Revenues up, profits down at La Poste in 2018

The annual results of France’s La Poste confirmed previous trends for revenues, which rose in line with 20-year normalised European inflation, yet operating and net income were significantly lower on a comparable, reported basis.

Its top line grew to almost €24.7bn, up 2.4% (+1.2% on a constant asset and exchange rates basis), against a 3.5% growth rate to €24.1bn one year earlier, while unadjusted operating income fell about 12% to €892m, both on a reported and constant scope/exchange rates basis, harming net profits.

Efforts aimed at reining in expenses, the group said, have not fully offset the accelerating decline in mail volumes. Moreover, higher costs from growing parcel activity in France, as well as Europe-wide pressure on express parcel margins, particularly in Germany, were also harder to manage than in the past.

On top of that, 2018 figures included the impact of new regulatory and tax provisions, “as well as the allocation of exceptional bonuses to employees, following the French President’s end-of-year speech, representing an impact on results of €144m”.

It is unclear the full extent of the recurring impact on its bottom line, which fell by €53m last year.

Group operating margins were down 60 basis points to 3.6%, resulting in net profits down to €798m from €851m one year earlier, while net income margin fell 30 basis points to 3.2%.

However, its balance sheet looked healthier, with net debt down to about €3.4bn from €3.8bn at the end of 2017, meaning the group is de-leveraging, as proved by some of its key debt/equity metrics. A stronger capital structure is due to the issuance of €750m of perpetual hybrid subordinated notes last April, which were “classified as equity”, as well as €299m of real estate disposals.

Its core Services-Mail-Parcels unit – 47% of group revenues, virtually unchanged as a percentage of total sales – saw flat revenues at €11.5bn, confirming previous years’ trends. The unit was responsible for 55% of its operating income, which came in at €495m, followed by GeoPost (€346m, 39%), which turned over €7.3bn last year.

Other key highlights included the takeover of Asendia, whose consolidation was responsible for a large portion of revenue growth at group level, and helped La Poste shore up its international mail and parcel activities, as well as “other acquisitions” in logistics, investments in industrial facilities and the issuance of the first green bond.

Chairman and chief executive Philippe Wahl noted “the robustness of our multi-business model has enabled us to continue our development in accordance with our strategic plan”.

Last year, Mr Wahl added, was challenging, in “various markets: decreasing mail volumes, historically low interest rates and pressure on parcel margins throughout Europe have led to a decline in our profits”.

A key highlight is the strategic equity alliance with Caisse des Dépôts, which is expected to “enable us, through equity investment, to accelerate our development for the benefit of our customers and local communities”.

Source: Transport Intelligence, February 28, 2019

Author: Alessandro Pasetti