Poste Italiane improved operating profits by 26% in the first half of 2015 driven by growth in financial and insurance services as well as rising parcel volumes as it gears up for a planned IPO in the autumn.
Rome aims to sell off a 40% stake in the state-owned postal group in late October or early November to raise up to €4 billion to help reduce the country’s heavy public debts.
In the first half of this year, Poste Italiane increased operating profits by 26% to €638 million while net income nearly doubled to €435 million from €222 million, driven by higher revenues and lower costs. Group revenues rose by 7% to €16 billion as growth in high-margin financial and insurance services continued to outweigh the decline in traditional postal services.
Francesco Caio, CEO and Managing Director, commented: “The first half-year results are encouraging in all areas: insurance services registered significant growth in revenues and margins; financial services closed the first six months with rising margins; postal services, for the first time in years, slowed the decline in mail revenues while continuing to increase parcel volumes and revenues.”
The financial and insurance services units both improved their half-year results. The financial services division increased revenues to €2.9 billion and improved operating profits significantly by 49% to €468 million. The insurance services business increased premiums by 15% to €9.4 billion and its operating profit rose by 7% to €236 million.
In contrast, the Postal Services division reported a 6.5% drop in half-year revenues to €1.9 billion, although this was a slower decline than the 9% seen in the first half of last year. Mail volumes were down nearly 12% but higher prices introduced last December offset about half of this decline. In addition, the group generated moderate growth in parcels with revenues up by 4.4% to €280 million and volumes up by 9% to 40 million thanks to the growing e-commerce market.
However, the postal division’s operating losses broadened to €89 million in the first half of 2015 compared to €36 million in the same period last year, due to the revenue decline and only partially compensated by cost reduction measures.
Moreover, Poste Italiane highlighted the decision of the country’s postal regulator AGCOM to ease regulations concerning the Universal Postal Service for the next five years, enabling the company to operate “more flexibly, more efficiently and in line with the changing delivery needs of citizens”.
In future, Poste Italiane will be able to offer a ‘standard mail’ service, with delivery within four days, whose price will be increased from €0.80 to €0.95. A new ‘priority mail’ service, with next-day delivery, will be permitted with ‘free market’ pricing. Moreover, the postal operator will be entitled to deliver only every second day to 25% of the country’s population, based on certain geographical zones.
“Through this measure, Poste Italiane can benefit from greater opportunities to diversify its postal revenues, also offering customers a new efficient priority delivery service, as well as with significant potential to increase efficiency through the gradual introduction of the aforementioned delivery on alternative days and completing important processes to automate the supply chain,” the company stated.
