Deutsche Post Profits More From Postcards Than Express Mail
Deutsche Post AG Chief Executive Klaus Zumwinkel has spent $5 billion on acquisitions since 1998 to reduce dependence on the domestic mail business. So far, the company still makes more money from delivering postcards than from flying urgent documents to their destination on time.
Europe’s largest postal service expects its mail business to be four times more profitable this year than either its new express or goods-transport businesses. The express service DHL International, now 76 percent-owned by Deutsche Post, had a first- half loss of 25 million euros ($24.7 million.)
Deutsche Post “really needs to sort out its internal problems,” said Dana Deusing, who helps manage about 5 billion euros at AM Generali and doesn’t own Deutsche Post shares. “There’s too much negative news.”
Zumwinkel explained Deutsche Post’s expansion strategy by saying profit margins at the acquired companies are better than they were and will improve further by 2004 or 2005.
“We asked customers what they expect Deutsche Post to look like in the future and they wanted an international delivery business,” he said in an interview. “Our strategy is customer driven. That’s why we are expanding.”
With Deutsche Post set to lose its German letter-delivery monopoly in 2007, Zumwinkel said he intends to look for more takeover targets, particularly in North America and Asia. “Several companies are pretty cheap because of recent share-price erosion,” he said without naming any.
