Operating profit (EBIT) rose to 547 million francs, representing an increase of 164 million francs. A large part of this – around 155 million francs – was due to the improved result in the financial services market. Efficiency measures, the restructuring of the post office network and the ongoing adjustment of our services to adapt to changing customer behaviour also contributed to the good result.
Profits are vital to be able to tap into new sources of income as well as to operate and modernize an affordable and needs-based infrastructure. They allow Swiss Post to invest in new parcel centers and new services for customers, and provide funding for the pension fund. “The fact that we are making good progress and have achieved a solid interim result will enable us to continually develop”, says Alex Glanzmann, Head of Finance at Swiss Post. “However, it can also clearly be seen that maintaining a stable operating result is still a major challenge for us”. The market environment continues to be difficult, and pressure remains high on all the Group units due to the digital transformation. Innovations are a key part of digital change, and Swiss Post wants to actively help shape the process in the interests of its customers.
Markets’ contribution to profit
All the markets contributed to the generally positive interim result. In the communication market, the letter business recorded an operating profit of 186 million francs, which is 3 million francs more than in the prior-year period. However, the number of addressed letters was again down on the previous year (-2.8 percent). Although Post Offices & Sales recorded a loss of -88 million francs, the decline was reduced by 11 million francs. This is due to the restructuring of the post office network, which offset losses in over-the-counter transactions for letters, parcels and inpayments. The volume of inpayments and outpayments over the counter alone declined by 5.8 percent in the first half of the year. In the interests of its customers, Swiss Post will continue to invest significant amounts in new services and modern access points.
Swiss Post Solutions improved operating profit by 5 million to 15 million francs, considerably increasing its EBIT margin. The services offered by Swiss Post Solutions for the outsourcing of business processes and innovative services in document solutions are meeting with growing demand in Switzerland and abroad.
The logistics business posted operating profit of 58 million francs, which was 6 million francs higher than the prior-year figure. Parcel volumes rose sharply once again (+4.9 percent). With a market share of around 80 percent, Swiss Post remains the number one in the Swiss parcel market. However, pressure on margins remains high, partly due to competitors from outside the sector.
In the passenger transport market, PostBus recorded an operating profit of 20 million francs. Despite increasing the number of kilometres covered, the result was one million francs down year-on-year. This was due to the non-recurring one-off item from the previous year (fuel reimbursement), higher fuel prices and a rise in employee benefit expenses.
Lower value adjustments at PostFinance
PostFinance generated operating profit of 392 million francs in the first half of 2017. The 155 million franc rise is mainly due to the base effect on reversals of impairment on financial investments (14 million francs), whereas high value adjustments had been recognized the previous year (110 million francs). The encouraging level of net trading income (+' million francs) and declining personnel expenses (-11 million francs) contributed to the improved result. PostFinance is still facing a difficult market environment due to persistently low interest rates and the competitive disadvantage in loans and mortgage lending. Net income from the interest differential business alone, our most important pillar, was down 38 million francs due to a lack of profitable investment opportunities.
Swiss Post wants to remain attractive to customers and employees
Technological change and the associated challenges will continue to be very noticeable in the individual markets. Swiss Post must register solid profits in order to meet these challenges and fulfil its obligation to provide a universal postal service in accordance with postal legislation. It attaches a great deal of importance to a high-quality service, which it provides in full. As part of the digital transformation, Swiss Post is investing in a modern infrastructure from its own resources, as well as funding basic and advanced training for its employees.
Swiss Post is adapting to the changes in the market and taking action early on. This will ensure that it can offer its customers first-class services in the long term, and remain attractive in the future as the third-largest employer in Switzerland.
Source: Swiss Post