Financial services help Swiss Post to 25% profit growth

Swiss Post said yesterday that its postal bank has been a major factor in recording a 25% increase in profits for the full year 2010, compared to 2009. The company said yesterday that along with growth in parcel deliveries driven by the economic recovery and rising e-commerce demand, its PostFinance unit helped deliver a profit of 910m Swiss francs (about $987m US), up from 728m the previous year.

Swiss Post’s banking division contributed around 61% of the company’s profits before tax, it said, thanks to customers making more deposits.

The company’s turnover increased less dramatically, by 2.1% from 8.55bn francs in 2009 to 8.74bn francs ($9.48bn US) in 2010, as efficiency improvements and higher parcel volumes countered declines in mail volumes.

Operating profit margins were up from 8.4% in 2009 to 10.7%.

The management is proposing to use around 200m francs to improve the company’s equity position and provide a dividend to the Swiss government, and to use 100m francs to finance its pension fund.

Commenting on its results, Swiss Post said it had achieved positive results in all four of its main markets – communications (mail and retail postal services), logistics, retail finance and public passenger transport.

It said its letter business had remained “strong” in 2010, with addressed domestic letter volumes remaining relatively stable, 2.365bn pieces compared to 2.401bn pieces in 2009, but letters sent from Switzerland dipping from 170m pieces to 74.4m year-on-year.

Headcount at the company increased by 326 full time equivalents in 2010, to 45,129 full time equivalents. This included 7,255 staff located outside Switzerland, up from 6,986. However, the company’s investments were down from 431m francs to 364m francs.

Looking ahead, Swiss Post said it was “firm” in its belief that it was on the right track, as it faces a “moderately upbeat” economic outlook and “ever fiercer competition”.

Swiss Post’s communications segment, which includes the PostMail, Swiss Post International, Swiss Post Solutions and Post Offices & Sales units, combined for an earnings before tax of 147m francs, up from 113m francs in 2009.

Letters and direct mail “remained strong”, helping PostMail to a 199m francs EBIT (up slightly from 198m in 2009), on turnover of 2.619bn francs, down from 2.808m francs in 2009. Revenue drop came from 1.5% decline in addressed letter volumes, price reductions announced in July 2009 and new liability for value added tax; but, efficiency improvements with new letter centres and in deliveries meant profits nevertheless increased.

Swiss Post International reduced its earnings before tax from 53m francs to 49m francs on sales of 788m francs (down from 877m francs in 2009), mainly as a result from restructuring expenses, the company said. This stemmed from Deutsche Post’s move to import parcels into Switzerland via its own DHL units rather than Swiss Post.

Swiss Post Solutions, the mailroom and document processing unit, achieved 7m francs of earnings, turning around its previous 25m franc loss. Its turnover reached 1.769bn francs from 1.359bn francs the previous year.

Swiss Post’s Post Offices & Sales unit reduced its losses to 108m francs for 2010, from the previous year’s 113m franc loss. Business conditions improved in the sale of nonpostal brand-name items, while development of the post office network helped with costs.

Other segments
Swiss Post’s logistics division saw its EBIT more than tripling from 45m francs to 164m francs year-on-year. PostLogistics caught on to the economic rebound and also enjoyed a 3.8% increase in e-commerce, as well as “significant” efficiency gains. Sales were down slightly overall from 1.488bn francs to 1.478bn francs.

Swiss Post’s PostFinance unit made the largest contribution to the group’s earnings, posting a 571m franc EBIT figure (up from 441m francs in 2009). Turnover climbed from 2.160bn francs to 2.389bn francs year-on-year thanks to customers putting more into their savings, with a resulting increase in net interest income as well as lower impairment charges.

Swiss Post’s public passenger transport arm, PostBus, recorded an increase in EBIT from 27m francs to 28m francs, on a turnover of 702m francs (up from 640m francs in 2009).

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