Belgian postal group bpost saw strong growth in domestic and international parcels in the second quarter of 2015 but its overall results weakened due to lower revenues.
Revenues declined by 2.6% to €597.6 million due to a mix of factors, including elections in 2014, lower state compensation (SGEI) for USO costs, the decision to curtail some International Mail activities but also a bad performance in Advertising Mail. Together these outweighed the double-digit parcels growth.
The group’s Q2 operating profit declined by 2.9% to €138.3 million, pushing the high operating margin down fractionally to 23.1%, while net profits were 2.1% lower at €91.2 million.
The Domestic Mail unit suffered a 4.8% drop in revenues to €364 million as volumes dropped by 7.6% (-6.1% on an underlying basis), with transactional mail down 5.3% on an underlying basis and advertising mail 9.9% lower.
In contrast, the parcels business continued to grow with overall revenues up by 17.9% to €81.2 million. The International Parcels business increased revenues by 31% to €39.4 million, driven by organic growth from the USA, positive currency effects and good milk powder volumes to China. The volume trend was not disclosed.
Domestic Parcel volumes increased by 12.6% compared to 4.7% one year earlier, driven by strong e-commerce growth and a continued positive trend in C2C. The Q2 growth rate was faster than Q1 (+10.2%) and 2014 (+7%). A 3% negative price/mix effect meant that Q2 revenues rose more slowly by 9.3% to €39.4 million. This revenue trend “is explained by the faster growth of large e-tailers with high volumes and lower prices than the smaller customers”, the company said.
However, the International Mail business, described as “very low margin”, contracted by 13.1% to €42.1 million due to portfolio changes while the small banking operation had stable revenues of nearly €52 million.
CEO Koen Van Gerven commented: “Through excellent growth in parcels and better than planned cost savings, we managed to minimise the impact on our profitability of the reduction in compensation received from the Belgian State for SGEI and a bad performance of advertising mail. These results again prove that our solid operating model continues to deliver. We are on track to realise our outlook for this year.
For 2015 as a whole, bpost said it expects domestic mail volumes to remain under substantial pressure and is planning for a volume decline of around 6% while government USO compensation payments will drop further. “We now expect high single digit growth in Domestic Parcels in spite of the intensification of competition. We also expect continued growth in the US and Asia parcels segment.”
