Deutsche Post Profit Rises Fastest Since Late 2011 on Parcels
Deutsche Post AG’s quarterly profit jumped at the fastest pace in 4 1/2 years after prices increased and deliveries on behalf of internet-based retailers rose. The stock gained to an eight-month high.
Second-quarter operating profit surged 40% to 752 million euros ($843 million), beating the 737 million-euro average of analyst estimates compiled by Bloomberg News. The growth was the steepest since the fourth quarter of 2011. Gains were propelled by rising parcel deliveries for online retailers and an increase in German postage rates for standard letters, Bonn-based Deutsche Post said in a statement. The mail operator reiterated its full-year profit forecast.
Deutsche Post, which also owns the DHL express and logistics brand, is betting that growth generated by electronic commerce will more than offset weakening letter volume, which it expects to fall by as much as 3% per year.
“We expect momentum in the third quarter to remain strong,” helped by the express division, and the company may meet 2017 earnings estimates a year early, analysts at J&E Davy, including Stephen Furlong, wrote in a report.
Full-year EBITA will be in a range of 3.4 billion euros to 3.7 billion euros, Deutsche Post said. Revenue in the second quarter fell 3.5% to 14.2 billion euros, held back by currency shifts and lower fuel surcharges, the company said.
The volume of time-definite international express shipments rose 8.2%. Airfreight volume dropped 4.7% in the quarter, while ocean-freight shipments increased 3.1%, Deutsche Post said. Parcel shipments in Germany jumped 12%, while revenue from that business rose 18% in Europe outside Germany, and 8.5% further abroad.
“The boom in online retail continues unabated,” Chief Financial Officer Larry Rosen said in an interview posted on the company’s website. “This particularly applies in Germany. We are becoming increasingly successful in converting volume growth into an above-average rise in earnings.” He added a conference call that three extra working days in the quarter versus the 2015 period contributed to the parcel boost.
Deutsche Post raised the price for delivering a standard letter in Germany to 70 cents from 62 cents at the beginning of the year. Second-quarter earnings were boosted by a recovery from a pay strike in the year-earlier period. The company also said it’s selling its 3-year-old Postbus passenger operations to FlixMobility GmbH after the unit didn’t meet profit targets.
