Deutsche Post ups forecast

City A.M. Reporter
Deutsche Post nudged up its 2011 outlook as it cut costs and garnered more customers seeking supply chain services.

As the economy improves, manufacturers of machine parts, cars and other goods ramp up production and pay Deutsche Post to transport parts and finished products.

Europe's biggest express delivery and mail company said on Tuesday it now expects full-year operating profit to reach the upper end of the outlook range of 2.2-2.4 billion euros (£1.2 to £1.5bn), compared with consensus of 2.36bn.

The positive earnings trend would last into 2012 if the global economy continues to recover, Deutsche Post said.

"The cyclical divisions showed an excellent performance in particular in view of slowing economic growth and what we saw from competitors," WestLB analyst Raimon Kaufeld said.

"Express showed roughly twice the margin reported by TNT (Express as underlying development, forwarding matched the strong earnings growth reported by DSV, and the progress at supply chain is significantly better than that seen from almost any competitor."

FedEx Corp and Dutch TNT Express have both reported better than expected quarterly results as cost controls offset high fuel prices.

Deutsche Post's supply chain business, which generates about a quarter of group revenue, agreed new contracts representing about 540 million euros in annual revenue in the first half and more than doubled its operating margin to 3.6 percent.

Deutsche Post will run a high-security warehouse for Philips, distribute drugs made by Bristol-Myers Squibb in the United States and deliver cars to dealerships in Scotland for BMW, which earlier reported consensus-busting quarterly profits.