Deutsche Post World Net AG. is planning to hike the number of its automatic parcel delivery stations in Germany to 2,500 from a current 1,000 by the end of 2009, also using stores of retailer Aldi, Focus reported in an article to be published tomorrow, citing no sources.
The total investment is seen at 20 million to 30 million euros, Focus added, with several hundred stations to be installed in Aldi stores.
Read MoreDeutsche Bank has written off a further EUR 2.3bn (GBP 1.8bn) to take its total credit crunch bill to more than GBP 5bn – one of the largest reported by any European bank.
Germany’s biggest bank was forced to admit to further losses caused by investments in mortgage-backed securities, commercial property loans and the monoline insurers that support bond issuers.
The write-downs drove its second-quarter earnings down to EUR 642m compared with EUR 1.8bn in the same period last year. There was some relief that the bank had managed to stay in the black after reporting a first-quarter loss.
This helped prompt speculation that Deutsche may be interested in bidding for Postbank, the retail banking division of Deutsche Post.
The losses also prompted discussions about whether Deutsche is too reliant on investment banking, which contributes about a third of its pre-tax profit.
The pain felt by Deutsche from the seizing up of financial markets has not been as great as that reported by UBS, which has recorded about GBP 19bn of write-downs. Wall Street firms have been hit harder. Merrill Lynch is trying to shore up a balance sheet dented by GBP 26bn of write-downs.
Deutsche may manage to avoid raising capital as the bank’s tier one capital ratio, used to measures its financial strength, is 9.3 pct. Its target is 8-9 pct.
Read MoreDeutsche Post World Net has backed out of a planned IT outsourcing megadeal with Hewlett-Packard worth billions of dollars, InformationWeek has learned.
Deutsche Post, the German logistics company and parent to DHL, chose not to finalize the contract after a six-month review found the “benefits, particularly in the early years, do not outweigh the risks,” according to an internal memo.
The dropped outsourcing deal called for HP to hire 2,500 Deutsche Post employees, including those working for DHL. It included taking over the operations and management of data, infrastructure, networks, and software running in data centers in Scottsdale, Ariz.; Prague, the Czech Republic; Malaysia; and other regions.
Although the companies didn’t make the contract size public in January, when they announced the signing of a letter of intent, they said Deutsche Post would save at least 1 billion euros over seven years by outsourcing IT and expected to reach a “definitive agreement” with HP by the middle of 2008.
In a July 21 e-mail to employees, Stephen McGuckin, IT Services Managing Director at Deutsche Post, wrote that the deal had fallen through partly because it wasn’t going to bring Deutsche Post the expected savings.
During the past six months, “both companies have learnt much about the challenges, risks and benefits of the proposed outsourcing. More significantly [Deutsche Post] IT Services continued to improve its cost position, increased the number of services delivered while also maintaining service levels. Simply put, during the six months of the evaluation, our improving cost position made HP’s job that much harder and their cost reduction target that much more difficult to achieve.”
McGuckin added that the decision is “not a reflection of HP’s merits as a service provider; it is a vote of confidence in [Deutsche Post] IT Services and our track record of service delivery.”
Read MoreDeutsche Post AG , said second-quarter profit fell 11 percent on costs to revamp the DHL Express division’s U.S. unit and after writedowns hurt earnings at Deutsche Postbank AG.
Net income fell to 254 million euros (USD 396 million), or 21 cents a share, from 285 million euros, or 24 cents, a year earlier, Bonn-based Deutsche Post said in a statement. Sales rose 5 percent to 16.2 billion euros.
Chief Executive Officer Frank Appel forecast in May that the DHL U.S. express-delivery unit will suffer a loss of USD 1.3 billion this year as a slowing U.S. economy hurts demand for air shipments and the business struggles to compete with United Parcel Service Inc. and FedEx Corp. Postbank, also based in Bonn, yesterday 30th July reported a 21 percent drop in second-quarter profit because of writedowns on debt-related investments.
Deutsche Post announced plans in May to limit losses at the U.S. express-delivery operations by shrinking the network, firing workers and transferring air deliveries to Atlanta-based UPS. The revamp will cost the mail carrier USD 2 billion through 2009, it forecast at the time. Deutsche Post said today the unit’s reorganization is “on track” and that talks with UPS over a final contract are making progress.
Postbank, of which Deutsche Post owns 50 percent plus one share, said yesterday that second-quarter net income fell to 119 million euros from 151 million euros a year earlier after writing down the value of securities by 143 million euros. The quarter’s markdowns bring Postbank’s total losses related to the U.S. subprime-mortgage-market collapse to 429 million euros.
Appel said in a statement today that the mail carrier is having discussions with “various potential partners” on the bank’s future. Deutsche Post announced June 25 it’s holding “exploratory” talks about a sale of Postbank as the company focuses on mail, express deliveries and logistics.
Postbank may fetch 9 billion euros to 11 billion euros, Carsten Werle, an analyst at Sal. Oppenheim in Frankfurt, wrote to investors this month. The bank has a market value of about 7.6 billion euros after the stock dropped 23 percent this year.
Deutsche Post World Net reported double-digit growth in its underlying EBIT for the first half, despite challenging economic conditions. Underlying EBIT, or earnings before interest and taxes excluding non-recurring effects, gained 12 percent to 1.9 billion euros.
Reported EBIT declined by 11 percent to 1.5 billion euros due to one-time charges at the Group’s Financial Services division and costs to restructure its DHL U.S. Express business. Revenue gained 3.4 percent, with growth being held back by negative currency effects. Excluding those effects, revenue grew
7.8 percent.
Deutsche Post has been able to maintain its position following the full opening of the German letter mail market on Jan. 1, 2008 with the impact of a worsening economic environment remaining limited. Total volumes in its Mail Communications unit increased by 3.2 percent in the second quarter, with the number of customer contact points being raised further.
Revenue in the Mail division rose 1.6 percent to 3.4 billion euros in the quarter. EBIT gained 1.9 percent to 321 million euros in spite of the new market environment and higher costs.
In the Express division the leading position in most markets outside the U.S. was maintained, helped by strong growth in its cross-border Day Definite and Domestic businesses. The division also benefited from its strong presence in fast-growing regions such as Asia/Pacific and Eastern Europe/Middle East/Africa (EEMEA). Accordingly, Asia/Pacific recorded organic revenue growth – excluding currency effects and other non-operative items – of 13 percent.
In the EEMEA region, organic revenue rose 26 percent, helped by higher fuel surcharges and strong performance of almost all products. In the Express Americas division, organic revenue increased 4.2 percent, due to increased demand for Day Definite products in Latin America, Canada and the Carribbean.
Measures to restructure the Group’s DHL Express U.S. business are on track, despite deteriorating market conditions and the weakening economic environment in the U.S. Deutsche Post World Net in May presented a plan to restructure DHL Express U.S. to cut losses by 1 billion dollars in 2011. By that time, the Group expects the contribution to the global network to exceed the losses incurred by the business. Negotiations about a planned air lift agreement with United Parcel Service (UPS) are making progress.
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