Frankfurt - Operating profit at Deutsche Post AG unexpectedly fell in the first quarter, missing analyst estimates, as earnings deteriorated in the freight-forwarding business.
Earnings before interest and taxes, or Ebit, fell 1 percent to 720 million euros ($805 million) in the three months through March 31, the Bonn-based company said in a statement on Tuesday, as competitive pressure and the introduction of new software saw profit in freight forwarding decline by 65 percent. That was below the average estimate for 737 million euros for group Ebit by 9 analysts collected by Bloomberg.
“We saw a moderate start to the year, as we expected,” Chief Executive Officer Frank Appel said in the statement. “We are investing significantly to ensure that our four divisions are optimally positioned, even though this is having a temporary impact on our performance.”
Deutsche Post is adding capacity at express hubs and sorting centres and installing SAP SE software at its freight-forwarding units as economic growth remains subdued. That project, one of the key priorities for this year, turned out more challenging than expected, the company said in March. It said two weeks ago that Roger Crook, who headed the freight-forwarding business, resigned from the post for personal reasons.
The first-quarter operating profit decline at the freight-forwarding was the sixth consecutive quarterly decrease, with Ebit falling to 17 million euros.
Ebit for the group will rise to between 3.05 billion euros and 3.2 billion euros this year, and to 3.4 billion euros to 3.7 billion euros next, the company reiterated.
Deutsche Post is locked in a conflict with trade union ver.di, which has staged a series of warning strikes after the company said it will hire parcel delivery personnel under a collective bargaining agreement that pays less than the one covering its current workers.
Bloomberg