The market environment in which Swiss Post operates continues to be difficult: operating profit (EBIT) fell to 383 million francs (previous year: 504 million francs) due to lower contributions to the results from the financial services, communication and logistics markets. 

In the first six months of 2016, Swiss Post generated Group profit of 313 million francs, 78 million francs less than in the prior-year period. At 383 million francs, operating profit was 121 million francs down year-on-year. The company’s business performance is characterized by an ongoing decline in the volume of letters, growing pressure on parcel margins and low interest rates in the financial services market. Operating income rose slightly by 1.2 percent to 4,150 million francs (previous year: 4,100 million francs).

Communication and logistics market: lower contributions to results

In the communication market, Swiss Post recorded an operating profit of 94 million francs (previous year: 137 million francs). The sharper decline in profit generated by Post Offices & Sales is principally due to the Group unit’s new internal performance mandate. PostMail maintained its contribution to operating profit, while Swiss Post Solutions recorded an increased contribution. The decline in the volume of letters was more pronounced year-on-year, with the number of addressed letters falling by 3.5 percent. The operating profit posted by Swiss Post Solutions totalled 10 million francs, 4 million francs higher than the previous year’s figure.

In the logistics market, PostLogistics recorded an operating profit of 52 million francs (previous year: 65 million francs). The logistics market continues to be characterized by increasing competition and price pressure, both nationally and internationally. Despite additional income from the 6.5 percent rise in parcel volumes and increased demand for value logistics solutions, operating profit fell. This decline is due to the Group unit’s adapted internal performance mandate.

In the passenger transport market, PostBus increased its operating profit by two million francs to 21 million francs. The main factor responsible for this positive trend was the ongoing low price of fuel. As the budgets of the public entities which act as contracting bodies for transport services are squeezed, the pressure on prices is rising even more.

PostFinance’s competitive disadvantage widens

Active in the financial services market, PostFinance recorded an operating profit (EBIT) of 237 million francs (prior-year figure: 280 million francs). The 43 million franc decline is mainly due to higher portfolio value adjustments on financial assets (–79 million francs), whereas portfolio reversals of impairment had been recognized in the first half of the previous year (+0 million francs). Net income from the interest differential business was down 17 million francs due to a lack of profitable investment opportunities. This trend will continue in the current year. Gains realized from the sale of equity holdings partially offset the decline in profit. The Brexit referendum in the United Kingdom temporarily caused a slight increase in customer foreign exchange trading volumes. Customer assets increased in both the private and business customer segments, with PostFinance’s sight deposit balance at the Swiss National Bank exceeding the exemption limit. PostFinance’s disadvantage of being unable to issue its own loans and mortgages will become increasingly pronounced. In the current low interest rate environment, it is clear that the lending prohibition is economically damaging and a threat to PostFinance’s long-term profitability.

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Source: Swiss Post