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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.

Published: 14 May 2008 18:22 CEST

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

Sweden's SSAB to build €4.5bn green steel plant in Luleå

“The transformation of Luleå is a major step on our journey to fossil-free steel production,” the company’s chief executive, Martin Lindqvist, said in a press release. “We will remove seven percent of Sweden’s carbon dioxide emissions, strengthen our competitiveness and secure jobs with the most cost-effective and sustainable sheet metal production in Europe.”

The new mini-mill, which is expected to start production at the end of 2028 and to hit full capacity in 2029, will include two electric arc furnaces, advanced secondary metallurgy, a direct strip rolling mill to produce SSABs specialty products, and a cold rolling complex to develop premium products for the transport industry.

It will be fed partly from hydrogen reduced iron ore produced at the HYBRIT joint venture in Gälliväre and partly with scrap steel. The company hopes to receive its environemntal permits by the end of 2024.

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The announcement comes just one week after SSAB revealed that it was seeking $500m in funding from the US government to develop a second HYBRIT manufacturing facility, using green hydrogen instead of fossil fuels to produce direct reduced iron and steel.

The company said it also hoped to expand capacity at SSAB’s steel mill in Montpelier, Iowa.

The two new investment announcements strengthen the company’s claim to be the global pioneer in fossil-free steel.

It produced the world’s first sponge iron made with hydrogen instead of coke at its Hybrit pilot plant in Luleå in 2021. Gälliväre was chosen that same year as the site for the world’s first industrial scale plant using the technology.

In 2023, SSAB announced it would transform its steel mill in Oxelösund to fossil-free production.

The company’s Raahe mill in Finland, which currently has new most advanced equipment, will be the last of the company’s big plants to shift away from blast furnaces.

The steel industry currently produces 7 percent of the world’s carbon dioxide emissions, and shifting to hydrogen reduced steel and closing blast furnaces will reduce Sweden’s carbon emissions by 10 per cent and Finland’s by 7 per cent.

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