Deutsche Post DHL earns fall on VAT payment

Added tax payment hits earnings at mail and freight company DHL

Associated Press

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.

Net profit fell to €201 million ($247.19 million) from €278 million in the same quarter a year before, however the company raised its earnings prediction for the year.

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.

The Bonn-based company has had to set aside money to pay a large tax bill to the German government after losing its exemptions for value-added tax. That reduced net profit by €260 million in the quarter.

Deutsche Post DHL, the privatized German post office, still carries mail there but has expanded its express delivery business to 220 countries, operating from a global hub in Cincinnati, Ohio, and a regional base in Leipzig, Germany. It also has freight and logistics businesses.

The company said Thursday that 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 increased parcel revenue due to growing online retailing.

The company raised its 2012 earnings predictions to €2.6 billion-€2.7 billion from €2.5 billion-€2.6 billion, measured as earnings before interest and taxes.

"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.

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