German logistics giant Deutsche Post DHL reported a sharp drop in quarterly profit Tuesday as a costly overhaul of its struggling post and parcel divisions
weighed on earnings.
The DHL owner said net profit plunged 77 percent to 146 million euros ($167 million) between July and September compared with the same period a year
earlier, falling short of analyst expectations.
The group blamed the steep drop on one-off costs of nearly 400 million euros, mainly for early retirement schemes, linked to a major restructuring to improve
profitability at its post-ecommerce-parcel unit.
The group's third-quarter revenues meanwhile climbed 1.4 percent to 14.9 billion euros, driven by strong performances in its DHL express and freight
divisions.
Despite an ongoing boom in online shopping deliveries, Deutsche Post has struggled to offset its thriving ecommerce
wholesale cell phones usa business with a decline in letter volumes, high labour costs and investments in items like electric delivery vans.
The group announced in June that it was lowering its outlook for the year as it embarked on a 500-million-euro restructuring designed to slash costs and
raise productivity at the troubled unit.
"We are tackling the challenges in our post-ecommerce-parcel division with determination and are making good progress," CEO Frank Appel said in a
statement.
As part of those efforts, the group plans to split the division into a German unit and an international/ecommerce one from January 2019.
Looking ahead the group confirmed its trimmed full-year forecast, saying it continues to expect operating profits before interest and tax of 3.2 billion
euros, down from an earlier estimate of 4.15 billion.
The group also stuck to its 2020 goals, aiming for an operating profit of more than five billion euros.
"We are confident that we will reach our earnings targets for 2018 and 2020," Appel said.
Shares in Deutsche Post rose more than two percent to 28.49 euros in early trading in Frankfurt, outperforming a DAX blue-chip index that was down 0.1
percent.
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