BERLIN, Aug. 7 (Xinhua) -- Profits at Deutsche Post DHL Group (Deutsche Post) have been hit by a surge in costs at its letter- and package delivery business, according to earnings figures published on Tuesday by the Bonn-based company.
Although gross revenue grew slightly at an annualized rate of 1.4 percent to 1.5 billion euros (1.74 billion U.S. dollars) in the second quarter of this year, operative- and net profits both slumped to 747 million euros (minus 11 percent) and 516 million euros (minus 14 percent) respectively.
The DAX-listed firm blamed the development on intense competition in an increasingly crowded letter- and package delivery industry in Germany.
"We continue to face challenges," chief financial officer (CFO) Melanie Kreis told press during a telephone conference on Tuesday.
As a consequence, Deutsche Post has taken measures to improve profitability by laying off staff and raising the levels of corporate investment in new products.
So far, the company has earmarked 51 million euros in costs for premature retirement agreements with workers in Q2 alone.
Additionally, Kreis announced that there would be an upcoming investment of 10 million euros in Deutsche Post's operative business as well as "above average" increases in the prices charged for package delivery solutions as of 2019.
Deutsche Post already issued a profit warning with view to difficulties in the letter and package divisions back in June, lowering the forecast for annual earnings before interest and taxes (Ebit) by around 1 billion euros to 3.2 billion euros in 2018.
"We lost a lot of trust at the time (from investors)," Kreis admitted on Tuesday.
In a further blow to the company's reputation, Deutsche Post was recently singled out the Hans-Boeckler Foundation of having the worst corporate manager-to-worker pay ration in Germany. In 2017, Chief Executive Officer (CEO) Frank Appel earned 232 times the amount of an average worker at Deutsche Post.
Hoping to steady the ship through turbulent waters, Appel is currently simultaneously acting as CEO and the head of the letter- and package division after the sacking of Juergen Gerdes in June.
"He is very clear in his aspiration to initiate the key measures to find a suitable successor in order to reverse the trend," Kreis explained.
On a more upbeat note, the CFO pointed to the positive development of the company's in-house electric "Streetscooter" van which Deutsche Post is using for its own deliveries as well as offering for sale to third parties. "We will further increase the production and internal use but also the external sale of the vehicles," Kreis said.
At the same time, however, Kreis refused to comment on rumors that Deutsche Post was planning an initial public offering (IPO) for its e-mobility unit together with U.S. investment bank Goldman Sachs.
She said no significant changes in the ownership structure of the division were scheduled during the coming two years, although Deutsche Post remained open to a range of different options in the longer-term. Enditem
