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Added sales tax payment hits earnings at mail and freight company DHL
FRANKFURT, Germany (AP) German logistics company Deutsche Post DHL saw its profit fall 28 percent in the second quarter as a large tax bill took a chunk out of increased sales in emerging markets.
Though net profit fell to 201 million ($247.19 million) from 278 million in the same quarter a year before, the company raised its earnings prediction for the year. Profit beat market estimates for around 179 million and the company's shares rose 2.5 percent to 15.06 in Thursday morning trading in Frankfurt.
"We continue to perform well," said CEO Frank Appel. "The excellent market positions of our brands and divisions in the world's growth markets are paying off."
Overall revenues rose 7 percent to 13.7 billion and Deutsche Post said it was well-positioned in the rapidly growing regions of the world, particularly Asia. Deutsche Post opened a new $175 million regional hub in Shanghai last month, joining facilities in Hong Kong, Bangkok and Singapore to build out the company's Asia-Pacific network
Offsetting that advance, the Bonn-based company has had to set aside money to pay back taxes to the German government after losing its exemption on a sales tax. That reduced net profit by 260 million in the quarter. The company had warned markets about the tax bill ahead of the earnings release.
Deutsche Post DHL, the privatized German post office, still carries mail there but has expanded its express delivery business to 220 countries, operating from global hubs in Cincinnati, Ohio, and Leipzig, Germany. It also has freight and logistics businesses.
The company said its express mail business increased operating earnings by more than 50 percent on sales increases in Asia and strong business in the United States. A decline in its traditional mail business was being offset by growing online retailing.
The company was confident enough to raise its 2012 earnings forecast. It's now predicting earnings before interest and tax to be in the 2.6 billion-2.7 billion range, as against 2.5 billion-2.6 billion before.