Bpost improved its underlying profits in the third quarter of 2015 thanks to double-digit growth in domestic parcels and has sealed a deal with staff to end recent strike action.
The Belgian postal operator reported a 3.3% drop in Q3 revenues to €569 million but underlying operating profits improved by 10.5% to €91.6 million, pushing the operating margin up to a high 16.6%. Net profits were nearly 18% higher at €62.1 million. However, these figures exclude high one-off non-recurring costs of €54.5 million for restructuring under the ongoing Alpha social plan.
The Belgian domestic mail business saw a 2.7% drop in revenues to €330 million as volumes dropped 4.7% on an underlying basis. Moreover, revenues were impacted by lower governmental compensation costs and the curtailment of international mail wholesale activities to improve profitability.
In contrast, the Parcels business increased revenues by 10.5% to €78.3 million on an underlying volume increase of 11.7%. This included a 13.5% rise in domestic parcels where revenues were up by 9.8% at €37.8 million thanks to e-commerce growth and more C2C parcels. International parcel revenues grew by 12.5% to €38.1 million.
CEO Koen Van Gerven said: “I’m very pleased with the strong EBITDA performance this quarter. Indeed, we recorded a softer underlying mail volume decline combined with excellent growth in domestic parcels against an already very strong quarter last year.”
Meanwhile, bpost has been boosted by the recent governmental approval of its latest management contract for the next five years, which includes retention of an extensive retail network and diverse social services. It has also been selected by the government for nationwide press distribution for the coming years.
At the same time, the company has agreed a new organisational model with the workforce that will enable it to restructure in response to declining mail volumes and respond to daily fluctuations in parcel volumes. The measures, including Saturdays into a five-day working week for certain departments, will come into force on January 1.
This issue had prompted unions to take strike action at several sorting and distribution centres around the country in late October.
Van Gerven said: “We’ve reached an agreement with the unions on a more agile organisational model which will further strengthen our competition position in the parcel market. The Belgian State has awarded us the press distribution concessions and approved the sixth management contract, confirming its trust in bpost and its employees.”
For 2015 as a whole, bpost now expects the underlying domestic mail volume decline to be less than 6% while domestic parcels volume growth should hit double digits and US volumes should continue to grow.
