Deutsche Post Stands by Growth Targets as Amazon Threat Looms
Deutsche Post AG stood by profit targets through the end of the decade, dismissing the threat posed by customer Amazon.com's expansion into parcel deliveries.
After cutting profit forecasts twice in 2015, earnings before interest and taxes will be in a range of 3.4 billion euros ($3.75 billion) to 3.7 billion euros in this year and rise more than 8% annually on average through 2020, the Bonn, Germany-based mail operator said May 4.
Plans to return more than 2 billion euros to investors through dividends and a stock buyback are “an expression of confidence” about business in coming years, Chief Financial Officer Larry Rosen said in a Bloomberg Television interview.
Amazon is looking at building its own distribution centers in Germany, raising concerns among analysts at Credit Suisse and JPMorgan Chase & Co. that the move poses a competitive risk to Deutsche Post as the internet retailer poaches the most lucrative business. Deutsche Post executives on May 4 downplayed the concerns.
The most likely scenario for Amazon “is to participate in some niches of the parcel market, not setting up a full network like we have,” Juergen Gerdes, head of Deutsche Post’s parcel and electronic-commerce operations, said at a press conference. “We are very relaxed and look forward to further cooperation” with one of the German company’s biggest customers.
The company, which also owns the DHL express and logistics brand, generated 1.1 billion euros in EBIT last year at its German mail operations, which includes e-commerce and parcel handling for the likes of Amazon. That was equivalent to nearly half of the group’s operating profit.
The volume of packages that Deutsche Post transported in the country jumped 9.4% in the fourth quarter and 8.7% for the full year.
DHL Supply Chain ranks No. 7 on the Transport Topics Top 50 list of the largest logistics companies in North America.
