La Poste profits down 10% in first half

La Poste profits down 10% in first half

La Poste saw its profits slip 10% in the first half of the year with domestic mail volumes declining, and with investments being made to build on the e-commerce boom in parcels. The French national postal operator had relatively stable revenues — up 1.6% year-on-year to EUR 10.97bn, or 0.4% higher discounting currency fluctuations.

But net profit was down 10.4% to EUR 355m thanks to “rapidly” declining mail volumes and historically low interest rates, and with the Group making EUR 449m in investments, primarily to reinforce its GeoPost network in France and Europe.

Divisions

La Poste is currently in the process of stepping up its development to restore its economic health under a new five-year business plan launched in January.

The company reorganized its Group back in April into five business units — Services-Mail-Parcels, GeoPost, La Banque Postale, Digital Services and La Poste Network.

In the first half of 2014, revenue in the Services-Mail-Parcels unit was down 2.3% to EUR 5.78bn, with mail volumes down 5.8% year-on-year, accelerated by a “difficult” economy. January’s postal rate increase took the edge off the financial impact of the volume declines. Operating profit in the unit was EUR 321m, down 12.1% on last year’s first half because of the volume decline.

Within the division, Mail revenue was down 2.8% year-on-year to EUR 4.72bn, while parcels revenue was stable at EUR 753m, while other activities including document management and unaddressed direct mail brought in EUR 311m, similar to last year’s first half.

International express parcels unit GeoPost saw its revenue climb 12.5% year-on-year in the first half, driven by the 21% growth seen in the UK, 10% growth in Spain, 8% growth in the Benelux countries and 6% growth in France, with the highly competitive German market still bringing 3% growth as GeoPost rolls out its upgraded delivery solutions strengthening its business-to-business and business-to-consumer offerings including through the DPD brand. GeoPost’s operating profit was down EUR 14m to EUR 127m in the first half, but would have been 20% up on last year’s first half excluding one-off costs.

Banking division La Banque Postale saw its revenue up 2.4% year-on-year to EUR 2.85bn, with growth in savings, loans and insurance products. Operating profit was up 10.8% to EUR 466m.

The Digital Services business unit saw revenues stable at EUR 212m, with new digital services like electronic signatures and data processing platforms bringing growth to offset the decline of traditional activities like cheque processing. The unit operated at a slight loss, but this did not count the financial impact of business carried out on behalf of other Group units, La Poste said.

The telecoms division La Poste Network achieved a 15% growth in its revenue over the half year, to EUR 81m, with an 18% growth in its customer base, to 1.1m lines.

Outlook

Looking ahead, La Poste said it expects mail volumes to decline at rates of 6% to 7% in the second half of the year, and as a result operating profit is expected to slip this year compared to 2013.

But, the company is focussed on accelerating its development under the new La Poste 2020 strategy, to strengthen its position in various markets and roll out new services and digital products.

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