Deutsche Post AG will distribute about $2.2 billion to shareholders after posting record fourth-quarter operating profit.
The German owner of the DHL delivery brand will keep its dividend at 85 euro cents a share, adding €1.03 billion ($1.1 billion) to a €1 billion stock buyback announced Tuesday. Earnings before interest and taxes rose 5.7 per cent to €957 million, the company said in a statement on Wednesday, beating the average analyst estimate of €939.4 million collected by Bloomberg and marking the highest profit ever for a three-month period, excluding the company’s former Postbank business.
Chief Executive Officer Frank Appel is trying to win back investor confidence after the company cut its profit forecast twice last year because of a failed software project at its freight-forwarding division and a series of strikes by delivery workers in Germany. Appel said those were one-time issues and pledged that profit will improve by at least €1 billion this year.
"The non-recurring effects which were a setback for us in 2015 will not be repeated," Appel said in an interview posted on the company’s website. This year, "we will increasingly see the positive effects of the structural improvements that we initiated, and the investments in growth will increasingly pay off."
Volume Jumps
Earnings at the freight and supply chain units rose, while the volume of parcels shipped in Germany jumped 9.4 per cent in the three months through December 31. Volume of time-definite international shipments, the company’s premium express product, advanced 9.8 per cent.
Deutsche Post rose as much as 0.9 per cent and was trading up 0.4 per cent at €23.39 as of 9:29 am in Frankfurt, adding to Tuesday’s 3.2 per cent gain following the buyback announcement. That pared the stock’s decline this year to 10 per cent, valuing the company, which is also Germany’s main postal operator, at €28.3 billion.
Full-year Ebit fell 19 per cent to €2.41 billion, meeting the company’s forecast. Deutsche Post reiterated a prediction that earnings at that level will be in a range of €3.4 billion to €3.7 billion this year. The slowdown of the Chinese economy is "more of a normalization than grounds for excessive concern," Appel said.
Operating profit at DHL’s express unit fell 8.3 per cent in the quarter as €66 million in unidentified charges were booked, though the division still managed to increase full-year earnings 10 per cent. The supply-chain unit posted the first decline in annual operating profit in seven years.
At the global forwarding and freight business, earnings fell for a third straight year. On February 18, Appel dismissed a report by Reuters that Deutsche Post was exploring the sale of its forwarding and freight business as a "false rumor."
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