Record profit has Deutsche Post unfazed by Amazon

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Deutsche Post DHL said it doesn’t fear moves by Amazon, the U.S. online retail group, to boost its logistics operations will eat into its parcels business as it reported the biggest quarterly profit in its history.

The German logistics giant posted an operating profit of 2.41 billion euros ($2.6 billion) for 2015, after earning a record 957 million euros before interest and tax in the final three months of the year.

The company reiterated its expectation that operating profit, to which the DHL divisions will contribute 2.45 to 2.75 billion euros, will rise by at least 1 billion euros this year to between 3.4 and 3.7 billion euros.

Deutsche Post Chief Executive Officer Frank Appel said the company’s business isn’t under threat from Amazon’s growing logistics ambitions.

“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 said following the publication of the 2015 results.

“We are very positive that we will be able to continue the positive trend.”

Appel’s comments, relating mainly to the German market, Europe’s largest, came hours before Amazon confirmed it would be leasing 20 Boeing 767 freighters from Air Transportation Services Group for five to seven years to handle rising deliveries in the U.S.

Deutsche Post faces a challenge from Amazon on its domestic doorstep after the U.S. group opened its first German parcel distribution center in Munich in October and said it plans to open more sorting hubs across the country. It also intends to establish a pan-European parcel locker network similar to one operated by Deutsche Post.

Amazon is estimated to account for around 30 percent of DHL’s parcels traffic and nearly a quarter of its revenue, but Deutsche Post stuck to its forecast that DHL will grow operating profit by 10 percent annually through 2020.

Deutsche Post grew revenue by 4.6 percent in 2015 to 59.2 billion euros, with DHL’s express unit boosting sales by 9.4 percent to 13.7 billion euros.

“The express business has further bolstered its leading market position by making additional significant investments in its network infrastructure and quality,” the company said.

Deutsche Post announced DHL is expanding its footprint in Scandinavia, Finland and the Baltic states via partnerships with Norway’s postal operator Posten Norge and Finland’s national mail company Posti to exploit the surge in cross-border online shopping in the region.