Deutsche Post Earnings Fall 6.5% on Increased Labor Costs

Deutsche Post AG (DPW), Europe’s largest postal service, said third-quarter profit fell 6.5 percent as a pay increase caused spending to rise.

Earnings before interest and taxes declined to 604 million euros ($770 million) from 646 million euros a year earlier, the Bonn-based company said in a statement. The average estimate of 11 analysts surveyed by Bloomberg was 641.3 million euros. Revenue climbed 5.7 percent to 13.8 billion euros.

“We will reach our target for the year,” Chief Executive Officer Frank Appel said in the statement. “Our mail division’s profitability was impacted by the new wage agreement, the loss of one workday compared with the previous year” and the effects of the bankruptcy of mail-order customer Neckermann.de GmbH.

The company, the world’s biggest carrier of air and sea freight by volume, has focused expansion of its DHL express- package and cargo businesses in emerging markets to compensate for declines at its traditional mail business. United Parcel Service Inc. (UPS), the world’s biggest package-delivery service, bidding 5.16 billion euros to buy European competitor TNT Express NV (TNTE) to match DHL’s market share in the region.

The TNT takeover is the subject of an extended European Union antitrust probe, and the deal may require “substantial remedies” to gain approval, Competition Commissioner Joaquin Almunia said Nov. 2. Atlanta-based UPS is scheduled to meet EU regulators on Nov. 12 for a hearing on the proposed purchase.

Deutsche Post reiterated its full-year Ebit target today, saying earnings will total 2.6 billion euros to 2.7 billion euros. It boosted the range in August from an earlier forecast of 2.5 billion euros to 2.6 billion euros.

Ebit at the mail division slipped 18 percent to 247 million euros, while earnings at DHL rose 5 percent to 462 million euros, Deutsche Post said.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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