France’s La Poste Group has unveiled profit and revenue growth targets for 2008 under a three-yearbusiness plan designed to move it closer to matching the financial performance of rival operators.
Its key 2007 financial results are in line with forecasts.In a detailed statement released on December 21, La Poste announced that its board ofdirectors had reviewed the expected 2007 consolidated figures, and approved the 2008 budget, the2008-2010 business plan, and the financial ambitions for 2012.
The French postal group said it should achieve the targeted operating profit margin of 5.8%in 2007, as against 4.6% in 2006 (IFRS pro forma), and meet its net profit target of EUR 850million. Internal investment during 2007 will be around EUR 1.2 billion, slightly higher than in2007, continuing the drive to modernisation in each of the divisions.
Spending on external growth will be significantly lower at EUR 110 million, compared to EUR550 million in 2006, essentially involving the international build-up of the express business, LaPoste stated. Given a satisfactory operating performance and well controlled capital expenditure,the Group should be able to significantly improve its debt ratios from 2006 going forward into2007, achieving by year-end a ratio of net debt to operating profit of 3.2 and a ratio of net debtto equity of 1.7.
For 2008, La Poste said that its group turnover should rise by 2.9% excluding changes inprovisions for épargne logement (Home Ownership Savings Plans and Accounts). Mail business revenuesshould grow by around 1%, including, as in previous years, slight erosion in volume. The Parcelsand Express division should achieve organic growth of more than 6%. Finally, La Banque Postaleexpects an increase in net banking income of around 4%. Overall, La Poste aims for a 6.1% operatingprofit margin in 2008.
La Poste will invest about EUR 1.3 billion during 2008, including eight new mail centres andfurther modernisation of several hundred post offices under the Mail Quality programme. The 2008budget also includes funds for acquisitions and the ongoing reform of the pension scheme funding.
Looking further ahead, La Poste pointed out that 2008 is the first year of a three-year2008-2010 business plan. This focused on two key commitments: continuous improvement in operationalperformance so as to bring the operating margin level up to those of the leading European postalservice groups; and improving the balance sheet, with a view to recovering financial solidity.
By achieving these targets, and assuming a stable regulatory environment, La Poste could meetits ambitious financial goals for 2012 of increasing the operating margin to 8.5%, improving theratio of net debt to operating profit to 2, and targeting a debt to equity ratio of less than 1.
