Deutsche Post Shares Slump on Profit Warning -- Update
June 08 2018 - 8:26AM
Dow Jones News
By Nathan Allen and Max Bernhard
Shares in Deutsche Post AG (DPW.XE) dropped sharply Friday after
the logistics company issued a profit warning for 2018 and
announced a series of measures to remedy declining profits at its
post, e-commerce and parcel divisions.
The German post and logistics company, which operates under the
DHL brand, said it expects 2018 earnings before interest and taxes,
or EBIT, to be around 3.2 billion euros ($3.78 billion) compared
with an earlier estimate of EUR4.15 billion.
Deutsche Post has been struggling with e-commerce driven growth
in parcel delivery, which has higher associated costs and requires
greater transport capacity than delivering mail.
In the past, "the focus was more on strong parcel growth and
short-term profitability than on continuous investments in
productivity," Deutsche Post said.
At 11:31 GMT shares in Deutsche Post were trading down 7.2% at
EUR30.34.
In an effort to improve productivity, Deutsche Post said it
plans to invest between EUR100 million and EUR150 million per year
in automation and digitalization to improve customer service and
boost efficiency.
These investments are planned until 2020 and beyond, Chief
Executive Frank Appel said in a call to journalists.
The group said it will introduce an early retirement program in
Germany to reduce its fixed-cost base, representing the bulk of a
EUR500 million restructuring charge in 2018. The measures should
lead to annual savings of between EUR150 million and EUR250
million, Deutsche Post said.
Mr. Appel said he was "very confident" the group would hit its
2020 EBIT target of more than EUR5 billion.
"In order to deliver long-term sustainable growth, we are now
consciously accepting short-term negative effects on our earnings,"
he said.
Write to Nathan Allen at nathan.allen@dowjones.com and Max
Bernhard at max.bernhard@dowjones.com
(END) Dow Jones Newswires
June 08, 2018 08:11 ET (12:11 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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