UPDATE 3-Deutsche Post upbeat on 2010 after Q1 profit rises

* Says now sees 2010 adjusted EBIT at upper end of range

* Adjusted EBIT forecast range was 1.6-1.9 billion euros

* Q1 underlying EBIT 566 million euros, vs forecast 452 mln

* Says start to year was encouraging

* Shares up 2.7 percent, outperforming market

(Adds analyst comments, details)

By Maria Sheahan

FRANKFURT, May 11 (BestGrowthStock) – Deutsche Post DHL (DPWGn.DE: )
delivered an upbeat 2010 outlook after improved shipping volumes
and restructuring helped turn around its express business in the
first quarter, leading to forecast-beating earnings.

“We had a very good start to 2010 and we are on our way
toward reaching our 2010 targets,” Chief Financial Officer Larry
Rosen told reporters on a conference call on Tuesday.

Europe’s biggest mail and express delivery company now sees
its 2010 operating profit coming in at the upper end of its
forecast range of 1.6 billion to 1.9 billion euros ($2.2-2.6
billion), in line with an analyst consensus of 1.87 billion
euros in a Reuters poll.

In the quarter through March, shipping volumes in the
Americas and in Asia picked up, helping Deutsche Post’s express
division swing to an operating profit from a year-earlier loss.

The World Trade Organisation has said it expected 2010 world
trade to grow 9.5 percent, rebounding from a 12.2 percent drop
last year, as companies and consumers gain confidence in
economic recovery and loosen their purse strings. [ID:nWEB7657]

Deutsche Post shares rose 2.7 percent to 12.255 euros by
0838 GMT, making them the biggest gainer on Germany’s blue-chip
index (.GDAXI: ), which eased 0.9 percent.

Deutsche Post stock trades at 11.8 times estimated 12-month
forward earnings, about level with Dutch rival TNT (TNT.AS: ) and
Austrian Post (POST.VI: ), according to Thomson Reuters StarMine,
which weights analyst estimates according to their track record.

U.S. rivals United Parcel Service (UPS.N: ) and FedEx (FDX.N: )
trade at multiples closer to 20.

“We think the structural problems associated with the mail
business and the impending elimination of the VAT tax privilege
in Germany are the reasons for (Deutsche Post’s) currently low
valuation,” said WestLB analyst Raimon Kaufeld, who recommends
investors buy Deutsche Post stock.


Europe’s mail operators have been struggling to cope with
falling consumer demand for letter mail while adapting to the
liberalisation of the mail market. Deutsche Post expects its
mail division to post a 3 percent decline in 2010 revenue.

Chief Executive Frank Appel, a former partner at consultancy
McKinsey, has pushed through bold changes since taking the helm
from Klaus Zumwinkel in 2008, trimming down Deutsche Post’s
cumbersome conglomerate structure.

Appel also spent billions to exit the U.S. express market,
where Post failed for years to gain ground against UPS and
FedEx, and sold banking arm Deutsche Postbank (DPBGn.DE: ).

This year, Deutsche Post expects its DHL division — which
bundles express, freight and supply chain services — to
generate half of group annual adjusted earnings before interest
and taxes (EBIT) for the first time, with sales growth of 4 to 5

In the first quarter, Deutsche Post’s underlying group EBIT
rose 81 percent to 566 million euros, easily beating the 452
million euro average estimate in a Reuters poll of analysts.

“The underlying EBIT growth of 81 percent was astonishing
and supported by a stronger than expected turnaround in the
Express division and a solid development in the Mail division,”
said DZ Bank analyst Robert Czerwensky.

UPS and FedEx have also reported stronger quarterly results
on an Asian-driven recovery. TNT on May 3 echoed peers’ positive
results, saying higher volumes and lower consignment costs
buoyed the performance of its express unit. [ID:nLDE63S1WK]

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(Reporting by Maria Sheahan; editing by Mike Nesbit and Karen
($1=.7453 euros)

UPDATE 3-Deutsche Post upbeat on 2010 after Q1 profit rises