France’s Groupe La Poste made a successful financial ‘rebound’ last year thanks to much better mail profits and strong growth in parcels, and is predicting further improvements this year as it speeds up its ongoing transformation and gears up for competition from Amazon.
The group increased revenues by 4% to €23,045 million in 2015, which was a 2.5% rise on a like-for-like basis and improved operating profits by 21.6% to €875 million, which was an underlying increase of 15%. Net profits rose by nearly 24% (15% like-for-like) to €635 million. In comparison, in 2014, operating profits had dropped by 8% and net profits by 18%, largely due to the declining mail business.
“2015 was the year of the re-bound. These are good results,” CEO Philippe Wahl told journalists, including CEP-Research, in Paris yesterday. Looking ahead, he stressed the importance of developing a broader range of products and services. “We’re going to accelerate the transformation of La Poste because the world around us is accelerating its transformation.”
Last year, a major improvement in mail profits due to price rises and cost reductions, combined with higher underlying profits from express parcels division GeoPost, slightly better results at La Banque Postale and cost controls throughout the group combined to boost overall profits.
The largest division, Services-Mail-Parcels (SMP) improved its operating profit by 66.3% (+64.9% at constant scope and exchange rates) to €697 million, driven by the mail price increase and significant cost reduction efforts to offset rapidly declining mail volumes, which fell by 6.5% last year. Its revenue slightly increased to €11,461 million (+0.6% and +0.7% at constant scope and exchange rates).
Mail revenue was stable at €9,334 million as the average 7% price increase that took place on 1 January 2015 offset almost all of the drop in addressed mail volumes. The development of services offered by postmen, who are now all equipped with Facteo smartphones, helped increase revenue as well.
Parcels saw its revenue grow 2.3% to €1,602 million in a highly competitive environment thanks to higher volumes and price increases as well as changes in export product mix. The 1.6% increase in volumes, including a 2.3% rise in B2C volumes, followed a 2.7% drop in 2014, and reflects the results of a strategy to win back market share. Wahl pointed out that the company has now started to deliver small parcels directly into home letter-boxes as a new service.
Asked by CEP-Research why the parcels business was apparently growing much more slowly than the French e-commerce market, Wahl underlined that these were only the figures of Colissimo (formerly Coliposte), which had to cope with the decline of the mail-order business, its former core customer segment. “If you consider the mail-order fall, then you see there is strong growth in e-commerce,” he explained. The group’s overall parcel growth in France was much higher when also taking Chronopost, which had seen double-digit growth, and DPD France into account, he added.
The CEO played down the threat posed by Amazon’s impending takeover of B2C delivery company Colis Privé which will give it full ownership of a logistics network and final-mile delivery operation. “They are one of our most important customers and they will become a competitor. It will be a policy of co-opetition,” Wahl commented, referring to a mixed relationship of cooperation and competition. Putting a positive spin on the e-commerce giant’s move, he said “their excellent service could help us to improve”, for example by enabling them to take advantage of new services such as delivery to home letterboxes and Pickup parcel points.
“E-commerce is a great opportunity for our group, both for parcels and fresh goods,” Wahl continued. The launch of Chronofresh and the investments in food delivery firm Resto-In and Parisian crowdsourced delivery firm Stuart were opportunities to develop new services for this sector, he pointed out. The CEO confirmed that the Chronofresh service would be extended to frozen goods.
La Poste’s subsidiaries in the logistics market (Viapost Services) and the unaddressed advertising mail market (Mediapost) posted better results as well, due to aggressive sales policies. Total revenue for these subsidiaries reached €525 million (+7.9% at constant scope).
Meanwhile, GeoPost, the express parcels division, again generated strong growth last year, both organically and through acquisitions. Its revenues increased by 15.3% to €5,675 million, which was a 9.1% rise on a like-for-like basis, while volumes increased by 16.4% to more than one billion parcels (1,006m), which was an underlying rise of 10.9%. The B2C share of volumes increased to 30% of the total.
All markets increased their revenues, led by the UK (+17%), Benelux (+14%), Spain (+9.5%), Poland (+9.1%) and Germany (+8%). GeoPost also spent the bulk of the group’s €130 million investment in acquisitions last year, buying an 80% stake in Resto-In, 22% in Stuart, and full ownership of DPD Systemlogistik in Germany, Australian operator Worldlink Perth and Signet UK.
Operating profit for GeoPost increased by 11% to €367 million but was reported as €268 million, down 5.9%. This figure included a €99 million non-recurring provision recorded for the French Competition Authority’s investigation of French transportation carriers. If restated to exclude this provision and also scope and exchange rate effects, the business unit delivered a 2.8% increase in operating profits.
Among other group businesses, La Banque Postale recorded €5,745 million in Net Banking Income (NBI), up +1.3%, while operating profit increased by 1.1% to €851 million, driven by sales growth and cost controls. La Poste Network’s sales revenue (made up of mail, postal parcel and Chronopost express activities) was flat at €2,265 billion. The Digital Services business unit, which drives the entire group’s innovation and digital transformation, delivered a 5% increase in revenue to €560 million and reduced its operating loss to €14 million.
Looking ahead to this year, La Poste said it would roll out new services in all of the business units, continue the geographic expansion of express operations, and introduce innovative digital service offerings while maintaining cost controls. It plans to invest about €900 million in diverse activities this year, including the ongoing digital transformation.
“Despite the low interest rates and increasing digitisation of trade, which should continue, the group still anticipates 1% to 2% growth in revenue as well as increased profit and operating margin in 2016,” it stated.
