Deutsche Post Sees Rising Earnings on Internet Commerce

Deutsche Post AG (DPW) said fourth-quarter earnings rose 38 percent, beating estimates, and predicted rising 2013 profit as booming online retail business will more than offset the decline of traditional mail.

Earnings before interest and taxes rose to 827 million euros ($1.08 billion) from 599 million euros a year earlier, Europe’s largest postal service said in a statement today. Profit beat the 791.7 million-euro average of seven analyst estimates compiled by Bloomberg. Revenue climbed 3.2 percent to 14.6 billion euros. The stock rose the most in seven months.

“In 2013, we will continue to do everything in our power to solidify and expand our market position in all business segments,” Chief Executive Officer Frank Appel said in a statement. “Although the first signs of economic stabilization are emerging, we expect at least the first half of the year will remain very challenging.”

Customers shopping online will continue to boost the Bonn- based company’s parcel business by as much as 7 percent per year, helping mitigate the effect of declining volumes in its mail business, it said. High-tech consumers in emerging countries including China also mean rising shipments of electronics goods. The nation became the largest consumer market for personal computers and smart phones last year, according to Deutsche Post.

Shares Rise

Deutsche Post rose as much as 4.4 percent, the biggest intraday gain since Aug. 2, and were up 4 percent at 17.68 euros at 9:40 a.m. in Frankfurt. That values the company at 21.4 billion euros.

Parcel volumes handled by the German group grew 9.8 percent last year, while volumes declined by 3 percent in the company’s mail business.

United Parcel Service Inc. (UPS), the world’s largest package- delivery firm, on Jan. 31 forecast profit for this year that trailed analysts’ estimates as a weak economy saps demand. UPS said it’s focusing on its own operations after terminating an agreement to buy TNT Express NV (TNTE) for 5.16 billion euros on European regulator opposition.

Appel said the transaction had created uncertainty for customers, and that Deutsche Post was benefiting in its competition against UPS and FedEx Corp. (FDX)

Uncertain Times

“Uncertainty is something customers don’t like,” he said in an interview with Bloomberg Television. “Deutsche Post is well positioned to gain market share in the express overnight business.” The company has no need or ambition for major acquisitions, the executive said.

Deutsche Post forecast Ebit to rise to 2.7 billion euros to 2.95 billion euros this year from 2.67 billion in 2012 and proposed a dividend of 70 euro cents a share, unchanged from a year earlier. The company is seeking to increase profit to as much as 3.55 billion euros by 2015, as it reduces administrative costs and expands its DHL express business.

“Global Forwarding/Freight was much better than expected driven by a selective growth strategy and the management of overhead costs,” Nadeshda Demidova, an analyst at Equinet Bank in Frankfurt, said in a note to clients. “The guidance for 2013 is better than expected.”

In global forwarding, Deutsche Post competes with Kuehne & Nagel International AG, which yesterday said the global sea freight market may gain as much as 3 percent this year, while air freight may rise by 2 percent.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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