A two-thirds jump in quarterly net profit is always something to celebrate, but it carries a warning for Deutsche Post DHL too.
The postal giant's blow-out quarter owed much to a fast-growing business delivering packages on behalf of e-commerce companies. While it's always nice to do well, such stellar performance will reinforce Amazon's view that there's gold in Germany's parcel delivery market -- and that it might not want to send so much lucrative business Deutsche Post's way. Revenue at the German group's eCommerce-Parcel business jumped 14 percent year-on year.
Deutsche Post is offering new services such as fixed time slots for package drops. Fast, high-quality and reliable deliveries do build barriers to entry against those hoping to steal away some of the parcel business -- though that wouldn't deter deep-pocketed Amazon should it spy a source of profit in its biggest market after the U.S.
One risk is that the Amazon threat forces Deutsche Post to keep spending: capex rose 8 percent year-on-year in the quarter. Another is that the U.S. company steals away the more profitable parts of the value chain such as express delivery to wealthy urban customers. Deutsche Post should toast a good quarter but keep in mind that its own time slot of success may be limited.
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