Postal banking boosts Swiss Post group profits

Swiss Post has seen its profits boosted considerably by its postal banking services in the first half of the year, with increased customer deposits swelling its coffers with a 14% increase in group profits before tax. Reporting on its first half results up to the end of June 2011, the company said exchange rates had helped overall revenues slacken 1% to CHF 4.3bn ($5.4bn USD), but group profit rose by CHF 66m ($83m USD) to CHF 550m ($690m) compared to the same period in 2010.

Some 60% of group profits came from the company’s PostFinance unit, where increased retail activity and rising interest rates saw a 20.4% improvement year-on-year in postal banking profits before tax to CHF 330m ($413m).

PostFinance is the fifth largest financial institution in Switzerland, and saw its overall revenue in the first half rising 6% to just over CHF 1.2bn ($1.5bn).

The group also achieved some efficiency gains in the first half, with overall headcount excluding trainees reducing by just over 1,000 to 44,094.

Operating units

In the communications market, Swiss Post noted that its first-half profits were relatively stable, with domestic letter volumes growing 1%, though overall parcel volumes were actually down 1.7% as restructuring saw a decrease in inbound parcels from Germany.

Swiss Post’s PostMail unit achieved a CHF 123m ($156m USD) profit before tax, up 14% on last year’s first half, thanks largely to efficiency improvements, with the half’s CHF 1.29bn ($1.6bn) revenue down from the 1.31bn ($1.63bn) seen in the same period in 2010.

Swiss Post’s post offices were hit further by an ongoing decline in the use of postal counters in Switzerland, with losses for the retail network rising 23% year-on-year to CHF 70m ($87m) and sales falling 3% to CHF 831m ($1bn). The fall in counter transactions was outpacing efforts to cut costs and introduce new non-postal products, Swiss Post said.

In the company’s business services unit, Swiss Post Solutions, restructuring measures effected last year brought back profitability, particularly with the company’s Central European direct mail business being transferred to a joint venture with Austrian Post. The unit saw its revenues rise 18% to CHF 385m ($481m) and brought home a CHF 3m ($3.8m) profit before tax.

Swiss Post’s PostLogistics unit saw profits weaken 4% year-on-year to CHF 73m ($91m) in the first half, on a CHF 708m ($886m) revenue that was also 4% down on last year’s first half. The 1.7% decline in parcel volumes with the loss of imported parcels from Germany was compounded in the results with rising staff costs.

Elsewhere, Swiss Post’s transport unit, PostBus, saw its services expanding in the half to bring a 3.5% growth in revenues, to CHF 354m ($442m) and 11% boost in profits to CHF 19m ($24m).

International

Swiss Post International’s business developed “positively”, the company said, although its flat sales growth and reduced profits were affected by major write-downs. Revenues grew less than 1% to CHF 384m ($480m) for the half, while profits before tax were down 11% to CHF 24m ($30m).

The company said sales were declining slightly in Switzerland, but growth in operations came from international subsidiaries and the acquisition of new companies.

“Owing to the strong economic activity in the first half of 2011 and thanks to the consistent implementation of our global sales strategy, we can expect sales and results for fiscal 2011 to be up somewhat on the previous year,” said Daniel Bättig, Head of International Mail.

Swiss Post International is now focusing on steadily expanding its industry solutions and increasing its presence in regional markets, the company said.

It claims third position in the global cross-border letter market, behind only Deutsche Post and France’s La Poste, employing 1,250 people in 12 European countries, five Asian cities and in the USA.

The company plans to increase its market penetration through “quality partnerships”, it said.

Bättig said: “Our growth is based on our offerings as an innovative and international communications service provider. We partner our business customers and enable them to optimise the value add of their services and goods.”