Austrian Post increased quarterly revenues as parcel growth offset a mail decline but profits slumped due to the soaring cost of keeping operations going during the COVID-19 pandemic.
The postal group’s turnover rose by a moderate 2.1% to €503 million in the January – March 2020 quarter while operating profits fell by 42% to €33.3 million from €57.4 million last year. Earnings were hit by the COVID-19 impact and also by start-up costs for the bank99 subsidiary.
The Parcel & Logistics Division had a strong quarter with revenues up by 23.8% to €174.5 million, including a 26.7% rise to €143.7 million in Austria. High single-digit organic growth and the positive volume effects (+28%) of the Deutsche Post DHL cooperation that started last August were main drivers. Volumes increased more than expected as B2C growth outweighed a fall in B2B parcels.
The division’s EBIT improved by 28.6% to €8.7 million despite heavy costs from keeping operations going smoothly and avoiding bottlenecks during the peak of the pandemic.
In contrast, the Mail Division showed the expected decline, with quarterly revenue down by 4.6% to €317 million on a 4-5% fall in addressed letters and a 9% decline in advertising mail. Operating profits fell by 16% to €46.9 million as a result.
“The results for the first quarter of 2020 reflect the current difficult business environment,” said CEO Georg Pölzl.
But he emphasised the postal operator’s role as an essential business for Austria. “The initial conclusion is that the company succeeded very well in maintaining the safety and health of the staff as well as the efficiency of the logistics network,” he commented.
Austrian Post said the first quarter of 2020 posed “major challenges” and the COVID-19 pandemic and the related negative economic impact “have redefined the company’s priorities”.
In spite of the significant deterioration of the business environment and due to the commitment of all its employees, Austrian Post succeeded in providing on a daily basis the high-quality postal services which are so crucial at this time.
Its current focus is to ensure it fulfils the three-fold objectives of preserving the safety and health of employees, maintaining the company’s services as part of the country’s critical infrastructure, and minimising the economic damage.
As a systemically relevant company in Austria, Austrian Post is fully committed to take on this responsibility although it is evident that various service obligations cannot be fulfilled in a cost-covering manner and/or additional costs arise from regulations and crisis measures.
Looking ahead, Austrian Post said it cannot accurately make any business forecasts for this year at present due to the uncertain outlook. The further development of the COVID-19 pandemic, the resulting government measures and especially the way and extent to which the economy rebounds will all have a direct impact on the company’s further business development in 2020.
In general, Austrian Post expects a decline in Letter Mail and Direct Mail revenues, depending on the duration and repercussions of COVID-19 pandemic, while parcel revenues are expected to rise but at a high cost burden. Overall, EBIT will decline in the current financial year as a consequence of direct and indirect COVID-19 effects.
