Deutsche Post Shares Advance on Cost-Cut Report

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June 14 (Bloomberg) -- Deutsche Post AG, Europe’s biggest postal service, rose the most in two weeks in Frankfurt after WirtschaftsWoche reported that the German company plans to save 1 billion euros ($1.2 billion) at its mail unit.
The target, set for the next 12 months, is about five times more than previously projected, according to the weekly magazine. Deutsche Post may eliminate mail delivery on Saturdays and former unit Deutsche Postbank AG could pay more than 100 million euros for 277 of the 350 postal outlets Deutsche Post may sell, the magazine said.
Deutsche Post is relying on growth at its DHL express- package and freight division to counter declining sales at the mail unit. Chief Financial Officer Lawrence Rosen said on a May 11 conference call that Deutsche Post has no plans to separate mail from express delivery, forecasting mail revenue to shrink by 3 percent this year.
“We’re trying to reduce costs, and of course that means we’re also looking at the mail unit,” Uwe Bensien, a spokesman at Bonn-based Deutsche Post, said by telephone. He declined to comment on the details reported by WirtschaftsWoche.
Deutsche Post rose as much as 33 cents, or 2.7 percent, to 12.47 euros, the steepest intraday increase since May 27. The stock traded at 12.43 euros, or 2.4 percent higher, as of 11:47 a.m. in Frankfurt.
“This would be good news, but it’s not clear how much of this program would contribute to earnings,” said Robert Heberger, an analyst at Merck Finck & Co. in Munich with a “buy” recommendation on the shares. “It may take until the third quarter before the plan gets underway and I don’t know whether the savings target could be achieved within one year from that.”