Deutsche Post plans new investment as e-commerce booms

Deutsche Post DHL set a new target for an operating profit of 5.3 billion euros for 2022 and said it would invest heavily in areas like warehouse automation and analytics as it aims to keep up with fast-growing e-commerce.

Deutsche Post shares fell slightly on Tuesday morning to trade 0.5% lower at 0751 GMT, underperforming Germany’s bluechip Dax index which was up 0.4%.

“This looks like evolution, not revolution,” said Bernstein analysts Daniel Roeska and Alex Irving, adding that the most ambitious targets were for the freight forwarding business.

Given the current uncertain economic environment, finance chief Melanie Kreis said the company’s new guidance would cover a three-year period and be rolled forward annually.

U.S. rival FedEx Corp warned last month that full-year earnings would miss analysts’ estimates, as the U.S.-China trade war exacerbates a global economic cooling.

For the 2020-2022 period, Deutsche Post plans to invest between 8.5 and 9.5 billion euros as it overhauls its IT systems and retrains staff, applying data analytics to help it better plan delivery routes and predict parcel volumes.

Included in that figure will be 2 billion euros for digitalization, with the expectation that this spending will generate an annual benefit of more than 1.5 billion euros by 2025.

The new strategy is based on the assumption that air freight will grow 1-3% a year, ocean freight 2-4% and road freight 3-4%.