Postal and logistics giant Deutsche Post AG (DPW.XE) Tuesday said first-quarter net profit soared on a higher valuation of put options on Deutsche Postbank AG (DPB.XE) shares and signaled volume declines had stabilized.

The former state monopoly said volume continued to shrink for all products and across all divisions in the first quarter from the fourth quarter of 2008, but the rate of contraction had stabilized, "suggesting that overall flows are bottoming out."

The comments came in a preview of first-quarter results, which are due May 6. It offered few details.

The economic slowdown caused consumer spending to slump and sapped demand for consumer goods, which put the mail and logistics sectors under pressure as shipping volumes fell.

Deutsche Post, one of the world's largest mail and logistics companies, said net profit jumped to nearly EUR1 billion from EUR382 million a year earlier. It cited the higher market valuation of put options on Postbank shares, among other things. A put is an option to sell a security at a specified price, usually within a limited period.

Deutsche Post, which competes with the likes of TNT NV (TNT.AE), FedEx Corp. (FDX) and United Parcel Service Inc. (UPS), is selling its majority stake in Deutsche Postbank and held a 39.5% stake as of March 6.

The Bonn, Germany-based company said reported earnings before interest and tax, or EBIT, were slightly positive in the January to March period, despite significant restructuring costs. Adjusted EBIT fell less than 50% in the quarter, it added, after EBIT reached EUR539 million a year earlier.

Merck Finck analyst Robert Heberger said EBIT and net profit were worse than expected, adding the statement wasn't easy to assess due to accounting changes.

The company continued its EUR1 billion cost-cutting plan, which helped to partly offset the volume declines.

All its Express operations outside the U.S. were profitable and all other divisions reported positive EBIT and adjusted EBIT. The company in November announced it would exit a large part of its DHL operations in the U.S. and book restructuring costs of about EUR3 billion mainly due to changes in its U.S. operations.

UPS and Deutsche Post last week ended talks to start a partnership that would have had UPS air-carry some DHL parcels in the U.S.

The mail unit was unable to mitigate the lower volume, which fell about 5% on the year. The drop was due to digitalization, increasing competition and higher wage expenses and couldn't be offset by one more working day than the same period a year earlier. The company last month said it would invest EUR420 million in its mail business and purchase 385 new mail sorting machines by 2012.

At 1030 GMT, Deutsche Post shares traded down 1.5% at EUR9.22 in a broadly higher market. The shares have shed over 50% of their value in the past 12 months while the Dow Jones Euro Stoxx Industrial Goods & Services index fell just over 40%.

 
   Company Web site: www.dp-dhl.com 
 
   -By Hilde Arends, Dow Jones Newswires; +49 69 29725 506; hilde.arends@dowjones.com