Austrian Post is profiting strongly from a new parcels partnership with DHL and facing up to Amazon’s logistics expansion in Vienna, its latest financial results show.
The postal operator’s Parcels & Logistics division increased revenues by a high 18.4% to €154 million in the July – September 2019 quarter thanks to volume growth and despite continuing “intense competition and high price pressure”. This included a strong 21% revenue rise in Austria and moderate 9% growth in various South East and Eastern Europe markets.
The division’s quarterly operating profit also improved by 13% to €7.1 million, representing a 4.6% profit margin, despite rising network costs and ongoing investments.
Notably, shippers are selecting faster delivery times, pushing up revenues from (next-day) premium parcels by more than 40% to nearly €93 million while standard parcel revenues dropped slightly to €47 million.
The biggest growth driver was the delivery partnership with DHL that has boosted the company’s overall parcel volumes by 25% since its launch in August. Austrian Post has taken over three former DHL Parcel Austria depots, with 140 employees, and has so far integrated about 70% of last-mile deliveries into its own operations.
“The partnership with Deutsche Post DHL Group to deliver parcels in Austria had a very good start. Since 1 August 2019, DHL parcels for Austria are delivered by Austrian Post. As a consequence, total monthly transport and delivery volumes are now about 25% higher than in the previous year”, said Austrian Post CEO Georg Pölzl.
The company has achieved this growth despite Amazon’s launch of its own deliveries in Vienna earlier this year. Since February, local courier firms have delivered between 25,000 and 35,000 Amazon parcels daily in the capital from a delivery depot outside the city, according to Austrian media.
The e-commerce giant is now stepping up the pressure with a second, 7,900 sqm delivery depot to widen its coverage ready for the peak Christmas season. “We need a new depot to deliver faster to other parts of the city,” a company spokeswoman told Austrian newspaper Die Presse.
Meanwhile, Austrian Post is pressing ahead with plans to double its own sorting capacity in order to cope with expected growth to about 150 million parcels a year in 2021, compared to 108 million last year. A new parcel centre at Hagenbrunn in Lower Austria went into operation in September, two facilities will open in Kalsdorf (Styria) and Thalgau (near Salzburg) in mid-2020, and four other centres are due to follow by 2022.
Austrian Post’s mail business reported flat revenues of €362 million in the third quarter but its operating profits dropped by a quarter to just under €45 million, pushing the margin down to 12.4%. Overall, the company’s quarterly revenue rose by 4.3% to €481 million but operating profits fell to €22.3 million due to the lower mail profits.
The company also announced moderate price increases to take effect in April 2020. The ECO rate for standard mail items will be increased from €0.70 to €0.74 and the PRIO rate from €0.80 to €0.85. The postage rate for small packets (Packet S) will rise to €2.55 compared to the previous rate of €2.50.
