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Deutsche Post in deep trouble
“Deutsche
Post is a pioneer in Europe and now is being punished for it,” says CEO Dr. Klaus Zumwinkel, and betrays in these words a plea for mercy, as his company would find itself in murky waters, once the German postal market is opened up. Dr. Zumwinkel is lamenting unfair competitive conditions in the EU. The delay in opening up some key European markets has stalled the company’s expansion. And the new entrants – Luxembourg based Pin Group & UK based TNT Post would expectedly launch a brutal price war on the German turf. Pieter Schaffels, spokesperson, TNT Post, said, “We are looking for increase of 10- 15% in market share.”In response, Deutsche Post is incessantly cutting costs & expanding in foreign markets where feasible. In 2006, the group improved its operating performance by increasing its revenue by 35.8% to $82.94 billion by consolidating all freight activities & focusing on the high growth Express division. Even their second quarter profits have risen by 13%, beating analyst expectations, primarily due to the DHL Express division that has had tremendous growth in Asia.
The clear stumbling block is its mail business, where revenues surged by a mere 13% since 2000. Express & logistics divisions have risen phenomenally; revenues stood at $17.2 billion (growth of 185% from 2000) & $22.7 billion (growth of 174% from 2000), but its cash cow remains the mail business, with 52% of total profits in 2006. The blow to this business will hit the company hardest. But with regulators refusing to show mercy, Deutsche Post has no choice but to engage itself in this long drawn bloodbath, hook line & sinker.
Edit bureau: Aditi Soni
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2007
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