Economy hurts Deutsche Post DHL freight business

Deutsche Post DHL net profits fall 5.9 percent as tougher economy slows freight revenues

David Mchugh, AP Business Writer

FRANKFURT, Germany (AP) -- Mail, express delivery and freight company Deutsche Post DHL saw its profits dip in the first quarter as the weak global economy saw companies ship fewer goods by air and after a large one-time gain in the year-ago quarter.

Deutsche Post DHL made a net profit of 498 million euros ($647 million) in the first three months of the year, 5.9 percent lower than the year-ago equivalent of 529 million euros.

The year-earlier figure included a one-time gain of 186 million euros from the sale of a stake in Postbank to Deutsche Bank. If the Postbank gain were excluded, net profit would have risen 45 percent. Revenues rose 0.6 percent to 13.44 billion euros.

The company's shares rose 3.3 percent to 19.44 euros in midday trading in Europe.

"Even though we have yet to feel any sort of economic tailwind, we were able to get off to a solid start in the new year," CEO Frank Appel said in a statement. He said the results "demonstrated once again just how robust our business model is."

Deutsche Post DHL, which operates an air freight hub in Cincinnati, Ohio, said its freight business saw slower demand in "a strained macroeconomic environment" that includes a stagnant European economy.

Air freight revenue fell 8.2 percent to 1.2 billion euros, with a particularly strong decline in the technology and manufacturing sectors. Still, operating earnings for the freight division showed a 1 percent increase due to strict cost management.

Its express delivery division saw operating earnings rise almost 10 percent to 254 million euros.

At the mail division, which is focused on its home base in Germany, revenues rose for its package delivery business. It cited "booming" e-commerce, in which people have goods delivered from online retailers. That helped offset fewer working days in the quarter due to the early Easter holiday weekend.

Deutsche Post DHL, which has 473,000 employees in 220 countries and territories, emerged from the former government post office through privatization, and remains Germany's domestic mail carrier. The German government owns a 24.9 percent stake through its KfW bank.

The company maintained its full-year forecast for as much as 2.95 billion euros in earnings before interest and taxes.