Deutsche Post said it planned to simplify its conglomerate structure after several major strategic moves missed their mark in the eyes of shareholders, the company said.
Deutsche Post said it would bundle its freight, supply chain and express delivery businesses under the DHL brand and would rename the entire group Deutsche Post DHL. Its future structure would focus entirely on mail and restructured DHL business.
Deutsche Post is active in traditional letter mail, DHL express delivery, freight shipping and supply chain. It recently agreed to divest its banking arm.
It said it wants to close ranks with the top 25% of its competitors in terms of profitability and return on capital as it aims for organic growth in all its divisions of 1-2 percentage points above market mid-term.
Its short-term goal was to preserve liquidity and cut costs amid the economic crisis as it braced for what it called very difficult years for the entire sector in 2009 and 2010.
Europe's largest mail and express delivery company had announced weeks in advance plans to unveil its “Strategy 2015” and had left the market guessing what its plans were. Analysts had said they were not expecting a revolution.
Deutsche Post said it was open to cooperations in Germany for its parcel business and was still in negotiations with US rival UPS.
“Our expectations are not so much for a dramatic change in the business model, such as for example the divestment of the relatively stable mail division or significant strategic acquisitions,” DZ Bank analyst Robert Czerwensky said ahead of the announcement.
He said he expected a positive effect from the announcement as it would help show more clearly where the company saw growth potential.
In a move that could help Deutsche Post steer its teeming conglomerate onto a clearer path, the company announced on Tuesday it named Lawrence Rosen its new chief financial officer (CFO), to replace outgoing John Allan.
The market had honored the move with a share price boost of more than 10%. Deutsche Post combines traditional letter mail in Germany, with logistics and its DHL express delivery business on an international scale. It is in the process of leaving the financial services sector.
Over the past year, Deutsche Post's stock has lost around two-thirds of its value as several major strategic measures left investors disappointed.
It agreed to sell its Deutsche Postbank unit to Deutsche Bank, mere days before the financial market collapsed and months after it first said it may sell the bank.
Having promised shareholders to fix problems at its US DHL express unit, it announced late last year it would cut a total 14,900 jobs in the United States and take $3.9 billion in restructuring charges to shrink its exposure there.
Post's stock now trades at around 8.6 times 12-month forward earnings, according to Thomson Reuters StarMine, which weights analyst estimates according to their track record.
That is a discount to US peers UPS and FedEX, which trade at 14.2 and 12.2 times EPS, respectively. (Reuters)