Austrian Post “fighting for every letter” as profits fall 6.4% in Q1
Austrian Post will spend another EUR 100m this year on its infrastructure, including new automation and sorting technologies as it seeks to continue cutting costs and raising efficiency. The Post said last week that with mail volumes continuing to decline with the shift to electronic communications, this year it is responding with a “resolute efficiency enhancement”.
As it released results for the first quarter of the year, showing Group revenues down in the absence of election mail this year, and profits down 6.4%, the company said it was expecting the decrease in letter mail volume to be between 3-5% this year as a whole.
Letter mail revenue fell 1.2% in the first quarter, with revenue for the company as a whole down 0.7% compared to the same period last year.
Austrian Post’s addressed and unaddressed mail volumes are also being affected by slower economic growth, with direct mail revenue down 6.3% in the first quarter.
The company also said that while e-commerce may be driving parcel volume growth, it hit advertising spending among struggling traditional mail order companies and retail stores.
Austrian Post is achieving growth in new services in the field of mail solutions.
The company said last week it is “fighting for every letter” in its traditional mail business, with the intention of providing more individualised customer solutions.
CEO Georg Pölzl said: “The main focus of our strategic activities is continued efficiency enhancement in addition to the consistent orientation to the needs of our customers. That is why we are continuing our investment programme in 2014, featuring capacity expansion measures, new sorting technologies and innovative solutions.”
First Quarter
Austrian Post made EUR 598.5m in revenue in the first quarter, a slight decline from what it described as a “very good year” in 2013 that was assisted by national referendums and local elections.
Net profit was EUR 43.7m, down 6.4% compared to the first quarter of 2013.
The company’s Mail and Branch division generated 378.8m in revenue in the quarter, down 3.1% year-on-year.
Letter mail and mail solutions revenue fell to EUR 207.1m, “as expected”, with direct mail revenue down 6.3% to EUR 105.7m, and media post stable at EUR 35.3m.
The Parcels and Logistics division saw its revenues rise 3.7% in the quarter, to EUR 220m. The Premium Parcels business, mainly business-to-business services delivering within 24-hours, achieved 3.8% growth in the quarter, to EUR 165m. It accounts for about 75% of parcels revenue.
The consumer Standard Parcels business had a slight increase of 0.3% in the quarter, to EUR 46.1m.
Austrian Post said 57% of its parcel and logistics revenue came from Germany, with 35% in Austria and 8% in South East and Eastern Europe. Revenue in Germany was up 2.6% in the quarter, despite the high levels of competition pressuring prices, while revenue growth in Austria was 4.4%. South East and Eastern Europe business was up 8.7% year-on-year.
Looking ahead, with a continuing effort to improve operating costs in the mail business, the company is expecting e-commerce to continue driving growth in the parcel and logistics business, with growth in the business-to-consumer segment looking at 3-6% growth this year.
