La Poste today unveiled a major improvement in half-year profits driven by strong growth in international parcels, a turnaround in mail profits and continuing high banking profits as well as by cost savings, and announced plans for a 3.6% rise in mail prices next January.
The French group’s revenues grew by 4.5% to €11.46 billion, which was 3% on a like-for-like basis, in the six months ending in June. Operating profits soared by 44% to €616 million, pushing the group’s operating margin up by 1.5 percentage points to 5.4%. Net profits came in 32% higher at €424 million.
The large Services-Mail-Parcels (SMP) business unit improved its half-year operating profits by 65% to €508 million. “This change reflects the combined effects from the price increase on postal products, which offset declining mail volumes, as well the decrease in expenses (optimising production processes and reducing overheads),” the group explained.
The SMP division increased its revenues fractionally to €5.75 billion. Mail revenues remained stable at €4.7 billion as the 7% drop in addressed mail volumes was offset by the 7% price increase that took effect on 1 January 2015. The rollout of Facteo smartphones to postmen continued, with 70% equipped as of end-June.
The domestic B2C parcels business (Coliposte) increased revenues by 2.2% to €770 million, mainly due to a favourable price/product mix effect. The e-commerce logistics unit Viapost and unaddressed mail business Mediapost recorded a 2.1% increase in revenues to €256 million, while Asendia, the international joint venture with Swiss Post, increased revenues by 9.6% to €236 million during the half-year.
The French postal operator also announced “unavoidable” price increases for 2016 designed to support provision of the universal postal service and in line with the price cap set in 2014 by French regulator ARCEP. Mail tariffs will go up by 3.6% on average, with ‘priority’ standard letters going up from €0.76 to €0.80, and the ‘deferred’ Lettre verte costing two cents more at €0.70. In contrast, parcel prices will be reduced with the tariff for Colissimo France shipments dropping by more than 10% from €4.90 to €5.50.
Meanwhile, express parcels unit GeoPost increased its operating profits by a strong 35% to €171 million (+22.9% at constant scope and exchange rates). Profit was stable excluding non-recurring items incurred on several projects launched to support the strong momentum of the business and the development of B2C.
GeoPost’s revenues grew by 16.5% to €2.7 billion (+9.3% at constant scope and exchange rates). This was fuelled by growing volumes in all of the countries where it operates (+16%), and especially in the United Kingdom (+24%) and in Poland (+16%), with a disadvantageous price/mix effect, notably driven by the rising share of B2C.
Acquisitions played a major role in the revenue growth, including WorldNet (UK) and Siodemka (Poland) which were taken over in 2014. GeoPost spent the bulk of the group’s total investment of €86 million in external growth in the first half-year, including the acquisitions of DPD Systemlogistik in Germany for €58 million, Australian freight forwarder Worldlink for €6 million, British forwarder Signet for €10 million and a 22% stake in French same-day delivery operator Stuart for €10 million.
In addition, the division continued its active policy on service innovation with the launch of the new DPDgroup brand identity, the development of handling capacities and the expansion of delivery solutions (such as development of the pick-up and drop-off network, expanding the Predict offering).
Among La Poste’s other businesses, La Banque Postale remained a vital contributor to group profits with operating profits of €468 million, up 6.8%, resulting from business expansion which increased the division’s revenues (net banking income) by 2.9% to €2.93 billion.
La Poste Network, which is refocusing towards banking services, experienced an increase in its banking activities with more loans and a slight increase in sales of mail and parcel products. The Digital Services business unit's revenue rose 4.9% to €278 million and its operating loss was cut by a third to €9 million.
Looking ahead, La Poste said in 2015, which it has termed its ‘rebound year’, it expects group revenues to grow about 3%, a higher operating profit and a substantial improvement in cash generation. The improvements will be driven by business growth, higher mail prices and cost controls.
