Deutsche Post Reorganizing As Earnings Fall 3%

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Deutsche Post World Net outlined a plan yesterday to increase profit 40 percent within three years through reorganization as it reported an expected 3 percent drop in third-quarter core earnings.

The company said the STAR program seeks savings through greater synergies in Deutsche Post's worldwide operations. STAR will affect all four Deutsche Post divisions, but it centers on the integration of express delivery company DHL, logistics company Danzas and Deutsche Post Euro Express.

DHL will become the single brand for the company's express delivery and logistics businesses, Deutsche Post said. The one-brand policy aims to save money by streamlining purchasing, standardizing accounting and back-office operations and using transport capacities more efficiently.

Word of the program follows Deutsche Post World Net agreeing with two investment funds and Japan Airlines to buy the 24.4 percent of Brussels-based DHL International Ltd. that it did not already own. Deutsche Post, which is partly privatized, is to pay $391 million to Chester Investment and Exeter Investment for 23 percent and an undisclosed amount to Japan Airlines for the other 1.4 percent.

The European Commission last month also approved Deutsche Post World Net's plans to form a joint venture with Dutch publishing group Wegener NV and to buy the firm's Interlanden distribution unit, the EU said.

Deutsche Post's Utrecht-based subsidiary Selektvracht will merge its addressed mail delivery operations with Wegener's Interlanden division, a supplier for the delivery of unaddressed mail on the Dutch mail market, to form the joint venture.

The two firms will cooperate in sales and marketing, and Selektvracht will take a majority stake in Interlanden. In a statement, both said they aim to become a leading supplier for the delivery of addressed mail in the liberalized Dutch mail market.

Interlanden, with a staff of 450 and 24,000 carriers, had sales of 60 million euros last year compared with the 52 million euro revenue earned by Selektvracht, which had 6,200 carriers.

The firms said the arrangement was likely to create jobs as its addressed and unaddressed mail operations expanded.

In other news, Royal Mail struck its first deal to deliver letters in the United Kingdom for Deutsche Post, one of its commercial rivals. Royal Mail said the trial will begin as soon as possible. Gillian Wilmot, Royal Mail's managing director of mail markets, called the agreement ground-breaking.

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