Frankfurt am Main (AFP) – German logistics giant Deutsche Post reported a drop in quarterly net profit Tuesday despite a boom in online shopping deliveries, as soaring costs prompt the group to embark on a major overhaul.
Second quarter net profits plunged 14 percent to 516 million euros year-on-year, which Deutsche Post blamed on high staff and transportation costs in its “post-ecommerce-parcel” unit.
Underlying, or operating profits, fell 11 percent to 747 million euros, beating analyst expectations.
“We are clear about the challenges that face us at Post – eCommerce – Parcel and are implementing the measures for aligning the division toward long-term profitable growth,” said chief executive Frank Appel in a statement.
Deutsche Post already warned in June that it was lowering its 2018 outlook as it takes a series of steps to slash costs and raise productivity at the troubled division.
It has set aside 500 million euros this year for the revamp, mainly for early retirement schemes.
Although ecommerce remains a key growth driver, Deutsche Post has struggled to offset the thriving business of online deliveries with a decline in letter volumes, high labour costs and investments in items like electric delivery vans.
The group’s revenues between April and June climbed 1.4 percent to 15.3 billion euros, driven by strong performances in its DHL express and freight divisions.
Looking ahead, Deutsche Post is now expecting full-year group operating profits before interest and tax of 3.2 billion euros, compared with an earlier estimate of 4.15 billion.
The group said its 2020 goals remain unchanged, aiming for an operating profit of more than five billion euros.
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