23 Jan 2008 18:44 - UPDATE 2-D.Post takes 600 mln eur hit at struggling U.S. unit
UPDATE 2-D.Post takes 600 mln eur hit at struggling U.S. unit
(Adds detail from CFO on conference call)
By James Regan
FRANKFURT, Jan 23 (Reuters) - German mail and logistics group Deutsche Post took a hit of about 600 million euros ($877 million) at its loss-making DHL express delivery business in the United States as economic weakness stalled its recovery.
The non-cash write-down would be taken in the company's 2007 accounts, Deutsche Post finance chief John Allan told reporters on a conference call on Wednesday.
"It's getting severely realistic about the value of the assets in this difficult trading situation," Allan said.
Deutsche Post in November abandoned a target to break even at the DHL Express business in the United States in 2009, citing weakness in the economy and tough competition. Allan declined to give a new break-even target date on Wednesday.
But he said the group remained committed to the U.S. express delivery market, where it is trying to take on dominant domestic rivals UPS and FedEx .
"The U.S. Express business is a key management priority and we are looking at a variety of options to improve performance," Allan said.
"In doing so, we are committed to maintaining a significant presence in the U.S. market, which remains of strategic importance to the group."
Deutsche Post said it still expected the overall DHL Express division to achieve earnings before interest and tax (EBIT) of between 900 million euros and 1.1 billion euros in 2009.
Group 2007 EBIT was in line with Post's forecast of around 3.7 billion euros before one-time items, Deutsche Post said, without giving further details. It is targeting around 4.2 billion euros in EBIT for this year.
The median of analysts' forecasts in Reuters Estimates was for Deutsche Post to report full-year 2007 EBIT of 3.74 billion euros, with a range of 2.60 billion to 3.94 billion euros.
PROPERTY SALES
Allan said the company would publish detailed results for 2007 as planned on March 6. While the write-down would impact earnings, the finance chief said the company would also give figures for the underlying performance.
He also said the write-down would not affect the company's plan to raise the dividend for 2007 by 20 percent to 90 euro cents a share.
Real estate sales agreed since Post announced a divestment programme in November meanwhile would generate more than 350 million euros in cash, Allan said.
Post also said it would give details on Thursday of a plan to outsource parts of its global IT infrastructure, generating long-term savings for the group of at least 1 billion euros.
So far, a letter of intent had been signed with a major IT service provider, Allan said, without giving more details.
Asked about plans for Post's Deutsche Postbank retail bank, Allan said he had nothing to add at this stage.
Deutsche Post Chief Executive Klaus Zumwinkel told analysts in November he could think about the role of Postbank in the group following the deregulation of the German mail market at the start of this year. Many banks were interested in Postbank, the CEO said then.
Shares in Deutsche Post closed down 3.5 percent at 20.53 euros earlier on Wednesday, performing better than the German blue-chip DAX index <.GDAXI>, which lost nearly 5 percent. Post shares have lost 10 percent in the last month.
james.regan@reuters.com, Reuters Messaging:
james.regan.reuters.com@reuters.net, +49 69 7565 1263
Enviado: 24/1/2008 10:58
