Deutsche Post DHL said a global economic recovery and cost cuts will help it boost its core profit this year, as it halted a slide in revenues last year and demand for air freight and mail started to improve.

However, shares dropped in pre-market trade on Tuesday as investors had expected a stronger outlook from Europe's biggest mail and express delivery company.

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

In 2010, underlying earnings before interest and tax (EBIT) will rise to 1.6-1.9 billion euros from 1.47 billion euros in 2009. The 2009 figure was down 27 percent year-on-year but was exactly in line with analyst estimates in a Reuters poll.

Deutsche Post shares were indicated 3.2 percent lower before the German market opens at 0800 GMT, while the German blue-chip index was seen 0.2 percent lower.

Weak full-year 2009 report and weak full-year 2010 guidance will weigh on the share today, a local trader said.

Deutsche Post said it would pay a steady 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.

A year ago, Deutsche Post launched a strategic rejig -- dubbed Strategy 2015 -- to placate shareholders unimpressed by previous restructurings, grow faster than the market and catch up to competitors in terms of profitability.

It also appointed Larry Rosen as finance chief at that time to replace John Allan after several major strategic moves -- such as the sale of Deutsche Postbank on the cusp of financial market collapse -- left investors disappointed.

In his first major statement on his priorities, Rosen said on Tuesday that Deutsche Post would focus on maintaining its credit ratings.

Our financial strategy will ensure that we possess the necessary financial strength and flexibility to further grow our operations and thus successfully implement our Strategy 2015, he 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.

Moody's had cut its rating on Deutsche Post's debt last year, voicing doubt that cost savings could offset pressure on profits as mail volume declines.

(Editing by Sharon Lindores)