Deutsche Post may sell, spin-off troubled forwarding unit

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Deutsche Post DHL is said to be mulling a sale or spin-off of its troubled freight forwarding unit to focus on its key express delivery and mail businesses.

Japan Post is tipped as a potential buyer of DHL Global Forwarding as it accelerates its international expansion following the $5.1 billion acquisition of Australia-based freight forwarder Toll Holdings last year.

Deutsche Post may seek a partnership, create a joint venture or sell either part of the complete operation, Reuters said, quoting two people familiar with the situation.

“The unit has had massive margin problems of late, among others, due to IT technology troubles,” so it’s natural that Deutsche Post is mulling ways to turn it around,” one of the sources said.

Deutsche Post has declined to comment, but is expected to clarify the situation when it publishes its fourth quarter results and annual report on March 11.

Deutsche Post booked a 345 million euros ($386 million) impairment charge on DHL Global Forwarding in November after the group abandoned Net Forwarding Environment, its troubled in-house IT system.

The forwarding business swung to an operating loss of 337 million euros in the third quarter from a year-earlier profit of 71 million euros, taking losses of the first nine months to 280 million euros against a 222 million euros profit last time.