Groupe La Poste today presented stable profits and a solid revenue increase for 2019, driven by strong growth at GeoPost/DPDgroup and other businesses, but warned that 2020 will be another difficult trading year.
The French postal group’s overall revenue rose by 5.2% to just under €26 billion, boosted by consolidation of Asendia (acquired at the end of 2018) and solid performances across all group businesses, especially GeoPost, the French domestic parcel business and La Banque Postale. Operating profits were stable at €889 million and net profits improved by 3% to €822 million.
CEO Philippe Wahl said: "Our transformation strategy and the strength of our multi-business model have enabled us to achieve revenue growth of 5.2% this year, across all of our business lines. La Poste has thus demonstrated its robustness in a difficult context within the various markets, considering the accelerated decline in mail volumes, interest rates remaining at historically low levels and pressure on parcel margins throughout Europe.”
He added: “During 2020, Le Groupe La Poste will continue its transformation and has today launched a major participatory initiative with a view to developing its new "La Poste 2030" strategic plan.”
French parcels business improves profits on high volume growth
La Poste’s largest business unit, Services-Mail-Parcels, increased revenues by 5.8% to €12.4 billion but its operating profit fell by 17.4% to €410 million. Services & Mail revenue grew by 6.1% to €10.5 billion as several small specialist acquisitions outweighed a 7.8% drop in mail volumes. However, mail profits dropped to €234 million from €256 million in 2018, according to a company presentation.
In contrast, parcel revenue grew by 5.7% to €1,875 million as Colissimo volumes grew by 8.7% to 362 million items, including a 10% rise in B2C volumes. The French parcels business improved operating profits by 3.6% to €172 million, which represented a 9.2% profit margin.
Profitable growth for GeoPost/DPDgroup
International express parcels unit GeoPost (which trades under the DPDgroup brand) generated a strong 6.7% increase in revenue to €7,768 million (+6.5% on a like-for-like basis). Growth was driven by a 2.8% increase to 1,332 million parcels and higher prices. B2C deliveries grew by 9% while 77% of revenues were generated outside France.
GeoPost's operating profit improved by 10% to €379 million on a reported basis but dropped by €13 million to €331 million excluding positive scope and IFRS 16 accounting effects. “This result fits within the context of Brexit which has impacted the European market, the ongoing tensions regarding delivery and transport costs and the roll-out of the Urban Logistics business,” the group commented.
In a separate statement, DPDgroup said its 2019 growth was achieved “in a highly challenging environment”, including increasing restrictions on delivery in city centres, an overall shortage of drivers and an increase in related costs. Focusing on quality of service, DPDgroup reinforced its premium position and agreed on a significant rate increase in most countries with its customers.
Yves Delmas, Executive Vice President, COO Europe, commented: “We are not volume-obsessed. Our 2019 performance is driven by profitable growth. As a market leader, it is our responsibility to pave the way toward a better pricing policy. Covering the increasing operational costs throughout Europe while improving our service performance as a premium player can only be made possible by fair pricing that our customers understand.”
DPDgroup reported particularly strong sales growth in Poland (+18%), the UK (+5.7%) in a context of economic slowdown and uncertainty in light of Brexit, France (+5.5% by DPD France and +6.6% by Chronopost), and Germany (+4.5%) in an environment of increasing costs.
The new Urban Services unit increased revenue by €36 million, notably thanks to the development of Stuart in the UK. Stuart, a delivery platform and on-demand logistics solution, currently operates in 142 European cities (95 cities in France, 45 in the UK, Madrid & Barcelona in Spain) along with partnerships with major retail outlets such as Carrefour in France.
In addition, DPDgroup expanded its urban delivery services significantly last year and now has 110 urban depots for final-mile deliveries by foot, bike or e-van in 13 countries. In particular, Chronopost France now operates 100% green deliveries in Paris, thanks to low-emission vehicles and urban depots, while DPD UK is rapidly expanding its fleet of electric vehicles and urban depots in London.
High profits at La Banque Postale
Elsewhere, financial services unit La Banque Postale increased its revenues (Net Banking Income) by a low 1.4% to €5,647 million and contributed slightly higher operating profits of €820 million to La Poste’s overall profits. The small Digital Services business unit increased revenues by 6.4% to €697 million and improved its profits slightly.
Investments in parcel centres and electric vehicles
Looking ahead to this year, La Poste highlighted the forthcoming finalisation of the strategic equity alliance between Caisse des Dépôts and La Poste, as well as between La Banque Postale and CNP Assurances.
However, the French group pointed out: “The economic climate will remain difficult, in the wake of previous years. The priority is still the transformation of the Group, through a plan of conquest, innovation and diversification.
“Revenues should grow organically and record a higher scope effect with CNP Assurances and other external growth transactions. The Group will continue to follow the savings plan introduced in 2019. And operating profits should increase. Investments and external growth transactions will continue to support the development of the various businesses.”
La Poste plans to invest about €300 million to modernise parcel centres in France, a slightly higher amount in hubs and warehouses at DPDgroup, and €154 million in new vehicles, including electric vehicles, according to its 2019 results presentation.
