E-mail was supposed to herald the beginning of the end for post, but the growth being forecast for Deutsche Post DHL (DE:DPW) tells a different story. We think the shares' recent strong run will continue as the group emerges leaner and more profitable from a multiyear restructuring. Analysts now expect earnings to grow at double digits for the next two years, which leaves the shares looking too cheap compared with peers - add in a chunky dividend yield, too, and we rate them a long-term buy.
- Improving cash generation
- DHL profits on track for 13-15 per cent increases
- Strong dividend growth
- Shares cheap compared to peers
- Weak global growth
- Acceleration in mail decline
First-quarter results for 2013 easily beat analysts' expectations in the mail operations, which in 2012 were responsible for a quarter of revenues and just over a third of operating profits. Parcel delivery was the standout performer with volumes up 6.4 per cent and revenues 7 per cent ahead on the prior period, as an online shopping boom means over three million parcels are now delivered every day. Letter delivery rose 1.4 per cent, which was impressive against the backdrop of a mail market in structural decline of between 2-4 per cent every year.