La Poste hit by European economic slowdown
Group revenue growth in 2008 is likely to be about 2%. It had originally targeted a 2.9% rise this year on the 2007 figure of €20.8 billion.
Group revenue growth in 2008 is likely to be about 2%. It had originally targeted a 2.9% rise this year on the 2007 figure of €20.8bn.
La Poste said in a statement that it now expected to achieve a profit margin of only 4% in 2008 compared to 6.2% last year and an original target of 6.1% for this year. In 2007, the French postal group made an operating profit of €1.3bn on turnover of €20.8bn. In the first half of 2008, its operating profits declined by 10.9% to €671m on revenues up by 2.3% to €10,556m.
In the second half-year, the group has intensified cost-cutting measures designed to save about €200m between June 2008 and June 2009. In addition, it has cut back on planned investments, and now expects only to make about 40% of the originally planned external growth investments.
The main impact of the economic downturn would be in the mail business where revenues are now expected to decline, La Poste said. It had budgeted for 1% revenue growth on last year’s figure of €11.6bn. But mail volumes had been affected by the downscaling of direct marketing activities by customers, fewer business letters and the continuing substitution by electronic media. A 3% volume decline is now expected for 2008 compared to the 1% annual fall since 2003. In the first half-year, mail revenues dropped 0.6% to €5.9bn and volumes declined 2.7%.
The Parcels and Express division, comprising express holding GeoPost and the separate French B2C business Coliposte, generated revenues of €4.5 billion in 2007 and had been targeting organic growth of more than 6% this year. In the first half-year, GeoPost increased revenues by 8.2% to €1.6bn and achieved higher profits, while Coliposte increased revenues by 6% to €685mn.
For the full year, the Parcels and Express division is now likely to generate “satisfactory” organic growth in revenues, even though the slowdown in some markets (UK, Spain) had intensified in the autumn. “A trend to lower volumes has appeared in recent weeks in most of the countries where the division is present,” La Poste noted.
Nevertheless, La Poste reaffirmed its medium-term (2008-2012) strategic plans, including mail diversification, completion of the European parcels/express network, development of La Banque Postale and modernisation of the post office network.
