Deutsche Post DHL raised its 2009 outlook when posting third-quarter earnings that beat forecasts, saying on Thursday cost cuts were helping offset stubbornly weak volumes.
Europe's biggest mail and express delivery company has shrunk its cost base by shutting down its loss-making domestic DHL express unit in the United States and spending less on advertising and consulting.
We are confident that we can raise our guidance for the rest of the year based on the hard work we have done inside our company, chief executive Frank Appel told Reuters TV.
Deutsche Post said it did not foresee a significant pick-up in shipping volumes during the rest of this year as there had so far been only a very slight volume recovery.
Third-quarter adjusted EBIT fell 31 percent to 947 million euros, well above the 341 million average estimate in a Reuters poll.
As a result, it now expects 2009 adjusted earnings before interest and tax (EBIT) of at least 1.35 billion euros ($2 billion), compared with a previous outlook of 1.2 billion, as it reaches its annual savings target of 1 billion euros by year-end, months earlier than originally expected.
There is light at the end of the tunnel, but it is too early to celebrate. So we will remain focused on keeping our costs under control, Appel said.
Sluggish consumer spending and shrinking business investing have hurt shippers around the world this year. The World Trade Organisation has forecast 2009 global trade volumes will contract 10 percent, the sharpest decline since World War Two.
U.S. competitor FedEx Corp, which reports full-year earnings on Dec. 17, has said there were signs the economy was stabilising, while United Parcel Service Inc has said the outlook for the holiday season remained uncertain.
TAKING THE LEAD
Analysts were upbeat on Deutsche Post's prospects.
With a very strong market position in all divisions and a very solid cash position the company could be among the winners of a potential recovery of the economic environment in coming quarters, WestLB analyst Raimon Kaufeld said in a note.
Post's smaller Dutch rival TNT NV has been grappling with weak demand at its express delivery unit and the threat of strikes by workers at its mail division, which it has been racing to restructure to boost profit.
The company adjusted its operating profit for restructuring costs in the United States and the insolvency of German retailer Arcandor, a major customer.
It said it expected further writedowns in the tens of millions of euros in the fourth quarter from Arcandor unit Quelle's insolvency.
Deutsche Post shares were 0.2 percent lower at 11.75 euros by 1440 GMT, while Germany's blue-chip index .GDAXI was up 0.3 percent.
Deutsche Post stock trades at 12.5 times 12-month forward earnings, a discount to UPS and FedEx both of which trade at multiples just above 20, according to Thomson Reuters StarMine, which weights analyst estimates according to their track record.
Investors have said they worry Deutsche Post has limited growth potential and a bloated staff cost base in the mail market, which faces shrinking revenue due to the new German government's reform plans.
(Additional reporting by Reuters TV; Editing by David Holmes and Dan Lalor)
($1 = 0.6782 euro)