The slowdown in the European economy and lower mail volumes will impact on La Poste’s results thisyear and lead to profits and revenues below budget levels. It has launched a €200 million
cost-cutting programme.The French mail and express group said the impact of the economic slowdown had already beenfelt in the first half-year but had intensified since August. Due to this and a clear drop in mailvolumes, the group’s organic revenue growth in 2008 is likely to be about 2%. It had originallytargeted a 2.9% rise this year on the 2007 figure of €20.8 billion.
La Poste said in a statement that it now expected to achieve a profit margin of only 4% in2008 compared to 6.2% last year and an original target of 6.1% for this year. In 2007, the Frenchpostal group made an operating profit of €1.3 billion on turnover of €20.8 billion. In the firsthalf of 2008, its operating profits declined by 10.9% to €671 million on revenues up by 2.3% to€10,556 million.
In the second half-year, the group has intensified cost-cutting measures designed to saveabout €200 million between June 2008 and June 2009. In addition, it has cut back on plannedinvestments, and now expects only to make about 40% of the originally planned external growthinvestments.
The main impact of the economic downturn would be in the mail business where revenues are nowexpected to decline, La Poste said. It had budgeted for 1% revenue growth on last year’s figure of€11.6 billion. But mail volumes had been affected by the downscaling of direct marketing activitiesby customers, fewer business letters and the continuing substitution by electronic media. A 3%volume decline is now expected for 2008 compared to the 1% annual fall since 2003. In the firsthalf-year, mail revenues dropped 0.6% to €5.9 billion and volumes declined 2.7%.
The Parcels and Express division, comprising express holding GeoPost and the separate FrenchB2C business Coliposte, generated revenues of €4.5 billion in 2007 and had been targeting organicgrowth of more than 6% this year. In the first half-year, GeoPost increased revenues by 8.2% to€1.6 billion and achieved higher profits, while Coliposte increased revenues by 6% to €685 million.
For the full year, the Parcels and Express division is now likely to generate “satisfactory”organic growth in revenues, even though the slowdown in some markets (UK, Spain) had intensified inthe autumn. “A trend to lower volumes has appeared in recent weeks in most of the countries wherethe division is present,” La Poste noted.
Nevertheless, La Poste reaffirmed its medium-term (2008-2012) strategic plans, including maildiversification, completion of the European parcels/express network, development of La BanquePostale and modernisation of the post office network.
