Deutsche Post World Net has previewed profit figures which show results holding up in 2008 despite an ominous fall in last quarter. The company met its profit target for 2008 despite its reservations earlier in the year. It ascribes this to “strict cost management and cash conservation”.
Overall Earnings Before Interest and Tax (EBIT) will be €2.4bn, but this excludes ‘non-recurring’ items. ‘Reported EBIT’ by contrast is reckoned to be €1bn which includes the huge write-off from DHL US Express business as well as those in the Supply Chain division.
Despite the headline figures, however, there was a clear and unsurprising note of caution emerging from DPWN headquarters in Bonn. The company described an environment where “fourth-quarter trading volumes in most business units continued to soften in a year-on-year comparison. In Air and Ocean Freight volumes weakened, with a “double-digit decline rate reflecting the slowing of the global economy.”
Express volumes in the last quarter shrank even outside the US with only eastern Europe and the Middle East showing “single digit” growth. The situation for DHL US Express seems to have been a precipitate fall through 2008 with business collapsing so fast that it has enabled “the Group to accelerate cost reductions”.
DPWN did not elaborate over the state of its Supply Chain Division, just commenting that, “Fourth-quarter revenues in the Supply Chain / CIS division also developed in line with the rate seen in the first nine months of the year”, which is somewhat surprising bearing in mind the seismic events amongst its automotive customers alone.
To cap all of this complexity, DPWN has also received the first €3.1bn of its sale of PostBank to Deutsche Bank. However here it is worth noting how financially stable the company now is.
John Allan, the company’s departing Chief Financial Officer commented that DPWN’s customer base was highly diversified in terms of both geography and industrial sector. He also said that it would continue to focus on further cost reduction and cash generation and he believed that Deutsche Post was well placed to trade through any further downturn “relatively well”.
