Deutsche Post World Net says it hit its profit target for 2007 despite continuing problems in the express business in the United States. The 2007 results were in line with its expectations and guidance of around 3.7 billion euros EBIT before non-recurring effects and all divisions met their targets, it said.
It is to make a non-cash writedown of some 600 million euros on the fixed assets in its US Express business in its 2007 accounts following an impairment review. It said work was continuing to identify the optimal solution to performance improvements in the business.
“The US Express business is a key management priority and we are looking at a variety of options to improve performance. In doing so, we are committed to maintaining a significant presence in the US market, which remains of strategic importance to the group,” said chief financial officer John Allan.
However, it said that even with the problems in America, it still expected the Express division to make consistent progress in underlying profit and to reach an EBIT of between 900 million euros and 1.1 billion euros in 2009.
“Overall, we saw good progress on an operating level in our business last year, with full-year underlying EBIT of 3.7 billion euros. In 2008, we will make further good progress, targeting around 4.2 bn euros EBIT,” said Chief Executive Officer Klaus Zumwinkel.
The group is focused on implementing of its “Roadmap to Value” capital markets programme. Property disposals agreed on since the programme was announced in November are expected generate more than 350 million euros in cash towards the target of at least 1 bn euros in proceeds over two years.
Another measure to increase shareholder value is a plan to partner with a third-party service provider for parts of its global IT infrastructure which it says will generate long-term savings for the group of at least 1 bn euros.
It has signed a letter of intent with HP to transfer responsibility for parts of the DPWN global IT operations to HP Services.
Under the terms of the agreement, DPWN expects to save at least 1 bn euros over the next seven years by driving down overall IT costs and better leveraging IT resources needed to run the business and service customers. The companies expect to reach a definitive agreement by mid 2008.
If an agreement is reached, HP would take over the approximately 2,500 employees who currently provide the services for DPWN’s data center operations — including information & data management, infrastructure & network management, and application management.
This would cover IT operations in Prague, the Czech Republic, Scottsdale, Arizona, and Cyberjaya, Malaysia, as well as in a number of European countries.
All applications used by DPWN customers will continue to be designed, developed and governed internally, including IT security standards and their implementation. DPWN will also retain the professional services and customer integration supply management components of its IT services unit, including project management, project consulting, application development and deployment services, as well as electronic data integration for its messaging and supply chain programs.
“This initiative would significantly contribute to achieving our business objectives, while preserving the high level of service that our customers expect.” said John Allan