Deutsche Post said it expects underlying earnings to fall in 2009 as the global economic crisis further chipped away demand for mail and logistics services in the first quarter.
Deutsche Post said it expects underlying earnings to fall in 2009 as the global economic crisis further chipped away demand for mail and logistics services in the first quarter.
“We expect that this level of volume decline will continue throughout the first half of the year, if not longer,” chief executive Frank Appel said in a statement on 25 February.
But 2009 reported earnings, excluding one-time charges, will improve significantly from a 2008 EBIT loss of €567m ($722.5 million), the company said. Analysts polled by Reuters expected a 2008 loss of €706m.
In reaction to weaker business, Europe’s biggest mail and express delivery company said it would cut its 2008 dividend to €0.60 per share from €0.90 a year earlier.
Analysts from brokerages including Deutsche Bank and Commerzbank had expected the dividend to remain unchanged.
Sluggish consumer spending and shrinking investments by businesses are hurting shippers around the world, with the US being hit the hardest. Deutsche Post has lost more than $1bn a year there for the past few years.
The company last year said it would halt its domestic US DHL Express business after failing for five years to gain share in a market dominated by rivals UPS and FedEx.
In 2008, the global Express business posted a reported EBIT loss of €2.1bn, hurt by costs to shut down its US business, where the last domestic shipment went out at the end of January.
Restructuring is on track, Deutsche Post said, adding it already has cut costs faster than expected as domestic revenues fell at a faster-than-expected pace.
The has said it will cut a total of 14,900 jobs and rack up $3.9bn of restructuring costs in the US to shrink its exposure to the market there.
Amid the strategic retreat, Deutsche Post on 25 February said the head of its DHL Express business, John Mullen, had resigned and would be replaced by Ken Allen, who most recently headed up the US restructuring project.
Mullen, who has had health problems, will remain available as an advisor, Deutsche Post said.
The company reported fourth-quarter adjusted EBIT fell 26.7% to €765m ($974.8m), broadly in line with an average estimate of analysts in a Reuters poll.
That put full-year 2008 adjusted EBIT at €2.41bn, just above the company’s own goal, as expected.
According to Thomson Reuters StarMine, which weights analysts’ forecasts according to their track record, Deutsche Post shares trade at 8.7 times projected 12-month earnings, a discount to both UPS and FedEx as investors worry it is losing ground against its rivals.
Deutsche Post shares have lost more than 60% of their value in the past 12 months.