* Q1 EBIT 885 mln eur vs poll avg 915 mln
* Margins at freight unit under pressure
* Shares seen down 3 percent
(Recasts, adds CFO comments)
BERLIN, May 11 German postal and logistics
company Deutsche Post DHL reported lower than
expected first-quarter profit after its freight forwarding
division was unable to pass on higher freight rates to
After years under pressure, rates for transporting goods via
ocean and air have started to increase this year thanks to
rising volumes and tight capacity, exacerbated by the bankruptcy
of South Korea's Hanjin Shipping.
However, that puts margins under pressure at forwarders,
because they cannot typically pass on the rates to their end
customers so quickly, Deutsche Post finance chief Melanie Kreis
Freight forwarders arrange transportation of goods for
customers, usually by booking space on ships and aircraft and
dealing with customs.
Deutsche Post's freight division is also undergoing
restructuring after a planned renewal of its IT systems ran into
problems and had to be reviewed.
"Our rivals have also seen this pressure but we are in the
turnaround phase so we have less room for manoeuvre," Kreis
said, adding that rising freight volumes made the company
optimistic that it could start to pass on higher rates in the
second half of the year.
The freight division's operating profit dropped almost 22
percent to 51 million euros ($55.5 million) in the quarter.
Overall, Deutsche Post reported first-quarter earnings
before interest and tax (EBIT) of 885 million euros, below the
average analyst expectation in a Reuters poll for 915 million
The post, eCommerce and parcel division, which is being
driven by demand for deliveries of goods bought online, also had
a slower than expected start to the year, DZ Bank analyst Dirk
Schlamp said in a note.
The group said it was on track to reach its 2017 profit
target for EBIT of around 3.75 billion euros and also confirmed
targets under its 2020 strategy, although Kreis said the freight
division had work to do to catch up.
($1 = 0.9194 euros)
(Reporting by Victoria Bryan; Additional reporting by Matthias
Inverardi; Editing by Georgina Prodhan and Maria Sheahan)