2006 financial statements: Swiss Post aims for sustained growth
Swiss Post once again achieved good results in 2006. At 837 million francs, Group profit was 26 million francs up on the prior-year figure (811 million francs). All segments once again ended the year in positive territory. By adjusting its organizational structure, Swiss Post now intends to support its sustained growth and enhance its innovativeness. With this aim in mind, Swiss Post is to bundle its innovative and electronic new businesses in Switzerland and abroad in a new Group unit named “Business Customer Solutions” and managed by Frank Marthaler, currently Head of Strategic Customer Management. He will be appointed a member of Executive Management as of 1 July 2007. In addition, Head of the PostLogistics Group unit Michel Kunz will also take over the management of PostMail as of 1 December 2007. Josef Bösch, the current Head of PostMail, will retire on this date.
In financial year 2006, Swiss Post generated Group profit of 837 million francs, an increase of around 3.2 percent or 26 million francs on the prior-year figure (811 million francs). Operating income rose by around 5 percent year on year to 7,895 million francs (2005: 7,499 million francs). In addition to the acquisition of the GHP Group and MailSource Inc. in the USA, the main contributors to the growth in sales were the Financial Services (PostFinance) and International segments. Equity continued to increase, but despite reaching 1,605 million francs (2005: 922 million francs) remains out of line with the industry.
2006 also saw the continuation of the trend towards dwindling volumes of traditional domestic and international letter items, with 1.8 percent fewer addressed letters and 4.3 percent fewer unaddressed letters processed than in the previous year. In contrast, the volume of parcels remained stable, while the number of express items in Switzerland rose by 5.5 percent. The net inflow of new money at PostFinance increased by a gratifying 23.4 percent. PostBus managed a slight increase in the number of passengers of around 1 percent.
As in the previous two years, all business areas and units contributed to the positive results. The strong annual results show that Swiss Post and its employees have been able to benefit from the favourable economic environment through the efficient provision of services and a willingness to innovate. The results will enable Swiss Post, as required by the Federal Council, to finance its investment programme from its own resources, continue to guarantee a high-quality basic service and remain a socially responsible employer. It will also eventually be able to finance the Swiss Post pension fund from its own resources.
Bundling strengths to generate growth
In recent years, Swiss Post has paved the way for significant improvements in efficiency through projects such as REMA and Ymago. In addition to carrying out these rationalization and restructuring plans, it is also improving the conditions necessary for sustained growth: with effect from 1 October 2007, it is to combine its previously decentralized, new and mostly IT-based services and its relationship management activities for large customers within the new “Business Customer Solutions” Group unit. This will not affect electronic payment services, a core business that will continue to be managed and developed under the responsibility of PostFinance. This bundling of strengths will add new offerings (document management, dialogue marketing and billing and e-business solutions) across Switzerland and worldwide to ideally complement Swiss Post’s mail, logistics and payment solutions. By taking this step, Swiss Post is continuing its strategy of expanding its core business to include further services up and down the value chain.
The new Group unit will have around 5,700 full-time equivalents and comprise the internationally active MailSource Group, the subsidiaries DocumentServices AG, DCL Data Care AG, Swiss Sign AG, Räber Information Management GmbH (search.ch) and yellowworld AG, and GHP, the German group in which Swiss Post acquired a majority stake in 2006. The area will be managed by Frank Marthaler, currently Head of Strategic Customer Management. Swiss Post’s Board of Directors has appointed him a member of Executive Management with effect from 1 July 2007.
Michel Kunz Head of PostMail and PostLogistics
The modernization of letter processing (REMA project) and other parallel projects will have a major impact on Swiss Post’s core business as a whole and enable new solutions from which the two Group units PostMail and PostLogistics are set to benefit. So that this potential for innovation and the opportunities for cross-unit collaboration can be best exploited, the two areas are to be placed under joint management. With effect from December 2007, Swiss Post’s Board of Directors is handing the management of the PostMail Group unit to Michel Kunz, who will discharge this role in addition to his existing responsibilities. As Head of the PostLogistics Group unit, Michel Kunz has successfully modernized PostParcels and established an excellent position for it in the deregulated market. Ulrich Hurni, currently Head of Swiss Post International Management AG, will serve as his deputy, addressing important issues in the PostMail unit. As Head of PostMail, Michel Kunz will replace Josef Bösch, who will retire after seven successful years as a member of Executive Management and the commencement of the REMA operations.
Integrated annual report – sustainable company management
In the context of the complete revision of the legislation governing postal services, an undertaking introduced by the Federal Council, it is of key importance to Swiss Post that financing for a high-quality basic service remains guaranteed. This is best achieved with a residual monopoly. In areas opened up to competition, it is calling for a level playing field for all market players. Swiss Post will continue to make the factors contributing to its results broader-based, increase the value of the company as required by the Federal Council, support the economic development of all parts of the country and offer its employees future prospects. For the first time, Swiss Post has integrated information on its social and environmental performance into its annual report, thereby highlighting its efforts in working towards sustainable company management and its awareness of its responsibilities towards employees, the environment and society.
Note for media representatives:
The printed version of the 2006 annual report will be sent out from around the end of April onwards.
Key figures for the Group 2006 2005
Operating income CHF million 7'895 7'499
Operating result (1) CHF million 823 805
As a % of operating
income (return on sales) % 10,4 10,7
Group profit for the year CHF million 837 811
Total assets CHF million 55'600 50'130
Equity CHF million 1'605 922
Investment (2) CHF million 540 347
Swiss Post Group employees
(excluding trainees) Full-time
equivalents (3) 42'178 41'073
Swiss Post Employees
(excluding trainees) Full-time
equivalents (3) 35'326 37'033
Group trainees Full-time
equivalents (3) 1'429 1'465
Selected key figures from the various business areas
Mail (PostMail) 2006 2005
Operating income CHF million 3'083 3'178
Operating result (1, 5) CHF million 239 218
Addressed letters (4) Millions of
items sent 2'762 2'813
Logistics (PostLogistics) 2006 2005
Operating income CHF million 1'386 1'368
Operating result (1) CHF million 87 87
Parcels Millions of
items sent 104 105
Financial Services (PostFinance) 2006 2005
Operating income CHF million 1'587 1'529
Operating result (1) CHF million 245 312
Inflow of new funds CHF million 2'548 2'065
Passenger Transport (PostBus) 2006 2005
Operating income CHF million 579 559
Operating result (1) CHF million 28 29
Number of passengers Millions of
persons 106 105
International 2006 2005
Operating income CHF million 1'079 992
Operating result (1) CHF million 58 35
Letters sent
(from Switzerland) Millions of
items sent 200 192
Post Office Network 2006 2005
Operating income CHF million 1'781 1'875
Operating result (1, 5) CHF million 19 27
Non-covered infrastructure
costs of the post office
network CHF million 412 442
Post offices Number 2'493 2'531
New Businesses
(GHP and MailSource) 2006 2005
Operating income CHF million 329 114
Operating result (1) CHF million 11 5
1 Operating result corresponds to operating profit before net non-operating financial income/expense and taxes (EBIT).
2 Investment in property, plant and equipment, equity investments and intangible assets
3 Average workforce in full-time equivalents
4 Prior-year figures adjusted
5 The results of the Mail and Post Office Network business areas are shown after infrastructure contributions (compensation for non-covered infrastructure costs in the post office network from reserved services of the Mail area).
Commentary on the segment results
As in the previous two years, all business areas and units contributed to the positive results. Despite the decline in sales caused by volumes, PostMail was able to increase its operating result by 21 million to 239 million francs (2005: 218 million francs). This was achieved through optimization measures and due to a lower contribution to uncovered costs in the post office network (infrastructure contribution). The effects of the monopoly being lowered to 100 g as of 1 April 2006 were barely noticeable. By further expanding customer and sector solutions, Logistics Services achieved a slight increase in operating income of 18 million francs and maintained its operating result on a par with the previous year (87 million francs). Due, among other things, to the current interest rate environment, to rising costs for handling cash inpayments at post offices and to special factors, PostFinance reported a fall in its operating result, by 67 million to 245 million francs (2005: 312 million francs). At 28 million francs, the operating result in the Passenger Transport segment (PostBus) was slightly down on the previous year (29 million francs); sales growth failed to fully offset negative effects such as lost tenders and lower compensation payments due to increasing pressure to cut government expenditure. In the International segment, the operating result rose by 23 million to 58 million francs (2005: 35 million francs) and operating income topped one billion francs for the first time (1,079 million francs). In the Post Office Network, the sale of non-postal branded items generated an operating result of 19 million francs (2005: 27 million francs). The infrastructure costs not covered by compensation payments fell from 442 million to 412 million francs. The result is to be improved by 50 million francs a year by reallocating responsibilities internally and setting up around 200 agencies (Ymago project). MailSource and GHP, for the first time grouped together as the “New Businesses” segment, generated an operating result of 11 million francs and operating income of 329 million francs overall.
Links
Annual Report 2006 (PDF, 3144kB)
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PWC Study (PDF, 202kB)
