Deutsche Post DHL hikes outlook as Asia demand buoys Q3

FRANKFURT (Reuters): Deutsche Post DHL has raised its 2011 outlook after robust Asian demand helped it beat expectations for the third quarter, marking a bright spot in an industry battered by soaring costs and a weakening global economy.

“We are not ignoring the possibility that the economic environment could get rougher, especially in developed countries,” Chief Executive Frank Appel said in a statement.

“But our early-warning systems have not given us any indication that our business faces a worrisome slowdown.”

Europe’s biggest mail and express delivery company said it now sees earnings before interest and tax (EBIT) exceeding 2.4 billion euros ($3.1 billion) this year, in line with a 2.41 billion euro average analyst estimate in a Reuters poll.

It had previously said it expected to reach the upper end of its outlook range of 2.2-2.4 billion euros.

“Even if the uncertain economic climate persists in 2012, particularly in western economies, we believe that consolidated EBIT will continue to rise based on our good earnings momentum,” Deutsche Post said, sounding a much more positive note than its rivals.

Dutch rival TNT Express last week flagged further cost cuts and said it would reduce its fleet on routes between Asia and Europe because of economic uncertainty.

U.S. rivals UPS and FedEx are navigating the slow-growing economy through increased pricing, technology improvements and quickly fine-tuning their capacity, adding seasonal workers when needed.

The World Trade Organization cut its forecast for growth of 2011 world trade to 5.8 percent in September, citing turmoil in the global economy, and warned the final figure could be even lower.

The latest forecast follows a major recovery in 2010, when the volume of world trade jumped by 14.1 percent, bouncing back from a big drop of 12.1 percent in the recession of 2009.

Deutsche Post, meanwhile, surprised with unexpectedly strong quarterly results. Its third-quarter EBIT jumped 18.5 percent to 646 million euros, above consensus of 586 million.

Both its express delivery business and the supply chain division-two of its four core businesses-benefited from growth in the Asia-Pacific region.

Asia-Pacific, its fastest-growing market, contributed about 14 percent of group revenue in the quarter. Deutsche Post has said it expects the proportion of sales generated in growth markets, about a third now, to continue to expand.

The company has raised prices for express delivery in Asia Pacific, the Middle East and Africa this year, partly to offset rising fuel costs.

Deutsche Post also sent more express shipments with a guaranteed delivery time- the most profitable category -driven by demand in Asia, where it is the No.1 player in that business segment with a 36 percent market share.

Even in Europe, where the sovereign debt crisis has made prospects for the region uncertain, Deutsche Post’s revenues rose by just over 3 percent, helped by German and Scandinavian demand for overland freight transportation and new supply chain business in Britain and eastern Europe.