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TEXT-S&P:Deutsche Post 'BBB+/A-2' rtgs affrmd
May 30, 2012 / 8:43 AM / 5 years ago

TEXT-S&P:Deutsche Post 'BBB+/A-2' rtgs affrmd

(The following statement was released by the rating agency)

May 30 -

Overview

-- In January 2012 we placed the ‘BBB+/A-2’ corporate credit ratings on German postal service and integrated logistics provider, Deutsche Post AG, on CreditWatch negative following an order by the European Commission to repay between EUR500 million and EUR1 billion in payments that the Commission deems have breached state aid rules.

-- Although the final amount of the aforementioned payments is yet to be determined, we have reassessed Deutsche Post’s business and financial risk profiles in light of current trading conditions, taking the projected payments into account.

-- As a result, we are affirming our ‘BBB+/A-2’ long- and short-term ratings on Deutsche Post and removing them from CreditWatch negative.

-- The stable outlook reflects our view that Deutsche Post will benefit from existing cost-cutting initiatives and further market recovery in the medium term.

Rating Action

On May 30, 2012, Standard & Poor’s Ratings Services affirmed its ‘BBB+’ long-term and ‘A-2’ short-term corporate credit ratings on German postal service and integrated logistics provider, Deutsche Post AG. At the same time, we removed the ratings from CreditWatch, where they were placed with negative implications on Jan. 27, 2012, following an order by the European Commission to repay between EUR500 million and EUR1 billion in payments that the Commission deems have breached state aid rules. The outlook is stable.

Rationale

The CreditWatch resolution follows our review of Deutsche Post’s business and financial risk profiles, taking into account the implications of state aid payments in our base-case credit scenario.

As a result of our review, we have revised our assessment of the group’s business risk profile to “satisfactory” from the weaker end of the “strong” category to reflect our view of the additional pressure on Deutsche Post arising from a weak economic environment, the ongoing structural decline in the group’s mail business, and increased reliance on the express and logistics businesses going forward.

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