Swiss Post CFO: We keep our promises, even in difficult times
Swiss Post has published its interim results revealing the Post is on track financially – but environment remains challenging
In the first half of 2022, Swiss Post generated a profit of 259 million francs, up 12 million francs on the first six months of 2021. At 294 million francs, operating profit was up 55 million francs compared to the previous year’s figure, while revenue stood at 3,460 million francs, up 104 million francs year-on-year. Overall, the results are better than in the first half of 2021. They have enabled Swiss Post to strengthen its financial foundation, and prepare it for the challenges of the months ahead. The sharp rise in prices for energy, fuel and raw materials and the marked increase in inflation are leading to significantly higher costs at Swiss Post – particularly in logistics.
Swiss Post can look back on a financially positive first semester. With the second quarter of 2022 now behind it, profit, operating profit (EBIT) and revenue (operating income) are better than in the first half of the previous year. “The interim results are in line with our expectations, Swiss Post is on track strategically and financially,” says Alex Glanzmann, Chief Financial Officer of Swiss Post. “We have established a solid financial foundation over recent years, and consolidated it during the first half of 2022. Swiss Post is well placed to meet the challenges of the months ahead”, Glanzmann adds. The economic environment is particularly challenging, with the sharp rise in inflation, record high prices for energy, fuel and raw materials, potential supply bottlenecks for essential goods, a tense geopolitical situation with the war in Ukraine and subdued consumer confidence, all of which are having an impact on operations at Swiss Post.
Steep growth in parcel market levels off
The largest contribution to the group result in the first half of the year comes from the Logistics Services unit. It generated an operating profit of 229 million francs, 36 million francs less than the previous year’s figure. While letter volumes were down 2.8 percent to 893.5 million, parcel volumes fell more significantly in the first half of 2022. Swiss Post processed 95.6 million parcels in the last six months, 5.1 percent lower year-on-year. The previous uninterrupted trend towards online retail slowed in the first six months of this year. The reasons for this are subdued consumer confidence and the almost complete lifting of coronavirus measures – people are again doing more of their shopping in the high street. In the longer term, however, Swiss Post still expects continued growth in parcels. By comparison, current parcel volumes are 41 percent higher than in the first half of 2018. Swiss Post continues to push ahead with the planned expansion of its parcel processing infrastructure – because greater capacity is needed in the medium and long term. This is the only way that Swiss Post can continue to process and deliver the growing parcel volumes in a manner that is both efficient and ecological.
But the parcel market is fiercely competitive, and pressure on margins and prices is high. This pressure has increased even more due to sharp price spikes in energy, fuel and raw material prices in recent months. “This impacts us significantly. Sorting and delivery cost us a good deal more money than they did a year ago,” says CFO Alex Glanzmann. For 2022, Swiss Post expects additional overall costs in the parcel business of between 30 and 40 million francs. Swiss Post attempts to offset these costs itself as best it can, and will continue to bear them in the second half of 2022. From next year on, however, Swiss Post will have to pass on some of the higher costs: As of 1 January 2023, Swiss Post will be introducing a variable energy surcharge and an inflation surcharge for parcels. Some 3,500 business customers with individually agreed prices for national parcel services will be affected (more on this in the media blog).
Pleasing result at PostFinance – but the short-term outlook is gloomy
PostFinance made a significant contribution to Swiss Post’s positive interim results. During the first half of 2022, the bank benefited from higher revenue from customer asset fees and interbank business. This enabled PostFinance to offset the persistent decline in the revenues from the interest difference business. Higher revenue from commission business and services also contributed to the positive result. Swiss Post considers the raising of the key rate on 17 June 2022 to be correct. Swiss Post and PostFinance welcome the return to positive interest rates, which is also in the interests of customers. But in the short term, the SNB’s interest-rate hike will have a negative impact on revenue from customer asset fees and interbank business. PostFinance therefore expects significantly lower revenue from interest operations for the second half of the year. While the bank expects the outlook for the traditional interest difference business to improve again in the medium term, the recovery will only be gradual.
PostalNetwork stable, PostBus with significantly higher passenger numbers
PostalNetwork maintained a stable result despite losses in letters and fewer over-the-counter inpayments, while operations at the Communication Services unit remain under development and are proceeding as planned. Mobility Services increased its operating profit by 5 million francs compared to the first half of 2021. Encouragingly, PostBus recorded 20 percent more passengers than a year ago as a result of its expanded range of services and recovering demand.
“Swiss Post of tomorrow” is the right path
The current developments on the markets reaffirm Swiss Post’s view that it is on the right track with its “Swiss Post of tomorrow” strategy. The company is expanding its infrastructure for the Swiss economy and the Swiss population. With the acquisition of logistics companies in neighbouring countries, it is reducing its dependency on global supply chains. Swiss Post is also continuing to develop its products and services in line with new customer requirements and is growing in new business areas. “We keep our promises, even in difficult times, and ensure optimal provision of products and services to the Swiss people and economy – powering a modern Switzerland,” says Swiss Post’s CFO, Alex Glanzmann.
See Swiss Post’s full Interim Report