The decisive factor behind this downturn are the challenging market conditions, resulting in a reduction in interest income at PostFinance of 129 million francs.
In the past, PostFinance and PostMail made the greatest contribution to good results at Swiss Post, but the operating framework has been difficult in both of these areas. Due to improvements in efficiency, PostMail was able to achieve a positive result despite the ongoing decline in letter volumes. PostFinance is also making great efforts, but continued low interest rates are having an impact on the Group result and can no longer be offset by other income or efficiency measures in the longer term. This includes increased parcel volumes. While these volumes are encouraging, Swiss Post is engaged in fierce competition in the parcel delivery market and can only handle the large volume of parcels thanks to high investments in infrastructure. “As expected, the third quarter results were lower year-on-year. This reflects developments in a challenging market. However, thanks to intensive efforts in all business areas, results have not declined to the same extent as the deterioration in general conditions”, says Alex Glanzmann, CFO of Swiss Post. Swiss Post is following the debate on the lifting of the lending prohibition initiated by the Federal Council with great interest. Against the backdrop of these significant challenges, Swiss Post is also looking for opportunities to tap into new sources of income. “We want to continue to finance the universal service from our own resources in the future, but this is questionable in the medium term given the difficult operating framework”, says Glanzmann.
Increased parcel volumes
The parcel volume processed by Swiss Post has increased again by 7 percent. Swiss Post already delivers over half a million parcels on average each working day. Yet the parcel delivery market is experiencing severe pressure on pricing as a result of fierce competition. The constant increase in parcel volumes also requires substantial investment in new parcel centers. For this reason, operating profit at PostLogistics decreased by 5 million to 96 million francs. At 1,251 million francs, operating income was 32 million francs up on the previous year, however. Long-term investments in new regional parcel centers are significantly improving logistics processes. For example, the recently opened parcel center in Cadenazzo (TI) has relieved the workload for the center in Härkingen (SO).
Falling letter volumes
Although letter volumes fell again by 4.5 percent, PostMail achieved an operating profit of 257 million francs in the first nine months of the year, exceeding the previous year’s figure by 4 million francs. The main reason for this success is that PostMail was able to reduce its operating expenses by 81 million francs, even though operating income was 77 million francs lower than in the previous year, not least due to falling letter volumes. The example of letter post demonstrates particularly clearly the importance of the daily commitment shown by employees. However, the optimization potential for PostMail to compensate for lower revenues is continually decreasing due to falling letter and newspaper volumes.
A high level of employee commitment
The fact that Swiss Post's operating profit (EBIT) was down by 22 million on the previous year at 371 million francs is due in particular to the persistently difficult interest rate situation at PostFinance and the difficult situation in terms of volumes and competition in the other markets. This development has been apparent for years, and Swiss Post has repeatedly addressed the issue and resisted it as far as possible. The commitment shown by Swiss Post staff is demonstrated by the results in other areas such as PostalNetwork. Here, it has been possible to massively reduce the deficit in recent years. The operating result at PostalNetwork is currently –103 million francs. While this is about 9 million francs lower than in the same period of the previous year, this is due to provisions for announced restructuring. Once again, Swiss Post Solutions made a positive contribution, steadily improving its operating profit and increasing it again by 14 percent (3 million francs) to 25 million francs year-on-year. Operating income rose by 16 million francs to 445 million francs.
Travelling by Postbus increasingly popular
The comprehensive public transport service from PostBus is enjoying increasing passenger demand, which is also due to the addition of further timetabled services. Operating income rose by 2 percent year-on-year. Due to the non-recurring repayment of excess subsidies to purchasers, the operating result improved by 12 million francs year-on-year to –8 million francs. With the sale of CarPostal France to Keolis S.A., at the end of September 2019, Swiss Post ended its commitments to PostBus in France and is shifting its focus to the Swiss market and the Principality of Liechtenstein.
Source: Swiss Post