DHL: Increased Expenditures in the U.S.
Marketing drive follows successful integration / 2006 New Target for Breakeven in EXPRESS Americas / Group earnings forecast remains positive / STAR-Program exceeds 2004 plan by more than 100 million eurosBonn, 09/29/2004, 11:30 AM CEST
DHL, the express and logistics unit of Deutsche Post World Net, has completed initial successful integration measures in the U.S. since the mid-2003 acquisition of express company Airborne. The Group today affirmed it will increase spending on infrastructure improvement, marketing and service quality in a move that will shift the break even target for EXPRESS Americas to 2006 from 2005 and secure sustained positive development.
"We will do everything it takes to succeed in the very competitive U.S. market and generate sustainable profits for our shareholders," said Deutsche Post World Net Chief Financial Officer Edgar Ernst. "The Group is well on track and well-positioned to confront the great challenges that lie ahead in North-America," Ernst said.
The additional expenditures underline the Group's long-term commitment to the important U.S. market. As part of the plan, DHL will strengthen its domestic U.S. transport network by adding further bases on the East and West coasts. It also plans to increase spending on marketing and service quality improvements. The expected loss in EXPRESS Americas will thus widen from the initially planned 300 million euros to as much as 500 million euros in 2004. In 2005, a loss of as much as 300 million euros can be expected.
Some 200 million euros in additional expenses in 2004 will be covered by favorable operating results in other regions, especially Asia, and segments such as logistics. In addition, the STAR value-creation program will contribute in excess of 100 million euros more to earnings this year than originally planned, bringing total savings in the two years since STAR was introduced to more than 800 million euros.
The group's earnings targets for 2004 and 2005 are not impacted by the altered U.S. timetable. For 2004, DPWN had announced a rise in operating profit (EBITA) by 7.5 percent to 12.5 percent year-on-year and 2005 EBITA of at least 3.6 billion euros.