Deutsche Post raises 2019 forecast after price hikes

Deutsche Post on Tuesday said it expects a further improvement in earnings in the second half of 2019 due to restructuring measures and a rise in German postage and parcel prices.

The German post and logistics group reported a 3% rise in second-quarter sales to 15.5 billion euros (£14.2 billion) while operating profit rose by 2.9% to 769 million euros, topping the 727 million average forecast from analysts.

Shares in Deutsche Post, which owns DHL, rose 2% in early trade.

The company, which is partly state-owned, said steps taken to improve productivity and an increase in the German postage rate from July 1 would help in the second half of the year, despite weak economic growth.

German regulators have agreed that Deutsche Post could increase prices by 10.63% in return for the company pledging to hire an extra 5,000 delivery workers.

Deutsche Post has enjoyed a boom in volumes thanks to the rapid growth of e-commerce, but prices have not kept pace with costs. It said last month it will hike parcel prices for business customers due to higher transport and personnel costs.

Earnings for the German Post & Parcel division turned positive for the first time since the fourth quarter of 2017, although that was counterbalanced by restructuring costs at its supply chain and e-commerce solutions units, the company said.

Deutsche Post said full-year operating profit should rise between 4.0 and 4.3 billion euros, up from a previous estimate of between 3.9 billion and 4.3 billion euros, and confirmed its guidance for the metric to now reach more than 5 billion euros in 2020.
The company wants to reach the 5 billion euro goal without one-off effects, finance chief Melanie Kreis told journalists.

United Parcel Service Inc said last month a jump in demand for its Next Day Air service drove better-than-expected profit in the second quarter as large retailers rushed packages to online shoppers.