DHL parent cuts outlook

Deutsche Post World Net, the world’s biggest logistics company, today slashed its profit forecast for this year by 17 percent and scrapped its outlook for 2009, citing slowing global economic growth, especially in the United States.

The German mail, express and freight forwarding group is now forecasting full-year earnings of around 2.4 billion euros [$3 billion], excluding one-off items and its stake in Deutsche Postbank, against a previous outlook of 2.9 billion euros [$3.65 billion].

The company, parent of DHL Worldwide, blamed sluggish consumer spending and shrinking investment by its business customers for the expected shortfall of 500 million euros [$630 million] in pre-tax earnings.

“The third quarter was a challenging quarter and we expect that the general economic environment to remain so in the near future,” Chief Financial Officer John Allan said in a statement.

The main shortfall will be seen in the express division “which is being particularly impacted by the deteriorating market conditions in the U.S.” the Bonn-headquartered company said.

Deutsche Post suffered a setback in plans to turn round its unprofitable DHL Express business in the U.S. last week after UPS Chief Executive Scott Davis said the size and scope of a deal to transfer DHL's air services to its U.S. rival may be changed. The deal is key to Deutsche Post’s $2-billion restructuring of its U.S. express business which is forecasting a loss of $1.3 billion this year.

Deutsche Post said third-quarter pre-tax earnings, excluding Postbank, is around 8 percent below 468 million euros [$590 million] in 2007. The only highlight is ocean freight, where double-digit growth outweighed weakening airfreight traffic to drive a similar increase in earnings at the forwarding and freight unit. The company said it will publish third quarter figures on Nov. 10.

Deutsche Post said it scrapped its 2009 outlook because it expects the global economy to slow further and recession to hit some developed markets. Previously, it forecast earnings before interest and tax of 3.4 billion euros [$4.28 billion].