Swiss Post recorded a lower group profit last year on 2016, largely due to an accounting irregularity but the operator highlighted a positive performance from its Mail and Parcel units to a backdrop of challenging market conditions.
The sum of around CHF78 million claimed by the audit report of the Federal Office of Transport (FOT) and a provision for the unrectified situation for the years 2016 and 2017 weighed on the result, it said.
Operating profit (EBIT) totalled CHF 630 million in 2017, down CHF 74 million year-on-year while operating income fell to CHF 7,987 million compared to CHF 8,188 million a year.
Despite this, Swiss Post managed to record a profit in its core business.
In a statement it said: “The market environment for the Swiss Post Group remains challenging: volumes of addressed letters are falling, pressure on prices in the logistics market is increasing and over-the-counter transactions continue to decline.”
It continued: “Nevertheless, the result improved in both the letter and parcel markets. The deficit at PostalNetwork was reduced thanks to operational measures. At PostFinance, one-off effects such as the sale of two equity portfolios and reversals of impairment on financial assets helped bolster the result.”
The statement added: “One year ago, Swiss Post began an extensive transformation process designed to tackle the rapid developments in digitization and the associated customer requirements. Swiss Post will continue to pursue this chosen path.”
Swiss Post highlighted the 'good result' at PostMail despite the decline in letter volumes.
Digital communication continued to pose challenges for the unit's core business. At the end of 2017, the number of addressed letters had decreased by 4.2% compared with the previous year’s figure, and the number of newspaper deliveries had also fallen (-2.9%).
“PostMail is combating this trend with measures such as supplementary services over the 'last mile' and succeeded in increasing its operating profit from CHF 317 million to CHF 370 million. This means that PostMail continues to make a very significant contribution to the Group result.”
Operating income fell to CHF 2,835 million as a result of declining volumes (2016:CHF 2,906 million). However, the fall in revenue was offset by consistent cost management adapted to the relevant situation, the implementation of efficiency measures and one-off effects, Swiss Post said.
Swiss Post also noted the growth in its parcel business despite pressure on prices.
Buoyed by the strong online retail segment, its PostLogistics unit delivered around 130 million parcels in 2017. This represents growth of 6.2% year-on-year.
“However, the boom in e-commerce has also resulted in new competitors forcing their way into the increasingly attractive market, significantly increasing the pressure on prices. Despite this difficult environment, PostLogistics recorded an operating profit of CHF 119 million, an increase of CHF 2 million year-on-year.
Operating income stood at CHF 1,619 million compared to CHF 1,572 million a year earlier.
In anticipation of continued growth in its online business and a resulting increase in parcel volumes,Swiss Post is planning to invest around CHF 150 million in the construction of three new regional parcel centres by 2020.
It also expects to build additional regional parcel centres in other regions. However, the number of future locations is currently still undecided.
The Swiss postal operator also provided an update on the restructuring of its postal network which it claimed was the densest in Europe.
The number of access points increased from 3,800 in 2016 to 3,870 last year. By 2020, Swiss Post will expand the network to more than 4,200 customer access points.
