An excellent set of results from Swiss Post

Press release dated 31.03.2011

Swiss Post achieved an excellent set of results in 2010. Group profit surpassed the CHF 728 million posted in the previous year to reach CHF 910 million. Operating income climbed to CHF 8,736 million (2009: CHF 8,558 million). Key factors contributing to the improvement in earnings included the increase in customer deposits, optimization measures and higher parcel volumes. In all four of the markets in which Swiss Post operates, it achieved positive results and made further progress. The letter business remained strong. Headcount increased by a total of 326 full-time equivalents in 2010. Swiss Post needs healthy profits in order to further increase its equity, help finance the pension fund, fund its investments and distribute an appropriate share of profit to the Confederation.

Swiss Post generated a Group profit of CHF 910million in 2010, 25 percent more than in the previous year. Operating income increased by 2.1 percent to CHF 8,736 million (2009: CHF 8,558 million). Swiss Post improved its results in the communications, logistics and retail financial markets as well as in the market for public passenger transport. The key factors contributing to the Group's profit growth primarily included the increase in customer deposits and resulting rise in net interest income in the retail financial market, cost savings in the communications and logistics markets, and higher parcel volumes.

The operating profit margin climbed from 8.4 percent in the previous year to 10.7 percent. Investments in 2010 were down on the previous year (CHF 431 million) at CHF 364 million. Once again, they were financed entirely out of Swiss Post's own funds. At year-end and before the appropriation of profit for 2010, equity amounted to CHF 4,224 million, which is below the standard level for the sector.  Group headcount increased by 326 year on year to 45,129 full-time equivalents.

As in previous years, Swiss Post will have to help finance its pension fund, gradually lift its equity to a level that is standard for the sector and in line with the requirements of the financial market supervisory authority FINMA, finance its investments out of its own funds and give the Confederation an appropriate share of profit. To do so, it needs healthy results underpinned by all Group units. The Board of Directors is proposing to the Federal Council that CHF 100 million of the profit for 2010 be used to finance the pension fund, CHF 200 million be distributed to the Confederation and to further increase equity.

Good results in all four markets

While all markets contributed to the excellent set of consolidated results for 2010, performance varied across the individual Group units. 61 percent of Group earnings come from the retail financial market. In the communications market, four Swiss Post Group units (PostMail, Swiss Post International, Swiss Post Solutions, Post Offices & Sales) achieved an operating result totalling CHF 147 million (2009: CHF 113 million). Business with letters and promotional mailings remained strong, enabling PostMail to achieve a result of CHF 199 million (2009: CHF 198 million) on operating income of CHF 2,619 million (2009: CHF 2,808 million). Falls in income, attributable among other things to a weaker decline in the volume of addressed letters of 1.5 percent, the price reductions introduced on 1 July 2009 and electing to be liable to value-added tax, were offset by efficiency gains, more specifically at the new letter centres and in deliveries.

Swiss Post International achieved a result of CHF 49 million (2009: CHF 53 million) on operating income of CHF 788 million (2009: CHF 877 million). The decline was due mainly to exceptional factors, more specifically the one-time restructuring expenses that became necessary as a result of Deutsche Post's decision to import into Switzerland the parcels previously assigned to Swiss Post through its own company, DHL.  On operating income of CHF 665 million (2009: CHF 696 million), Swiss Post Solutions achieved a result of CHF 7 million – considerably more than in the previous year, when one-time integration and restructuring expenses at individual companies pushed the result down to a loss of CHF 25 million. On operating income of CHF 1,769 million (2009: CHF 1,359 million), the Group's Post Offices & Sales unit lifted its result to CHF -108 million (2009: CHF -113 million). In addition to the integration of Stamps & Philately, the result was positively impacted by a generally favourable trend in business, more specifically in the sale of non-postal brand-name items, and cost effects resulting from the development of the post office network.

In the logistics market, the result rose by CHF 119 million year on year to CHF 164 million (2009: CHF 45 million), with PostLogistics benefiting, among other things, from an increase in parcel volumes driven by the economic climate and electronic commerce (+3.8 percent) and significant efficiency gains; the moderate decline in income to CHF 1,478 million (2009: CHF 1,488 million) was by far offset by reductions in expenditure. At CHF 571 million, the retail financial market (PostFinance) made the largest contribution to the Group result (2009: CHF 441 million). The rise in operating income to CHF 2,389 million (2009: CHF 2,160 million) was largely attributable to higher customer assets and the resulting increase in net interest income as well as lower impairment charges.  In the continuously expanding market for public passenger transport, PostBus achieved an operating result of CHF 28 million (2009: CHF 27 million) on operating income of CHF 702 million (2009: CHF 640 million).

Keeping costs under control and safeguarding earnings

The only moderately upbeat economic outlook and ever fiercer competition, the sustained effects of substitution, business customers' efforts to optimize their consignments, the still-insufficient equity base and the sole dependence on PostFinance's earnings all confirm Swiss Post's firm belief that it should remain on its chosen path. In all four of the markets in which it operates, it aims to keep costs under control, diversify earnings across as wide a base as possible and offer its customers first-rate services at competitive prices.

Key figures for Swiss Post Group

Figure Unit 2010 2009
Operating income4 CHF million 8,736 8,558
Operating result (EBIT)1 CHF million 930 721
as % of operating income (return on sales) % 10.7 8.4
Group profit CHF million 910 728
Total assets CHF million 93,310 84,676
Equity CHF million 4,224 3,534
Investments2 CHF million 364 431
Headcount at Swiss Post Group (excl. trainees) FTEs3 45,129 44,803
of which abroad FTEs3 7,255 6,986
Trainees at Swiss Post Group in Switzerland FTEs3 1,824 1,690
Addressed letters, domestic Millions of items sent 2,365 2,401
Parcels, domestic Millions of items sent 108 104
Access points Number 3,612 3,607

Selected key figures by segment (Group units)

Communications market Figure Unit 2010 2009
Communications market Operating result1,5 CHF million 147 113
PostMail Operating income5 CHF million 2,619 2,808
PostMail Operating result (EBIT)1,5 CHF million 199 198
Swiss Post International Operating income4,5 CHF million 788 877
Swiss Post International Operating result (EBIT)1,5 CHF million 49 53
Swiss Post International Letters sent (from Switzerland)5 Millions of items sent 74.4 170
Swiss Post Solutions Operating income CHF million 665 696
Swiss Post Solutions Operating result (EBIT)1 CHF million 7 -25
Post Offices & Sales Operating income5 CHF million 1,769 1,359
Post Offices & Sales Operating result (EBIT)1,5 CHF million -108 -113

Logistics market Figure Unit 2010 2009
PostLogistics Operating income5 CHF million 1,478 1,488
PostLogistics Operating result (EBIT)1,5 CHF million 164 45

Retail financial market Figure Unit 2010 2009
PostFinance Operating income CHF million 2,389 2,160
PostFinance Operating result (EBIT)1 CHF million 571 441
PostFinance Net inflow of new money CHF million 10,662 20,120

Public passenger transport market Figure Unit 2010 2009
PostBus Operating income CHF million 702 640
PostBus Operating result (EBIT)1 CHF million 28 27
PostBus Number of passengers in Switzerland Millions of persons 121 118

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 interests and intangible assets
3 Average expressed in terms of full-time equivalents
4 Prior-year figures for SPI adjusted as a result of restatement
5 Prior-year figures only comparable to a certain extent due to changes in the allocation of products