Tag: Deutsche Post

Deutsche Post seeks FedEx partnership to stem DHL Express US losses – report

Posted by | Jan 25, 2008 | |

Deutsche Post is reportedly in talks with FedEx over a partnership with DHL Express designed to reduce its heavy losses in the USA. The report, which follows news of the planned EUR 600m writedown of US assets, has not been confirmed.

The Financial Times Deutschland reported today that DPWN executives want FedEx to take over DHL Express’ domestic US operations. In exchange, DHL Express would provide services in Europe for FedEx. Talks are taking place with FedEx chairman Fred Smith, the newspaper said, citing sources close to the company. DPWN CFO John Allan told the newspaper: “We have several options.”

News agencies cited DPWN spokespersons as saying that no decisions have yet been made about the future of the US express business. Talks with FedEx were not confirmed.

The Frankfurter Allgemeine Zeitung’s online website cited Allan on Friday as saying that it was “ very, very unlikely” that the domestic US business would be given up due to the strategic importance of the market. The priority was to reduce the US losses “as quickly as possible and very substantially”. But this did not necessarily mean having to make a profit in the USA since a substantial amount of international business was generated there, he noted.

Influential analysts recently called on DPWN to downscale its US express operations significantly to reduce long-running heavy losses. Last November, due to the increasing impact of the slowing US economy, DPWN scrapped the target of achieving a breakeven in the USA by 2009.

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DHL denies sale to FedEx

Posted by | Jan 25, 2008 | |

A DHL spokesman says parent company Deutsche Post World Net has no plans to sell its U.S. Express delivery service to its Memphis-based rival FedEx Corp.

“There is no question about our exiting the U.S. business, a withdrawal can be completely ruled out,” DHL spokesman Jonathan Baker said in a phone interview with Memphis Business Journal, a Courier sister paper, Friday morning.

Baker said he’d been fielding calls from news media across the country after a story about a possible deal appeared in Financial Times Deutschland, a German business newspaper, Friday morning.

That report said Deutsche Post World Net was in talks with FedEx founder, chairman, president and CEO Frederick Smith about the possibility of a buyout or a partnership.

In return, Deutsche Post World Net would give FedEx a larger presence in the European market, according to the report.

DHL is the main customer for ABX Air, based in Wilmington. DHL has spent billions of dollars to build up its domestic presence. Nonetheless, U.S. operations lost USD 900 million last year and analysts don’t foresee a profit this year.

The company has said it will take an USD 874 million writedown of the value of its struggling DHL Express business in the Americas. Baker said that move was more about accounting than sales and said DHL’s problems were industrywide.

“Just like everyone else, (our problems) are a result of economic conditions that have affected the industry as a whole,” he said. “We’re continuing improvement in our U.S. business and are dedicated to serving our customers.”

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German Cartel Office says new rules will help Deutsche Post 'cement' monopoly

Posted by | Jan 25, 2008 | |

The minimum wage in the German postal-services industry and plans to maintain a sales tax exemption for Deutsche Post AG will help the company ‘cement’ its monopoly, the head of the German Cartel Office told Sueddeutsche Zeitung.

Imposing a minimum wage on the industry was a ‘regulatory sin’ and plans to only grant a sales tax exemption for postal services to companies that provide country-wide services will subdue burgeoning rivals, German antitrust regulator Bernhard Heitzer said in an interview with the newspaper.

‘We shouldn’t make the same mistakes that were made in the energy industry, where the market was liberalised without providing for the right competitive framework,’ Heitzer said.

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FedEx in talks to buy DHL stake

Posted by | Jan 25, 2008 | |

FedEx reportedly is in talks to buy all or part of Deutsche Post’s DHL delivery business in the U.S. in a deal that would help it challenge larger rival UPS.

Seeking to cut losses in the hyper-competitive domestic fast delivery business, Deutsche Post may move to trim its DHL business in the United States, without abandoning it completely, according to published reports on Friday.

Deutsche Post CFO John Allan was quoted by Frankfurter Allgemeine Zeitung, a German newspaper, that a total sale of DHL in the U.S. is “very, very unlikely.”

A deal could be in the works by May at the latest, according to the report.

Shares of FedEx rose 1.6% to end at USD89.96, bucking the move down in the overall market. UPS fell 1.8% to USD69.97.

A spokesman for Memphis-based FedEx didn’t return a phone call from MarketWatch.

Analyst Rick Paterson of UBS said FedEx doesn’t really need DHL’s U.S. delivery assets, and that it simply has to wait for it to lose ground over time to eventually win over its domestic market share.

FedEx, however, would benefit if DHL allowed it to become the U.S. distributor of its hefty package traffic originating in Europe and Asia, he said.

FedEx would have the edge in any talks because Deutsche Post is under pressure from shareholders to produce some kind of value for DHL.

A deal between DHL and UPS is less likely because of the “more contentious relationship” between the two giants overseas, he said.

One of the world’s largest delivery companies with 4,000 offices, DHL traces its roots to 1969 in the U.S. before being acquired by Deutsche Post in 2002.

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Deutsche Post studying restructuring

Posted by | Jan 25, 2008 | |

Deutsche Post is considering its options for retail bank Postbank and its loss-making DHL Express unit in the United States but has not reached any decisions, a source close to the supervisory board told Reuters on Friday.

“There are considerations, but no decisions yet,” the person said. A second source familiar with the matter confirmed this.

Deutsche Post is exploring ways to stem losses from DHL in the United States, where economic weakness has stalled its recovery as it tries to take on dominant domestic rivals UPS and FedEx.

The company said this week it would write down around 600 million euros (USD879 million) on the value of the business after previously abandoning a target to break even at DHL in the United States in 2009.

And Deutsche Post’s chief executive, Klaus Zumwinkel, has said the role of Postbank in the group could be considered following the deregulation of the German mail market at the start of 2008. Many banks are interested, Zumwinkel told analysts in November.
His comments have been taken as a signal in the market that the bank would be sold.

The Financial Times Deutschland said on Friday that Postbank would be merged with another bank and not sold, while Post is in talks with FedEx about the U.S. package delivery business.

Teaming up with FedEx in the domestic U.S. business whilst offering FedEx a joint venture in Europe to enable it to deepen its presence could be the “most elegant solution for the massive profitability problems of DHL in the U.S.”, ING analysts wrote.

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