Return to Profitability at La Poste

La Poste (F.PST) Chairman Martin Vial promised a swift improvement in profitability in 2002 after a EUR170 million write-off at its Geopost express parcel delivery subsidiary pushed France’s powerful national post office to its worst result since 1998. ‘We had a difficult year in 2001,’ said Vial in an interview Thursday with Dow Jones Newswires. ‘Our outlook is for a recovery and a return to increased profitability in 2002.’ La Poste – Europe’s second largest post office by revenue after Deutsche Post AG – reported a net loss of EUR95 million in 2001, down from a profit the year before of EUR139.2 million. As well as the EUR170 million Geopost write-off, La Poste said its earnings were dented by a combination of slower economic growth in France, higher transport charges and extra costs linked to the switch to the euro and a new 35-hour work week. In addition, a new way of claiming social security payments in France, bypassing the mail, cost La Poste EUR60 million in lost revenue. La Poste’s write-off at Geopost came as the French post office took steps to restructure its loss-making parcels delivery business, closing some units in France and merging others in Germany and the U.K. In the interview Thursday, Vial said La Poste is looking for a partner for its EUR4 billion-a-year financial services business but all but ruled out joining an existing alliance between French banks Caisse des Depots et Consignations (F.CDC) and Caisse d’Epargne (F.CCE).”

Dow Jones: “[S]peaking Thursday, Vial said La Poste is open to all different kinds of partnership, including the type of product-specific tie-ups it currently has with other banks and financial companies. He said new partnerships wouldn’t necessarily conflict with existing links with the CDC and Caisse d’Epargne. ‘We are looking for other partners as a way of extending the range of products we are able to offer,’ he said. ‘As it stands today, we are open to everything.’ In recent months, the French government has come under pressure to reform La Poste’s banking business, possibly by spinning it off into a separate unit. Earlier this year, an influential parliamentary committee said without reform the post office’s banking operations risked ‘withering away’. Without a full banking license, La Poste’s inability to extend consumer loans and most mortgages means many of its clients turn to rival banks for credit when they reach their early twenties. Executives at La Poste are likely to pressure the government later this year to allow them to extend the products they can offer to consumer credit and home loans. A new four-year service contract between the government and La Poste – due since the end of last year – is only likely to be finalized at the end of 2002