Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Deutsche Post cuts profit target on freight IT woes

Published 28/10/2015, 20:02
© Reuters. A Deutche Post sign stands in front of the Bonn Post Tower in Bonn
DHLn
-

FRANKFURT/BERLIN (Reuters) - Germany's Deutsche Post (DE:DPWGn) slashed its 2015 operating profit target for the second time this year on Wednesday, taking a 345 million-euro ($376 million) hit from a troubled revamp of IT systems at its freight division.

The restructuring of the IT system, intended to reduce reliance on paper and known as the New Forwarding Environment, had already been under review after proving more costly and difficult to implement than expected.

The division's head, Roger Crook, left in April.

The German postal operator said it now expected 2015 earnings before interest and tax (EBIT) of at least 2.4 billion euros, compared with a previous target of between 2.95 and 3.1 billion euros.

The group said it would roll back the NFE system in those countries where it had been piloted and was looking at alternatives, such as using parts of its current IT systems combined with bolt-on solutions already in use by other firms.

A spokesman stressed that Deutsche Post was not ruling out working with the current NFE suppliers, if they were able to provide a solution that would be successful.

The one-off charges comprise a complete write-down of the 308 million euros of NFE assets, plus the costs of reversing the system in the pilot countries.

The effects will mainly be recognised in the third quarter though some will be in the final quarter, the spokesman said.

"The group recognised the need to weigh potential alternatives and will implement a step-by-step replacement and upgrade of its IT set-up," Deutsche Post said in a statement.

The 2015 profit target is also being hit by a further 200 million euros of one-off effects for a range of smaller items, such as a legal case in Africa, impairments on the values of older aircraft and a pension liability in its Post - eCommerce - Parcel division.

The company, which had already cut its 2015 guidance in August due to strikes, maintained its targets for 2016 and its mid-term goals for 2020.

Deutsche Post is due to publish its nine-month results on Nov 11.

© Reuters. A Deutche Post sign stands in front of the Bonn Post Tower in Bonn

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.