2007 results: Swiss Post's success continues
Swiss Post once again posted an excellent result in 2007. With Group profit of 909 million Swiss francs, it exceeded the previous year's figure by 72 million francs. Operating profit rose by over 800 million to 8,712 million francs. Over two thirds of operating income was generated by the PostMail, PostLogistics and PostFinance Group units. The result shows that Swiss Post is operating in an efficient and client-focussed manner and will help Swiss Post to finance the necessary investments to achieve sustained growth. It can also build up its equity base, which is still inadequate compared with the sector as a whole, and the public value remains qualitatively high. Swiss Post needs additional funds to consolidate its pension fund. Thanks to the good result, Swiss Post will be able to make a dividend payment to the Confederation for the first time.
In financial year 2007, Swiss Post generated Group profit of 909 million Swiss francs, which is 8.6% or 72 million francs more than in 2006. Operating income increased by 10.3 % to 8,712 million francs (previous year: 7,895 million). PostFinance and the new Strategic Customers & Solutions (SKL) Group unit – with the GHP Group, acquired in autumn 2006 – made a major contribution to sales growth (+350 million francs). In 2007, Swiss Post consolidated the entire annual sales of GHP (364 million francs) for the first time. The EBIT margin fell from 10.4% to 9.9% overall. Swiss Post was able to increase its equity base significantly: it now stands at 2,470 million francs (previous year 1,605 million) before profit distribution. The company is aiming to achieve an industry-standard equity base which, in 2007, would have required equity capital of 3,222 million francs.
The 909 million-franc profit shows that Swiss Post and its employees have been able to benefit from the favourable economic environment by performing an efficient service and displaying innovation. In order to develop further and to fulfil the aims of the Swiss Federal Council, the company needs to continue to generate similar profit levels. The Confederation expects Swiss Post to prioritise the gradual build-up of the necessary equity and restructuring of the pension fund, and as a secondary priority, to achieve appropriate profit distribution. These priorities are in addition to self financing and increasing the company value.
This year Swiss Post intends to pay 250 million francs to the Confederation for the first time. The same sum was requested by the administrative board to the Federal Council for the consolidation of its pension fund. Under balanced conditions, Swiss Post will in future be able to draw the necessary funds for a successful transaction from its own resources.
All product-critical units in the profit zone
At operating level, all the segments which provide Swiss Post products contributed in varying degrees to the Group’s positive result. PostMail's result of 236 million Swiss francs fell short of last year's figure of 383 million. This is largely due to higher expenses for commissioning the new letter centres (REMA project). The decline in the number of letters carried – a result both of substitution and of cost optimization due to large customers grouping consignments – continued, though at a slower pace. Thanks to acquisitions and expansion of customer and industry solutions, PostLogistics succeeded in increasing its operating income by 86 million to 1,461 million francs. Owing to higher costs for acceptance services, however, the Group unit generated a lower result than in 2006. Overall, PostLogistics was able to continue the positive performance delivered in the past five years. PostFinance again posted a large increase in new deposits (3.4 billion francs). The financial services arm of Swiss Post lifted its operating income by 350 million to 1,937 million francs. The operating result of 318 million francs (2006: 245 million) is a new record for PostFinance, which did not have to allow for any extraordinary impairment in connection with the US credit crisis. The operating result for the PostBus division rose by 4 million to 32 million francs. PostBus succeeded in expanding its offering both abroad (Liechtenstein and France) and in Switzerland. The noticeable decline in public-sector compensation was largely offset by higher transport revenues. Higher costs for transport and deliveries in the export business resulted in an operating result of 34 million francs (2006: 44 million francs) for Swiss Post International (SPI). Operating income was up 6% year-on-year to 1,145 million francs.
Post Offices & Sales lifted its operating income by 85 million to 1,736 million francs. This additional income was partly the result of higher sales of other brand-name articles and higher compensation payments. Despite the higher operating income, the negative trend in traffic volumes is continuing within the post office network. By continuously developing its network – a process which results in efficiency improvements and also entails alternative models such as the inclusion of agencies in the distribution system – Swiss Post is working to counter this trend.
New SKL Group unit recognized in balance sheet for first time
The companies incorporated into the Strategic Customers & Solutions Group unit, which generate 80% of their sales abroad, posted operating income of 692 million francs. The entire annual sales for the GHP Group, which specializes in dialogue marketing and customer management and has belonged to Swiss Post since 1 September 2006, have been entered in Swiss Post's balance sheet for the first time. The operating result for GHP and MailSource, which operates in the field of document solutions, comes to 19 million francs. It is being offset by one-off write-downs in the printing business area.
Swiss Post's growth-oriented strategy and the stable earnings trend show that the company is competitive. This puts it in a good position to withstand any further erosion of the letters monopoly, which is currently set at 100g. In view of the proposed further deregulation, however, politicians must ensure sufficient funds are available to finance the defined scope of the basic service. In addition, Swiss Post and its competitors must have a level playing field in terms of employment conditions and business development opportunities.
|Key figures for the Group||2007||2006|
|Operating income||CHF million||8'712||7'895|
|Operating result 1||CHF million||866||823|
|As a % of operating income (return on sales)||%||9,9||10,4|
|Group profit||CHF million||909||837|
|Total assets||CHF million||60'084||55'600|
|Investments 2||CHF million||644||540|
|Headcount at Swiss Post Group (excl. trainees)||FTEs 3||43'447||42'178|
|Employees at Swiss Post (excluding trainees)||FTEs 3||33'419||35'326|
|Trainees at Swiss Post Group||FTEs 3||1'473||1'429|
Selected key figures for segments (Group units)
|Operating income||CHF million||3'008||3'028|
|Operating result 1||CHF million||236||383|
|Addressed letters||millions of items sent||2'742||2'762|
|Operating income||CHF million||1'461||1'375|
|Operating result 1||CHF million||76||93|
|Parcels||millions of items sent||104||104|
|Operating income||CHF million||1'937||1'587|
|Operating result 1||CHF million||318||245|
|Net inflow of new money||CHF million||3'409||2'548|
|Operating income||CHF million||585||579|
|Operating result 1||CHF million||32||28|
|Number of passengers||millions of persons||107||106|
|Swiss Post International||2007||2006|
|Operating income||CHF million||1'145||1'079|
|Operating result 1||CHF million||34||44|
|Letters sent (from Switzerland)||millions of items sent||194||200|
|Post Offices & Sales||2007||2006|
|Operating income||CHF million||1'736||1'651|
|Operating result 1||CHF million||-25||-111|
|Strategic Customers & Solutions||2007||2006|
|Operating income||CHF million||692||396|
|Operating result 1||CHF million||-1||8|
1 Operating result corresponds to operating profit before net non-operating financial income/expense and taxes (EBIT)
2 Investment in property, plant and equipment, equity investments and intangible assets
3 Average workforce in full-time equivalents