Deutsche Post cuts profit target on freight IT woes

FRANKFURT/BERLIN (Reuters) - Germany's Deutsche Post slashed its 2015 operating profit target for the second time this year on Wednesday, taking a 345 million-euro ($376 million) hit from a troubled revamp of IT systems at its freight division. The restructuring of the IT system, intended to reduce reliance on paper and known as the New Forwarding Environment, had already been under review after proving more costly and difficult to implement than expected. The division's head, Roger Crook, left in April. The German postal operator said it now expected 2015 earnings before interest and tax (EBIT) of at least 2.4 billion euros, compared with a previous target of between 2.95 and 3.1 billion euros. The group said it would roll back the NFE system in those countries where it had been piloted and was looking at alternatives, such as using parts of its current IT systems combined with bolt-on solutions already in use by other firms. A spokesman stressed that Deutsche Post was not ruling out working with the current NFE suppliers, if they were able to provide a solution that would be successful. The one-off charges comprise a complete write-down of the 308 million euros of NFE assets, plus the costs of reversing the system in the pilot countries. The effects will mainly be recognised in the third quarter though some will be in the final quarter, the spokesman said. "The group recognised the need to weigh potential alternatives and will implement a step-by-step replacement and upgrade of its IT set-up," Deutsche Post said in a statement. The 2015 profit target is also being hit by a further 200 million euros of one-off effects for a range of smaller items, such as a legal case in Africa, impairments on the values of older aircraft and a pension liability in its Post - eCommerce - Parcel division. The company, which had already cut its 2015 guidance in August due to strikes, maintained its targets for 2016 and its mid-term goals for 2020. Deutsche Post is due to publish its nine-month results on Nov 11. (Reporting by Georgina Prodhan and Victoria Bryan; Editing by Jonathan Gould and Adrian Croft)