chief executive, is to become the world's No. 1 shipping, express and freight empire.
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With such a global presence, shareholders wonder why the company is still lopsidedly dependent on its domestic mail business. Last year, the company's letter carriers generated 70 percent of company earnings on just 30 percent of sales.
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Some analysts argue that Deutsche Post, which is 69 percent government-owned, needs more time to digest what it has acquired.
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"They are still integrating a lot of those acquisitions," said Matthew O'Keeffe of Deutsche Bank. "They managed to knit together the East German post office with the West German post office and that is no small feat. They have yet to work the same magic on the companies they have acquired."
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– John Schmid (IHT) When it comes to the mail, Germany's postal monopoly can deliver – after all, its carriers voted last week not to go on strike. But when it comes to delivering a smile to shareholders – well, investors are still waiting.
.
Shares in Deutsche Post AG, issued with great fanfare in a blockbuster offering in November 2000, have traded below their E21 issue price for more than a year. They finished Monday at E14.10 ($13.33), down 34 cents and far below their 12-month peak of E19.81.
.
Mail carriers staged a series of warning strikes before settling last week for a 3.5 percent raise in 2002 as part of a two-year contract. Deutsche Post escaped a full-blown strike, but it must now reckon with higher wage costs that are eating into margins, according to Martina Jung, analyst in Frankfurt at Metzler Equity Research.
.
"We do not see much potential for the shares in the short term," Jung said.
.
Investors were still reacting to the wage settlement when another potential blow came in reports last week from Brussels that the European Commission might force Deutsche Post to pay back E500 million in state aid. In response, Deutsche Post offerred Monday to cut stamp prices to avoid the repayment, sending the stock to a nine-month low Monday. The commission has been trying to determine whether the company used profits from its monopoly domestic mail delivery services to subsidize its unprofitable parcel and express activities.
.
Even good news seems to leave shareholders glum. The stock has lagged even though Parliament last year extended Deutsche Post's monopoly on mail delivery, which was to expire this year, until 2007.
.
Last week, shareholders aired their grievances about Deutsche Post's strategy at their annual meeting. Since 1997, the former Bonn-based government agency has been transforming itself into a global company through a spectacular E7.6 billion buying spree that swept up 52 companies from around the world. The acquisitions included DHL World Wide Express and the Swiss-based Danzas AG, Europe's biggest freight-forwarding company. Deutsche Post bought seven U.S.-based rivals and now owns ground carriers and air-cargo operators all across Europe.
.
The goal, according to Klaus Zumwinkel, chief executive, is to become the world's No. 1 shipping, express and freight empire.
.
With such a global presence, shareholders wonder why the company is still lopsidedly dependent on its domestic mail business. Last year, the company's letter carriers generated 70 percent of company earnings on just 30 percent of sales.
.
Some analysts argue that Deutsche Post, which is 69 percent government-owned, needs more time to digest what it has acquired.
.
"They are still integrating a lot of those acquisitions," said Matthew O'Keeffe of Deutsche Bank. "They managed to knit together the East German post office with the West German post office and that is no small feat. They have yet to work the same magic on the companies they have acquired."
.
– John Schmid (IHT) When it comes to the mail, Germany's postal monopoly can deliver – after all, its carriers voted last week not to go on strike. But when it comes to delivering a smile to shareholders – well, investors are still waiting.
.
Shares in Deutsche Post AG, issued with great fanfare in a blockbuster offering in November 2000, have traded below their E21 issue price for more than a year. They finished Monday at E14.10 ($13.33), down 34 cents and far below their 12-month peak of E19.81.
.
Mail carriers staged a series of warning strikes before settling last week for a 3.5 percent raise in 2002 as part of a two-year contract. Deutsche Post escaped a full-blown strike, but it must now reckon with higher wage costs that are eating into margins, according to Martina Jung, analyst in Frankfurt at Metzler Equity Research.
.
"We do not see much potential for the shares in the short term," Jung said.
.
Investors were still reacting to the wage settlement when another potential blow came in reports last week from Brussels that the European Commission might force Deutsche Post to pay back E500 million in state aid. In response, Deutsche Post offerred Monday to cut stamp prices to avoid the repayment, sending the stock to a nine-month low Monday. The commission has been trying to determine whether the company used profits from its monopoly domestic mail delivery services to subsidize its unprofitable parcel and express activities.
.
Even good news seems to leave shareholders glum. The stock has lagged even though Parliament last year extended Deutsche Post's monopoly on mail delivery, which was to expire this year, until 2007.
.
Last week, shareholders aired their grievances about Deutsche Post's strategy at their annual meeting. Since 1997, the former Bonn-based government agency has been transforming itself into a global company through a spectacular E7.6 billion buying spree that swept up 52 companies from around the world. The acquisitions included DHL World Wide Express and the Swiss-based Danzas AG, Europe's biggest freight-forwarding company. Deutsche Post bought seven U.S.-based rivals and now owns ground carriers and air-cargo operators all across Europe.
.
The goal, according to Klaus Zumwinkel, chief executive, is to become the world's No. 1 shipping, express and freight empire.
.
With such a global presence, shareholders wonder why the company is still lopsidedly dependent on its domestic mail business. Last year, the company's letter carriers generated 70 percent of company earnings on just 30 percent of sales.
.
Some analysts argue that Deutsche Post, which is 69 percent government-owned, needs more time to digest what it has acquired.
.
"They are still integrating a lot of those acquisitions," said Matthew O'Keeffe of Deutsche Bank. "They managed to knit together the East German post office with the West German post office and that is no small feat. They have yet to work the same magic on the companies they have acquired."