Pitney Bowes results buoyed by “substantial” digital commerce growth
Pitney Bowes recorded a promising third quarter, as the world’s largest mailroom technology provider continued its multi-year transformation programme. The US-based company achieved its fourth consecutive quarter of year-on-year growth as revenues edged up 2% to $942m.
With cost savings of nearly $100m achieved in the company, the quarter’s pre-tax profit (EBIT) was up 2% year-on-year.
The company’s strategy of stabilising its existing mail businesses while cutting costs and expanding into new business within the digital commerce field appeared to be gaining some traction.
In its latest quarter, Pitney Bowes said its digital commerce revenues were up 26% year-on-year to $221m thanks to “substantial” organic growth, with EBIT up 90% to $95m.
Physical mail business revenues were down on last year’s third quarter, with revenues from small and medium-sized business solutions, presort activities and production mail together sliding 3%.
The company said a third of this impact was from its withdrawal from non-core products in Norway and switching its direct sales model to a dealer network in 11 smaller European countries.
Marc Lautenbach, the Pitney Bowes chief executive said aside from the restructuring impacts, he believed the underlying fundamentals in the mail businesses were improving as the focus moved to core product lines.
“Solid”
“We performed well in the third quarter, delivering solid financial results,” he said. “Once again, our Digital Commerce Solutions segment posted excellent top and bottom line results for the quarter, growing revenue 26% and expanding margins. Profitability in our mailing businesses continued to improve year over year.
“Our results further demonstrate the continued and steady progress we are making in executing our long-term growth strategy to unlock greater shareholder value. Going forward, we remain confident about our multi-year journey to transform Pitney Bowes and deliver sustained value for our clients, shareholders and employees.”
Among the various Pitney Bowes divisions in the third quarter, revenue was down 5% in North American mailing, to $363m, with EBIT on $160m. The company said its recurring revenue streams for rental machines declined at a lesser rate compared to last year’s third quarter, but equipment sales declined with a change in sales strategy.
International mailing revenue was down 6% to $132m in the third quarter, with EBIT at $16m. Changes in market approach in some areas affected the performance, including the move away from noncore products in Norway, and the switch to a dealer network in six smaller European markets.
The enterprise business solutions unit saw production mail revenue at $113m, down 3% year-on-year, with EBIT at $10m. Revenue was flat in North America compared to last year’s third quarter, up in Europe, and down in Asia-Pacific.
Presort services revenue was up 6% to $111m, with EBIT at $22m, helped by the improved qualification of mail for presort discounts as a result of operational enhancements and the effective implementation of the postal rate change at the beginning of the year.
