UPDATE: Deutsche Post Gives Upbeat Outlook; 2Q Net Profit -71%
23 July 2009 - 5:02PM
Dow Jones News
Postal giant Deutsche Post AG (DPW.XE) Thursday confirmed its
2009 net profit outlook as shipping volumes looked like they may
have reached bottom in the second-quarter, and said it will reach
its cost savings target earlier than expected.
The company expects a net profit for 2009 based on the valuation
of put options on Deutsche Postbank AG (DPB.XE) shares,
substantially above the EUR1.69 billion net loss in 2008. A put is
an option to sell a security at a specified price, usually within a
limited period.
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, but the company
said Thursday that "business development in the second quarter
confirms our view, expressed after the first quarter, that in
percentage terms volume declines may have seen the bottom."
The Bonn, Germany-based company, which competes with TNT NV
(TNT.AE), FedEx Corp. (FDX) and United Parcel Service Inc. (UPS),
said it doesn't believe world trade will make a substantial
recovery in the coming months, but it expects its full-year
adjusted earnings before interest and taxes will reach EUR1.2
billion.
It now said it will hit its EUR1 billion cost savings goal in
the second quarter of 2010, ahead of previous expectations for the
end of 2010.
Reacting to a dramatic downturn in the shipping industry,
Deutsche Post in May stepped up its wide-ranging restructuring
program to cut costs, including extending working hours and
postponing wage increases as well as scrapping organization levels,
in an effort to adjust capacity to demand.
Second-quarter net profit dropped 71% to EUR66 million from
EUR231 million a year earlier, but clearly surpassed a Dow Jones
Newswires poll of 12 analysts, which forecast a net loss of EUR83
million.
Its first quarternet profit had soared to EUR944 million, from a
EUR383 million profit in the same quarter of the previous year, on
higher valuations of put options on Postbank shares.
Its closely watched adjusted earnings before interest and tax,
or EBIT, fell 38% in the second quarter to EUR257 million, but was
helped to some extent by cost reductions mainly in the Express
corporate division.
EBIT was down 70% on the year at EUR109 million in the second
quarter. Sales for the April-to-June period fell 18% to EUR11.07
billion, reflecting a steep fall in shipping demand across the
globe due to a weak economy.
Company Web site: www.dp-dhl.com
-By Hilde Arends, Dow Jones Newswires; +49 69 29725 506;
hilde.arends@dowjones.com