DPSGY Deutsche Post AG (PK)

   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)

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