Poste Italiane’s parcel volumes hit record levels in the second quarter of the year (April-June 2020), while revenues rose sharply, mitigating the impact of a sharp decline in mail shipments during the period.
Overall, however, the Italian postal group's quarterly revenues were down 13.1% year on year (y/y) to €2,336 million, affected by the COVID-19 outbreak. Q2 adjusted EBIT (operating profit) totalled €320 million (-32.4%) while adjusted net profit fell by 22.7% to €256 million.
B2C parcel growth 'remarkable'
Parcel revenues in the three months to end-June 2020 increased by 32.6% year on year (y/y) to €262 million “boosted by B2C growth of a remarkable 79.7% to €145 million,” Poste Italiane noted. Parcel revenues in the first half of the year totalled €473 million, an increase of 18.7% y/y with B2C activity up +52.3% to €254 million.
In Q2, parcel volumes rose by 53.9% y/y to 51.8 million, with B2C accounting for 36.3 million of this total. H1 volumes were up by +31.5% to 89.9 million, with B2C shipments totalling 61.6 million (+50.3%).
“Poste’s successful transformation of the logistic value chain through investments in long haul, automatic sorting and the Joint Delivery Model allow us to benefit from the growing e- commerce trend and manage peaks effectively,“ the company said.
In May this year, Poste Italiane said it was seeing dramatic growth in its parcel business with high double-digit increases in B2C volumes driven by a flood of imports from China.
Mail activity diminishes further
Turning to Mail, during the (COVID-19) lockdown some higher margin products were temporarily suspended while the e-substitution trend accelerated. This resulted in revenues falling by 35% in Q2 y/y to €407 million and by 27.2% in the first-half of the year to €924 million. Mail volumes were down 24.2% in Q2 to 523 million and by 19.2% in H1 to 1,137 million.
In Q2, Poste Italiane's Mail, Parcel & Distribution segment revenues fell by 19.9% to €701 million and by 16.1% in H1 to €1,472 million.
Q2 adjusted EBIT was – €155 million compared to -€57 million a year earlier while H1 adjusted EBIT was – €376 million compared to -€110 million in the first six months of 2019. This produced a Q2 net loss of €104 million compared to -€51 million y/y and of -€135 million in H1 versus a net profit of €50 million in the first-half of last year.
Poste Italiane's group first half-year revenues were down 8.6% y/y to €4,792 million in the first half of the year. Adjusted EBIT totalled €531 million (-35.6%). Adjusted net profit totalled €399 million (-31.0%).
Benefits of diversification and operational resilience confirmed
Poste Italiane's CEO and General Manager, Matteo Del Fante, commented: “The first half of the year has been a defining moment for the country and the company. The benefits of business diversification and operational resilience have been confirmed in a challenging environment. Poste Italiane managed to ensure uninterrupted business while supporting all stakeholders. Extensive co-operation with national institutions continues, with our operational know-how supporting the Protezione Civile’s (Italian Civil Protection Department) logistics activities.”
He continued: “Revenues were penalized by the sharp mail decline, mitigated by a record high B2C parcels delivered also thanks to the fully fledged Joint Delivery Model and our state of the art automated sorting centre in Bologna.”
Del Fante added: “We are assessing and executing significant cost reduction initiatives with the aim of preserving long-term profitability, with the second quarter already benefitting from some of these actions.
“Long term strategic trends, at the heart of our Deliver 2022 plan, have been confirmed. Thanks to the ongoing transformation plan we are able to seize new market opportunities.”
Business outlook
Poste Italiane underlined that COVID-19 has had a significant economic and financial impact on Italy as well as on the postal group.
“March and April were characterised by the government's restrictive measures, progressively reduced in the following months but, to date, it is not yet possible to precisely outline what will be the 'new normal.' This makes it premature to make realistic forecasts on the group's economic and financial evolution during 2020.”
In the Mail, Parcels and Distribution segment, the health crisis led to “a sharp acceleration into the future, albeit based on trends already outlined in the Group’s strategic plan: a decline in mail and growth in e-commerce parcels. In order to cope with and support this sharp increase in parcels, the Group is accelerating the construction of two new sorting centres, in northern and central Italy, and is strengthening its partnership with Chinese operators active in inbound e-commerce,” Poste Italiane noted.
With the end of the lockdown, activities to strengthen the 'green' fleet, one of the objectives of Poste Italiane to significantly reduce CO2 emissions, have resumed.
