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BUSINESS

Subprime crisis hits earnings at Deutsche Post

German logistics group Deutsche Post reported a wider-than-expected 18.4 percent drop in first quarter earnings on Wednesday as turbulence on financial markets hit earnings at its Postbank banking unit.

Subprime crisis hits earnings at Deutsche Post
Photo: DPA

The fall in net profit to €407 million ($629 million) – analysts polled by Thomson Financial News had forecast €455 million – was also due to the period having two fewer working days, a statement said.

Operating income for the first three months fell 14.7 percent to €851 million, while revenues grew 1.8 percent to €15.7 billion. The weak dollar and pound helped shave more than four percentage points off revenue growth.

As reported on May 8, turbulence in financial markets stemming from the collapse of the US subprime mortgage market led to operating profit falling by more than a fifth at Postbank in the first three months of the year.

Deutsche Post said it was sticking to its target of operating income before one-off items of around €4.2 billion for the whole of 2008, and of €4.7 billion for 2009.

The company announced it would set a turnaround plan within the next two weeks for its troubled US division, which saw further problems in the first quarter.

Post chief executive officer Frank Appel said in early March that a retreat from the US unit was not an option.

afp/dpa/ddp

BUSINESS

France’s EDF hails €10billion profit, despite huge UK nuclear charge

French energy giant EDF has unveiled net profit of €10billion and cut its massive debt by increasing nuclear production after problems forced some plants offline.

France's EDF hails €10billion profit, despite huge UK nuclear charge

EDF hailed an “exceptional” year after its loss of €17.9billion in 2022.

Sales slipped 2.6 percent to €139.7billion , but the group managed to slice debt by €10billion euros to €54.4billion.

EDF said however that it had booked a €12.9 billion depreciation linked to difficulties at its Hinkley Point nuclear plant in Britain.

The charge includes €11.2 billion for Hinkley Point assets and €1.7billion at its British subsidiary, EDF Energy, the group explained.

EDF announced last month a fresh delay and additional costs for the giant project hit by repeated cost overruns.

“The year was marked by many events, in particular by the recovery of production and the company’s mobilisation around production recovery,” CEO Luc Remont told reporters.

EDF put its strong showing down to a strong operational performance, notably a significant increase in nuclear generation in France at a time of historically high prices.

That followed a drop in nuclear output in France in 2022. The group had to deal with stress corrosion problems at some reactors while also facing government orders to limit price rises.

The French reactors last year produced around 320.4 TWh, in the upper range of expectations.

Nuclear production had slid back in 2022 to 279 TWh, its lowest level in three decades, because of the corrosion problems and maintenance changes after
the Covid-19 pandemic.

Hinkley Point C is one of a small number of European Pressurised Reactors (EPRs) worldwide, an EDF-led design that has been plagued by cost overruns
running into billions of euros and years of construction delays.

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