DHLGY Deutsche Post AG (PK)

By Adria Calatayud and Ulrike Dauer

Deutsche Post's application for an increase in letter-postage prices has been rejected by Germany's postal regulator, arguing that the company couldn't sufficiently prove a rise in costs.

Germany's Federal Network Agency, which regulates the country's postal market, said Monday that Deutsche Post wasn't able to prove that a reduction in letter volumes had resulted in higher costs per item. Cost increases arising from inflationary pressures and a collective wage agreement were offset by cost reductions in figures submitted by Deustche Post, the regulator said.

The decision means a figure in the three-digit million euros that the company was hoping to earn would be missing, Deutsche Post Chief Executive Tobias Meyer said during a call with journalists. The group's German post-and-parcel division will examine scaling down investments and additional cost-cutting measures as a result, but a lawsuit can't be ruled out, Meyer said.

Deutsche Post had submitted an application in May for an early increase to postage charges, capped under a framework that went into effect at the beginning of 2022 and will run until the end of 2024, the agency said.

"We see the challenging environment in the letters and parcels business but, according to the data submitted, the letter prices are sufficient to cover the costs per letter item. The regulated letters sector is still making a profit," Federal Network Agency President Klaus Mueller said.

Ulrike Dauer contributed to this story.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

August 07, 2023 06:38 ET (10:38 GMT)

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