Deutsche Post shares rise as profits slump amid restructuring costs

Deutsche Post shares are higher Tuesday, as the postal and delivery service reported a smaller than expected slide in profits and confirmed its upbeat outlook.

Deutsche Post shares rise as profits slump amid restructuring costs

Deutsche Post shares are higher Tuesday, as the German-based postal and courier service reported a slump in third-quarter profits, due to one-off restructuring costs. However, that drop was smaller than expected, while revenues grew following an upbeat e-commerce parcel unit.

By 1140 BST, Deutsche Post shares were 3.55% higher at €28.91. The stock has been a little mixed, but trending lower in recent weeks.

Deutsche Post Q3 earnings

Earlier Tuesday, the delivery and logistics service reported its third-quarter earnings. The company said that Q3 net profits slid 77% from a year earlier to €146 million.

The drop in profits was attributed to one-off restructuring costs as the business seeks to better benefit from the explosion in demand for online package deliveries. While demand for its services has surged, its pricing has failed to consistently keep pace with higher transport costs.

Revenues, meanwhile, climbed 1.4% to €14.8 billion in the third quarter of 2018, from the same period a year earlier.

“Deutsche Post DHL Group remains in good shape with our fundamental growth drivers intact,” Frank Appel, CEO of Deutsche Post DHL Group.

“We are tackling the challenges in our Post - eCommerce - Parcel division with determination and are making good progress in implementing the announced measures to improve productivity and the cost structure. The results of our efforts will already be clearly visible over the coming year,” Appel added.

Positive outlook

As Appel states, the business widely expects its restructure investment to bear fruit by the end of this year. Deutsche Post is now forecasting full year earnings before tax of €3.2 billion. The post and package division of Deutsche Post should generate some €600 million of that total.

The business added that it continues to anticipate the generation of operating profit to more than €5 billion, by 2020.

“We are confident that we will reach our earnings targets for 2018 and 2020 despite the significant rise in macroeconomic risk factors in recent months due to trade disputes and currency fluctuations, for example,” Appel said.

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