La Poste France 2002 Group results

BREAK EVEN GROUP RESULTS, ALTHOUGH NEGATIVE AND SIGNIFICANTLY BELOW OBJECTIVES AT PARENT COMPANY LEVEL, ILLUSTRATING THE GROUP’S VERY INSUFFICIENT PROFITABILITY TO FACE FUTURE CHALLENGES.

MODEST REVENUE GROWTH : €17.3 BILLION, +1.8%

STRONG DECLINE IN OPERATING INCOME : €100 MILLION VS €221 MILLION IN 2001,
DESPITE IMPROVING CONTRIBUTION FROM SUBSIDIARIES AND PRODUCTIVITY EFFORTS

BREAK EVEN NET INCOME AFTER MINORITY INTERESTS

The Board of La Poste, meeting today under the chairmanship of Jean-Paul Bailly, Chairman of La Poste Group, approved the annual consolidated accounts of the company for 2002.

Million euros 2001 2002
REVENUES 17,031 17,332
EBITDA 907 989
OPERATING INCOME 221 100
NET INCOME BEFORE TAX 77 12
NET INCOME AFTER MINORITY INTERESTS (95) 34

MODEST GROUP LA POSTE REVENUE GROWTH

Increasingly operating in deregulated markets, La Poste posted Group revenues of €17 332 M in 2002, up 1.8% versus previous year (+1.5% on constant perimeter). During 2002, 57.5% of Group Revenues have been generated in markets fully open to competition.

MAIL : Mail activity posted €10,253 million of sales, improving slightly by 1.2 %. Mail revenues were negatively impacted by a disappointing economic climate, in particular on the direct mail market, as well as by substitution effects in favour of electronic mail, resulting in a €175 million shortfall versus budget.

EXPRESS : Express activity, sustained by domestic markets (France, Germany and the United Kingdom) and product diversification, posted sales of €2,085 million in 2002, up 5.5 % versus previous year (+3.4 % on constant perimeter and currency basis) .

PARCEL : The significant improvement of ColiPoste (+10 %) was offset by the negative effects from the Dilipack close down, resulting in Parcel Sales of €989 million, versus €992 million in 2001.
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FINANCIAL SERVICES: Financial Services performed well in 2002, particularly in CCP and Insurance products. Sales rose 6.1 % before repayment of overpaid revenues owed to the Caisse des Dépôts et Consignations in connection with interest income from Plans Epargne Logement (PEL) for fiscal years prior to 2002. Allowing for such payback, revenues increased only 2%, from €3,928 million in 2001 to €4,005 million, with customer deposits over €200 billion, their highest level ever.

GROWING EBITDA ON THE BACK OF PRODUCTIVITY EFFORTS REALISED.

Group La Poste EBITDA reached €989 million in 2002, improving 9% versus 2001.

This improvement was driven by a tight control of personnel and other external costs and by lower taxes on salaries related to a broader proportion of sales subject to value added tax (VAT).

NET OPERATING INCOME NEGATIVELY IMPACTED BY THE RESULTS OF PARENT COMPANY LA POSTE

The net operating income of La Poste’s parent company showed a heavy loss of €30 million in 2002 versus a profit of €183 million in 2001, as productivity efforts proved insufficient to offset lower than expected mail sales versus budget and provisions for pre-pension programmes.

Contribution from Subsidiaries improved, with operating income reaching €100 million in 2002, compared with €38 million in 2001. This improvement can be explained by the first effects of the reorganisation completed by GeoPost in 2002, resulting in a positive operating income of €58 million in 2002 versus a loss of €22 million in 2001.

FINANCIAL INCOME IMPROVED THROUGH ACTIVE DEBT MANAGEMENT

Financial expenses have been reduced from €144 million in 2001 to €88 million in 2002 on the back of lower interest rate on the outstanding debt and stronger cash positions.

BREAK EVEN NET INCOME AFTER MINORITY INTERESTS

Goodwill amortisation inflated in 2001 due to exceptional amortisation at GeoPost GmbH, came back to its linear rhythm in 2002. Net income after minority interests consequently rose €129 million in 2002, from a €95 million loss in 2001 to a €34 million profit in 2002.

INDEBTEDNESS UNDER CONTROL AND LOWER CAPITAL EXPENDITURES

The positive trend in Cash Flow (Marge Brute d’Autofinancement), which grew by 14% to €705 million and the slowdown of capital expenditures (€629 million in 2002 versus €1,186 million in 2001) allowed to put the Group’s debt under control.

A COMMITMENT TO TRANSPARENCY AND CORPORATE GOVERNANCE

La Poste Group, a leading company in France and in Europe, clearly underscores its commitment to financial transparency and corporate governance. The Group has already started to develop its IAS/IFRS compliance program, which will be completed by 2005. In order to improve, from now on, its financial information, La Poste Group will disclose for the first time its financial results by activity during the first semester of 2003.
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PERSPECTIVES FOR 2003

2002 financial results show that despite growing contribution from subsidiaries to consolidated financial statements and already achieved productivity efforts, Group performance is today insufficient to support its development.

La Poste must accelerate its efforts towards improving its competitiveness and deliver by 2007 a financial performance in line with its main competitors, consistent with the objectives set by Jean-Paul Bailly, Chairman of the Group, in its strategic plan « Performances et Convergences ».

In this context, the commitment to reach break even at the parent company level of La Poste in 2003, is a first step towards these objectives of performance. This will allow the Group to implement an ambitious plan to modernise its production capacity and significantly improve the quality of the services delivered to its clients.

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