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UPDATE 2-Deutsche Post plays down hit to DHL from Amazon's own deliveries
March 9, 2016 / 7:08 AM / 2 years ago

UPDATE 2-Deutsche Post plays down hit to DHL from Amazon's own deliveries

* Amazon’s move into delivery shows appeal of market-CEO

* Amazon to remain important customer to Deutsche Post

* Post confirms 2016 target and goals through to 2020

* Analysts have raised concerns over Amazon’s delivery moves

* Shares down 1 pct, underperform market (Adds details from news conference, shares, analyst comment)

By Emma Thomasson and Victoria Bryan

BERLIN, March 9 (Reuters) - Deutsche Post shrugged off concerns for its DHL business over moves by Amazon to carry out more of its own parcel deliveries, sticking with its profit growth targets.

Deutsche Post’s shares have come under pressure following moves by Amazon to start building up its own delivery capabilities which is seen as a threat to DHL’s business.

Credit Suisse analysts estimate that Amazon accounts for about 30 percent of DHL parcel volumes and up to a quarter of its revenue.

However, Deutsche Post’s Chief Executive Frank Appel said the announcement on Tuesday of a share buyback showed his optimism for the future of the group. He added that competition from Amazon did not undermine that.

“It is good if other companies try to gain a foothold as it shows that our market is very appealing... we view it as a sportsman,” Appel told a news conference. “We are very confident that we will be able to continue the positive trend.”

The stock was down 1 percent at 1040 GMT versus a 0.5 percent firmer German blue=-chip index, having lost 23 percent in the last 12 months.

Amazon set up its first parcel sorting centre in Germany last October and is planning more. It also wants to set up a parcel locker network across Europe to enable people to pick up their own orders, similar to a service offered by Deutsche Post.

Ekkehard Hahn, head of logistics firm Mail Professionals told the Handelsblatt daily on Wednesday that deliveries by DHL to his firm’s mail distribution centres in Munich where Amazon is piloting its own sorting centre are down 25 to 30 percent.

Juergen Gerdes, head of the post, parcels and ecommerce unit of Deutsche Post, admitted the Amazon parcel centre was hurting its business but did not expect the impact to be sustained as Deutsche Post works on new offers like parcel boxes outside private homes as well as improving its same day delivery service.

“It is not that we have any deficits. It is just Amazon trying something new... It is not a question of pricing,” he said, adding that Deutsche Post’s relationship with Amazon was still good and it would remain an important customer.

“We are operating a very big machine with a big number of customers,” Gerdes said. Deutsche Post said 70 of the 100 biggest online retailers in Germany were its customers.

Deutsche Post confirmed its expectation that operating earnings will rise by at least 1 billion euros ($1.1 billion) this year to between 3.4 and 3.7 billion in 2016, with more than 1.3 billion of that due to come from the post, parcels and e-commerce unit.

Deutsche Post also reiterated its long-term targets for a rise in operating profit of more than 8 percent annually up to 2020, including average operating profit growth of 10 percent per year from DHL.

“The confirmation of guidance for 2016 and 2020 is a positive signal. From our point of view, it can be interpreted as a signal that Deutsche Post believes that Amazon remains an important customer,” said DZ analyst Dirk Schlamp.

$1 = 0.9112 euros Additional reporting by Matthias Inverardi in Bonn; Editing by Elaine Hardcastle

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