While reporting strong operating profit growth, outgoing Swiss Post CEO Robert Cirillo said, “Swiss Post provides the universal service without using taxpayers’ money. To ensure this remains the case, postal legislation will need to be adapted to the real need of the general public and companies.”
Overall operating profit was up 24.1% y-o-y to CHF401m on revenues up 4.8% to CHF7,626m. Its core business of letter and parcel delivery reported very strong profit growth and revenues despite falling volumes.
Mail and parcel volumes in decline
Though in the eyes of Swiss Post’s leadership a hiccup in the ongoing trend of parcel volume growth, in 2024 parcel volumes declined by 2.9% y-o-y to 180m pieces. To add to this was the continued decline in mail volumes, this time down 5.5% to 1.56bn pieces.
Even so, the Logistics segment achieved 31.0% y-o-y operating profit growth to CHF439m on revenue that grew 5.6% to CHF4,358m, resulting in a margin growth of 1.97 basis points. For many postal operators around the world this is profit growth and margin that they can only dream of.
From April this year, former CFO Alex Glanzmann will be interim CEO of the postal operator. He said, “The price adjustments implemented at the beginning of of 2024 have offset the structural decline in letter volumes for the time being. With the efficiency programmes over the past four years, we have managed to reduce our costs [but] the structural decline in volumes will continue.”
Swiss Post is one of the most highly regarded postal operators on continental Europe thanks in part due to previous universal service reform that has been underway in some form or another since 2019. Even so, Cirillo said, “It is now up to politicians to give Swiss Post sufficient freedom for it to remain successful.”
The company has stated “In Swiss Post’s view, access to postal services should be guaranteed but not too rigidly imposed.” Chair of the Board of Swiss Post added, “Switzerland needs a strong public service beyond 2030. We have to start developing this now.”
New reforms have been signalled by the Federal Council including all Swiss residents being offered digital mail boxes where they are able to choose to have all mail sent as opposed to paper letter mail.
Among other service level initiatives, Swiss Post now offers real-time, live tracking of parcels 15 minutes before delivery. Where this is only applicable in parcel-only delivery rounds, there are plans for this to be rolled out to mixed mail and parcel rounds too.
PostalNetwork – increasing losses
Where the universal service obligation business reported stronger margins and healthy profit, Swiss Post’s achilles heel seems to be the post office arm PostalNetwork. The division reported an increase in operating losses in 2024 to CHF113m from CHF 93m in 2023, on revenues that fell 1.1% y-o-y to CHF541m.
As with almost every postal operator in the world, the post office network is often the state’s main point of contact with its citizens, and Swiss Post has a network of close to 2,000 staffed locations across what is still quite a small country (for comparison, Australia Post has roughly double that over a vast geographical area). It reported a 10.7% y-o-y fall in payment transactions and the parent company invested CHF100m in its service offering.
High expectations in a country known for precision
Switzerland has a reputation for high quality, from almost perfectly clean streets to their world leading watches and engineering. Looking at the financials of its postal operator (not to mention the quality of service offered for that) and comparing them to any number of other universal service obligation operators, one could be forgiven for wondering why reform is needed? Such reform has been underway for many years longer than the others in Europe, and this is perhaps why Swiss Post is a generation ahead of its fellows. However, in a country where high standards are so often offered it becomes an expectation, and that is perhaps why Swiss Post seeks further reform, even if that means letters might be delivered slightly later.
Author – Richard Shrubb
Source: Ti Insight
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