Swiss Post “managed to improve its (H1) result and offset the slowdown in earnings growth at PostFinance”
In the first six months of 2024, Swiss Post generated operating profit (EBIT) of 160 million francs. This is in line with expectations and the previous year’s level.
Compared to the first half of 2023, Swiss Post saw a rise in operating revenue of 256 million francs and an increase in profit of 8 million francs. The stable interim result confirms that the company is on the right track with its strategy. Swiss Post wants to develop the public service both physically and digitally, providing it financially independently and focusing consistently on the changing needs of the country’s people and companies.
Swiss Post’s financial result for the first half of the year is on a par with the previous year. While Group profit and operating revenue were slightly better than in the first half of the previous year, operating profit at 160 million francs was down around 5 million francs year-on-year.
“Particularly in the core logistics business of letters and parcels, Swiss Post managed to improve its result and offset the slowdown in earnings growth at PostFinance, which is due mainly to interest rates. Our employees have once again made an enormous effort to ensure the high quality of Swiss Post’s services for its customers,” says Alex Glanzmann, Head of Finance at Swiss Post.
“As in the past, however, Swiss Post will have to face strong headwinds in the future. Specifically, this means fewer letters and over-the-counter payments every year, continuing pressure on margins in the parcel market and a subdued outlook for interest operations,” explains the CFO. With healthy finances and a robust, holistic strategy, Swiss Post is confident that it will continue to successfully meet these challenges.
Conditions in the parcel market remain challenging
The largest EBIT contribution by far was made by the Logistics Services unit, with an increase of 44 million francs to a total of 220 million francs. However, volumes continue to decline: in the first half of the year, employees again sorted and transported fewer letters than in the previous year. It means that while letters remain an essential pillar of Swiss Post’s financial result, customers are moving irreversibly towards digital services. The structural decline continued accordingly in the first half of 2024 – though, at –4.6 percent, somewhat more slowly than in the previous year (–6.0 percent). The price adjustments for letters effective from 1 January 2024 are having a positive impact on the financial result. While the volume of international small goods consignments increased, Swiss Post recorded a decline of –5.6 percent in parcels. Over-the-counter transactions at the PostalNetwork unit also continued to decline (–11.8 percent compared to the prior-year period). The new strategic partnerships and the Post Mobile service launched at the beginning of the year are having a positive impact on the result, but cannot offset the significant decline in volumes. The continuing decline underscores the need for the company to transform the branch network. It is essential that Swiss Post is able to respond to its customers’ needs – physically and digitally, regionally and locally. Swiss Post will therefore continue to provide a nationwide, future-proof branch network with some 2,000 staffed locations and around 600 self-operated branches. Over the next few years, Swiss Post will invest over 100 million francs in its network: in staff, new formats and modern branches.
Another step towards a balanced result at the Communication Services unit
With a 2 million franc improvement in the result year-on-year, Communication Services has taken another step towards a balanced result as it builds up its digital core business, showing that, in this unit too, the right course has been set. Swiss Post wants to respond to customers’ requirements and the ongoing process of digitization in the best possible way in the long term. Swiss Post also sees the inclusion of a digital letter service in the universal service as part of the Federal Council’s proposed amendments to the Postal Services Ordinance as an important signal for the future.
PostFinance: interest rate developments in March and June have an impact on the first half-year
In the first half of 2024, PostFinance generated an operating profit of 89 million francs, representing a decrease of 36 million francs year-on-year. This was partly due to value adjustments. Interest operations remain an important pillar for PostFinance. The recent policy rate cuts by the Swiss National Bank (SNB) on 22 March and 21 June led directly to lower interest income at PostFinance. At the same time, it is important to continue to develop services in business areas that can generate non-interest income – in line with the needs of private and business customers.
Swiss Post wants to guarantee its relevance to the population over the longer term
In the first half of 2024, Swiss Post has established a stable foundation to tackle the second half of the year, despite the now familiar challenges. Swiss Post aims to guarantee its relevance to the population over the longer term through stronger customer centricity and services that offer digital and physical connections. In the second half of the year, Swiss Post will draw up its 2025 to 2028 strategy in detail to ensure a successful start to the next stage of the Swiss Post of tomorrow. It will enable Swiss Post to focus consistently on the changing needs of the country’s people and companies, while retaining the goal of remaining financially independent and financing its public postal service without the support of the taxpayer, i.e. from its own resources.
