Correios de Portugal maintains profit, but revenues down 4.2%

CTT Correios de Portugal has recorded a 4.2% drop in its revenues for the full year 2011, as a result of a 6.4% reduction in mail volumes, but remained profitable. In the last full year before full liberalisation of the Portuguese postal market, CTT saw its EUR 761m turnover slide by EUR 33.3m.

However, the company’s margins increased by more than two percentage points, helping consolidated net income to grow by less than a point to EUR 56.7m, translating into a net profit of EUR 3.24 per share.

Portugal’s universal service provider said its postal and express services, providing the bulk of income for the group, felt the difficult economy and financial crisis particularly acutely.

Postal operating income was down 5% or EUR 31.4m compared to 2010, while express operating income was down EUR 9.9m or 6.9% year-on-year.

One particular positive for CTT revenues has been from its financial services, which brought in an extra EUR 1.9m in operating income, up 3.4% on 2010.

Cost-cutting

CTT has been engaged in a cost reduction programme that aims to trim annual operating costs by EUR 103m by the end of 2012, from the 2009 base year.

In 2011, the company said it saw its consolidated operating expenses fall by 6.5% to EUR 682.2m, while regarding its cost-cutting target for supplies, services and staff costs, it achieved an 8% cost reduction, or EUR 58m saving, which was above the 7% or EUR 47m target for the year.

During the year, CTT won a World Mail Award recognising its achievements in Corporate Social Responsibility.

Portugal’s government enacted a law opening up the country’s postal market to full competition last month, 16 months late according to the requirements of the European postal directive.

CTT will continue to run the universal postal service until at least 2020, retaining exclusive rights to issue stamps bearing the word “Portugal” and remaining sole providers of registered mail services for legal documents, as well as maintaining responsibility for the positioning of mailboxes on public streets.

Competitors will be given access to CTT’s last mile network, while it appears direct mail will fall outside the sales tax exempt universal service.