European parcels operator GLS said today it plans to increase prices in all markets after itsvolumes, revenues and profits declined in the year ending March 31, 2010. It expects business to
stagnate this year but will invest €50 million in its network.The Royal Mail-owned company said that despite the economic crisis its volumes declined onlyslightly last year but there was a heavier fall in revenues and profits due to price pressure.Parcel volumes dropped by 1.4% from 350 to 345 million whilst revenues fell by 5.5% from €1.8billion to €1.7 billion. EBITA declined by 15.3% to €132 million, representing an EBITA margin of7.9% compared with 8.7% the previous year.
Royal Mail announced last week in its 2009-10 results that revenues at GLS fell by 0.5% to£1,487 million (€1,719 million) while cost savings limited the fall in operating profit to 10% to£112 million (€129.5 million). The differences between the Royal Mail and GLS figures are due toexchange rate effects and publication of GLS results in British pounds rather than euros.
“The results reflect tough price competition as competitors have responded to the world-wideeconomic recession by seeking to maintain volumes with price reductions,” commented Rico Back, CEOof the GLS Group. “In some European countries and regions this has led to considerable pricedeclines, a trend which must now be reversed.”
In response, GLS said it will put up its prices and increase investments in order to ensureservice quality, well-trained staff, a strong physical network and modern technology.
“GLS offers high quality parcel services and to support this, we continuously invest in ourbusiness even in difficult economic times. However, customers who require high quality have to beprepared to pay for it. This is why we will raise our prices in all countries,” Back said.
In Germany, GLS increased international and domestic prices by 2.8% for business customers onApril 1 while keeping consumer prices unchanged. Price increases for other markets have not beendisclosed.
In 2010/11, the GLS Group plans to invest approximately €50 million in its European network.Investments will be made in the physical network infrastructure such as land, buildings andconveyor equipment as well as IT harmonisation and development. “Modern IT solutions play adecisive role in making it easier to communicate with consignors and consignees”, Back added. “Inaddition, we will continue to optimise our processes without compromising quality.”
In the current year, GLS expects the economy and the CEP market to show only a slight recovery. “ The crisis is not over. Markets will change and there may be consolidation; business insolvenciesand take-overs across sectors are expected in the year ahead“, Back predicted.
“In view of the still uncertain economic situation we think business will stagnate in 2010/11.Nevertheless, the GLS Group will continue to strengthen its European network to support the highquality service offered and to prepare the ground for the eventual economic upturn when it comes,”he concluded.
