Deutsche Post DHL unveiled a conservative financial strategy that focuses on saving cash to safeguard its credit rating and gave a 2010 earnings outlook that missed market expectations.

The move, announced by new Chief Financial Officer Larry Rosen on Tuesday, comes after Deutsche Post disappointed investors with major strategic moves that failed to produce hoped-for gains and long-term growth.

Europe's biggest mail and express delivery company sees its express delivery and freight businesses boosting underlying group earnings before interest and tax (EBIT) to 1.6-1.9 billion euros ($2.2-2.6 billion) from 1.47 billion in 2009.

That outlook is well below the average estimate of 2.1 billion euros in a Reuters poll of analysts.

Post shares fell 1.6 percent to 12.59 euros at 1106 GMT, while the German blue-chip index <.GDAXI> was 0.52 percent lower.

Shrinking business investing hurt Deutsche Post and its peers last year. The World Trade Organization has said that 2009 global trade volumes contracted by about 12 percent, the sharpest decline since World War Two.

Deutsche Post Chief Executive Frank Appel said trade volumes stabilized toward the end of last year and the moderate recovery picked up in early 2010.

Now we can really talk about a small tailwind. Still, the global economic crisis is definitely not over yet, Appel said.


Deutsche Post said it would pay a dividend of 0.60 euros per share for 2009, in line with analyst estimates. It also vowed to pay out 40-60 percent of its profits as dividends from now on to woo investors.

Shareholders last year punished Deutsche Post's shares when the company slashed its dividend by a third, even though Post gave assurances that the move did not signal a strategic change.

U.S. competitor United Parcel Service , which reports its first-quarter earnings on April 27, raised its dividend last month, saying that its outlook for gradual economic recovery in 2010 justified the move.

FedEx Corp , another bellwether of the economy, reports third-quarter earnings on March 18.

Deutsche Post has made major changes in its conglomerate structure over the past few years but many of them disappointed shareholders.

It spent billions to exit the U.S. market after failing for five years to gain ground against UPS and FedEx there. And it sold Deutsche Postbank days before the financial market collapsed but when valuations were already down.

The company named Rosen to replace John Allan as finance chief last year in hopes that his experience with bulky German companies and the demands of large corporate customers would help steer Deutsche Post onto a clearer path.

In his first major statement on strategy since he took over in September 2009, the U.S. national said on Tuesday that the company plans to focus on its credit rating in the near future rather than spending money on acquisitions or special dividends.

We want to use our excess liquidity to gradually fund our pension plans and further strengthen our rating. Extraordinary dividends or share buy-back programs will only be an option if we don't see any further optimization potential in the above areas, Rosen said.

Deutsche Post has a BBB+ rating at Standard & Poor's and Baa1 at Moody's, both of which are three notches above junk. That compares with U.S. rival United Parcel Service's AA- rating at S&P, but slightly above FedEx's BBB.

(Editing by Sharon Lindores)

($1=.7350 Euro)