La Poste Group profits hit by declining mail volumes
Postal operator La Poste Group saw its profits slump last year, but was bailed out by a major tax credit from the French government. The latest financial figures from the French national postal service reveal that revenue remained stable — up 2% to EUR 22bn, or up 1% at constant exchange rates.
Revenue growth came thanks to price increases and the performances of parcel services and La Banque Postale, which countered the impact of declining mail volumes.
But even including the tax credit from social employment programme Crédit Impôt Compétitivité Emploi (CICE), La Poste’s operating profits were down 5.6% in 2013 compared to the year before, to EUR 770m.
Without the tax credit, operating profits would have been down 42% year-on-year. The CICE is a tax credit amounting to 4% of the payroll, granted to organisations to encourage investment in training, recruitment and research to create jobs and competitiveness in French business.
La Poste Group’s net profits grew 31% year-on-year in 2013 thanks to the tax credit, to EUR 627m, but would have fallen 30% without it. The company’s economic health indicator — taking into account cash flow and expenditures — was negative EUR 104m for the year.
The state-owned company’s new chairman Philippe Wahl said 2013 was a “turning point” for La Poste.
The year involved almost a billion euros being invested in renovating post offices, modernising infrastructure and reinforcing the network, along with the purchase of electric delivery vehicles. Acquisitions included more Seur franchises in Spain, a 40% stake in Indian parcel firm DTDC and a similar stake in French parcel firm Colizen. The company also bought a 66% stake in freight forwarder Tigers.
Via its joint venture with Swiss Post, Asendia, the Group acquired Pitney Bowes’ international mail business operations in the UK, and a 40% stake in Irish e-commerce firm eShopWorld.
La Poste’s mail business saw its revenue down 2.7% in 2013, to EUR 11.1bn, largely because of the 5.5% decline in volumes, a decline blamed on digitalisation and the impact of the poor economy on the advertising sector.
Operating profit for mail declined 31.1% year-on-year, to EUR 471m, with the company conceding that “significant” innovation and cost-control efforts had not succeeded in offsetting volume declines.
Within the mail business, La Poste’s Sofipost division, which includes marketing services unit Mediapost, desktop publishing unit Docapost and logistics unit Viapost, as well as a 50% stake in Asendia, saw its revenue up 7% to EUR 1.2bn in 2013, with operating profit stable on EUR 67m.
La Poste’s parcels-express business saw revenues rise 7.3% compared to 2012, to EUR 5.98bn. Operating profit was up 4.1% to EUR 419m.
The results were helped by the growing parcel volumes within France and international markets, thanks to innovations like DPD’s Predict service, which offers consumers choice over where and when parcels are delivered.
Within the parcels-express area, La Poste’s domestic unit ColiPoste saw its revenue up 2.8% to EUR 1.59bn thanks to a 3.1% growth in volumes driven by “buoyant” e-commerce activity.
The international parcels unit GeoPost Group, which trades under brands including DPD, saw its revenue increase 9.3% in 2013, to EUR 4.39bn, with operating profit up 8.8% to EUR 319m. Growth was spurred on by acquisitions and the rollout of new products and services designed to improve service quality, the company said.
Elsewhere, La Poste’s banking business, La Banque Postale, was helped by a good performance in its insurance division and healthy growth in its credit card business, with banking income up 5.7% to EUR 5.54bn in 2013, and an operating profit up 14% to EUR 708m.
Looking ahead, the company said there was signs of economic recovery in Europe, though policies of controlling public spending and long-term interest rates. La Poste is aiming for a 1-2% growth rate for the Group in 2014, but said it expected operating profit to decline because the falling mail volumes will not be fully offset.
As a response, the company said its new “La Poste 2020” strategy should help turn around results, controlling costs and strengthening the development of the Group.