Deutsche Post AG’s shares rose to a record after Europe’s biggest mail company said operating profit rose last year and all divisions achieved their earnings targets.

The stock of Deutsche Post gained 58 cents, or 2.4 percent, to 25.20 euros in Frankfurt, valuing the company at 30.3 billion euros ($39.8 billion). Earnings before interest and tax increased 2.9 percent to 3.87 billion euros, Bonn-based Deutsche Post said today in a statement.

“Deutsche Post hasn’t had the best track record of achieving its targets in the past, so the expectations were pretty low,” said Robert Heberger, an analyst at Merck Finck in Munich with a “hold” recommendation on the shares. “Now that they’ve basically achieved their guidance, or at least were within range, that seems to be enough to drive this positive share reaction.”

The company, which runs Germany’s postal system and owns the DHL express-delivery service that competes with United Parcel Service Inc., plans to increase the dividend by 7.1 percent to 75 cents a share. Sales soared 36 percent to 60.5 billion euros after Deutsche Post acquired the U.K.’s Exel at the end of 2005.

Net income fell 14 percent to 1.92 billion euros, or 1.60 euros a share, from 2.24 billion euros, or 1.99 euros, a year earlier, after the company reduced its stake in Deutsche Postbank. Full earnings will be posted March 20. The numbers released today were preliminary.

Profit was boosted by a 276 million-euro gain in the third quarter from the redemption of bonds exchangeable for shares of Postbank, Germany’s biggest consumer bank. The early redemption reduced Deutsche Post’s stake to 50 percent plus one share, reducing the amount of profit attributable to Deutsche Post shareholders, the company said today.

Financial Services

The financial-services division including Postbank and BHW, a company acquired in October 2005, met its forecast for 2006 profit of more than 950 million euros after the 863 million euros posted in 2005, Deutsche Post said.

Chief Executive Officer Klaus Zumwinkel paid 3.7 billion pounds ($7.2 billion) in December 2005 for Bracknell, England- based Exel, his biggest acquisition among $20 billion in purchases over the last decade. The move vaulted the company to the No. 1 spot in the contract-logistics industry. The purchase was part of Deutsche Post’s preparation for the expiration of a legal monopoly in German mail deliveries at the end of this year.

“With sales of more than 60 billion euros, we’re now No. 1 in the world in the logistics industry and can take advantage of the corresponding size advantages,” Zumwinkel said in today’s statement. “Now organic growth is our highest priority.”

The logistics unit more than doubled earnings to 762 million euros from a restated 346 million euros a year earlier. Ebit at the mail division rose 1.2 percent to 2.05 billion euros.

International Activities

“Our strategy of compensating for sinking mail sales in our German home market through increasing international activities, while at the same time cutting costs, is paying off,” Chief Financial Officer Edgar Ernst said in the statement. The company now gets more than a fifth of its letter-delivery revenue outside Germany, he said.

The express division, which Deutsche Post said in December was the company’s “weakest performer,” generated Ebit of 325 million euros compared with a restated year-earlier loss of 23 million euros. The forecast had been for Ebit of between 300 million euros and 400 million euros.

DHL aims to break even by 2009 in the U.S., where startup delays at a hub in Ohio in 2005 increased spending and drove customers away.

UPS, the world’s biggest package-delivery company, on Jan. 30 posted a 7.5 percent increase in fourth-quarter profit to $1.13 billion. Slowing U.S. industrial production will curb high- margin air shipments this year, causing earnings growth to decline from last year’s 11.2 percent rate, UPS said.

Deutsche Post said it will outline expectations for 2007 when the company releases detailed earnings next month.

Source: Bloomberg

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