European parcels operator GLS is poised to grow in the lucrative Spanish market throughacquisitions, according to a newspaper report today.
“We are conducting acquisition discussions in Spain and want to seal transactions within thenext two months,” CEO Rico Back told the German newspaper Die Welt. Back declined to disclose whichcompanies he was negotiating with but noted that GLS has a budget of about EUR 250 million foracquisitions. Parcel and express firms in Spain are able to achieve profit margins of 16-18%, whichis considerably more than in highly competitive markets such as Germany, the newspaper said.
Back said GLS aimed to increase its turnover to EUR 2 billion and pre-tax profits to EUR 200million by 2009. In the year ending March 31, 2007, according to provisional figures, the RoyalMail subsidiary increased sales by 7% to about EUR 1.6 billion while pre-tax profits rose at ahigher rate to EUR 165 million, the newspaper reported. This gave GLS a profit margin similar tothat of TNT and well ahead of DHL and DPD, although well behind UPS’ 17% margin, Die Welt wrote.
In its home market of Germany, GLS increased revenues by only 5%, partly due to priceincreases. “We increased prices by 3.5%. This impacted on volumes to some extent,” Back said,admitting that business had been lost to competitors such as DHL.
Back reiterated that GLS had no plans to enter the German mail market due to the highinvestment that would be necessary and the dominant position of Deutsche Post.
