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Deutsche Post DHL Stock Dips On Weak Q4 Profit; Sees Earnings Growth Ahead


Shares of Deutsche Post DHL Group (DPSGY.PK) were losing around 2 percent in the morning trading in Germany after the mail and logistics group reported Wednesday lower profit in its fourth quarter, despite growth in revenues. Looking ahead, the company projects higher earnings in fiscal 2018 and 2020.

The company has applied the IFRS 16 accounting standard with effect from the beginning of 2018, and this will result in an increase in Group EBIT of about 150 million euros per financial year. It is also expected that the solid pace of economic expansion, further business growth and operational improvements in the individual divisions in particular will lead to increased earnings in 2018.

Frank Appel, CEO of Deutsche Post DHL Group said, "Thanks to successful business development in all four divisions, especially outside Germany, our company has registered another very good year. In 2017 we took another major step on the road to achieving our strategic and financial goals for 2020."

For the fourth quarter, consolidated net profit declined 0.5% to 837 million euros from last year's 841 million euros, due to a higher tax rate. Earnings per share decreased 4.5 percent to 0.64 euro from 0.67 euro a year ago.

Profit from operating activities or EBIT, however, grew 6.3 percent from last year to 1.18 billion euros.

In the fourth quarter, Deutsche Post DHL registered an increase of 4.5% in total Group revenue to 16.11 billion euros from 15.41 billion euros last year. International revenues increased 4.8 percent to 11.03 billion euros.

For fiscal 2017, consolidated net profit was 2.7 billion euros, higher than last year. EBIT increased 7.2% to 3.74 billion euros, and Group revenue went up 5.4% to 60.4 billion euros, with all four divisions contributing to the increase.

Further, the Board of Management and the Supervisory Board will propose a dividend increase of 9.5% to 1.15 euros per share at the Annual General Meeting on April 24, 2018. If approved by the shareholders, the total payout would be approximately 1.4 billion euros, reflecting a payout ratio of 52%.

Going ahead, Deutsche Post DHL forecasts a rise in EBIT to approximately 4.15 billion euros for fiscal 2018, and more than 5 billion euros for fiscal 2020.

In 2018, the PeP division is expected to contribute around 1.5 billion euros, while DHL divisions' EBIT contribution would be around 3.0 billion euros.

In 2020, PeP will contribute some 1.7 billion euros and the DHL divisions approximately 3.7 billion euros.

In Germany, Deutsche Post DHL shares were trading at 35.83 euros, up 2.24 percent.

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