Swiss Post’s Q3 2023 results impacted by lower letter and parcel volumes

Express parcels

As expected, 2023 remains a financially challenging year for Swiss Post: up until the end of September 2023, it had generated an operating profit (EBIT) of CHF 208m, which is CHF 137m less than the previous year’s figure. Profit amounts to CHF 145m, CHF 142m below the previous year’s level. The result reflects the challenging market environment and the accelerated trend towards digitization. Swiss Post is confident that the turnaround in interest rates and its consistent implementation of the “Swiss Post of tomorrow” strategy will have a positive impact on the result as early as 2024.

Subdued consumer confidence, the advancement of digitization and inflation continue to weigh on Swiss Post’s result. At CHF 208m, operating profit at the end of September was CHF 137m below the previous year’s figure. Alex Glanzmann, CFO at Swiss Post, explains: “The result is in line with expectations. It reflects the challenging operating framework.” Profit fell by CHF 142m to CH F145m. The sale of the subsidiary Swiss Post Solutions, which had a positive impact on profit in the previous year, remains a key factor here. Operating income as at 30 September 2023 came in at CHF 5,285bn – that is 4.2 %, or CHF 211m, more than in the same period of the previous year.

6.6 % fewer letters and 5.1 % fewer parcels

In the logistics business, Swiss Post generated operating profit of CHF 201m in the first nine months of 2023, down CHF 77m francs year-on-year. Demand fell in all major product groups: by 6.6 % for letters, by 8.5 % for unaddressed promotional mailings and by 5.1 % for parcels. Declining volumes in letters and parcels had a significant effect on over-the-counter transactions at PostalNetwork. With counter payments also declining by 19.6 %, PostalNetwork’s result was down by CHF 16m. Mobility Services’ EBIT decreased by 8 million francs. Over the first nine months of the year, PostBus transported 132 million passengers, which is 15 million more than the previous year’s figure. Ticket revenue rose, whereas compensatory payments from the public sector fell. Overall, the income was not sufficient to cover higher costs. Communication Services increased operating income through strategic acquisitions, primarily in the e-government, secure customer communication and cybersecurity sectors. By doing so, Swiss Post is promoting digital transformation in Switzerland with secure and trustworthy solutions. However, expanding digital services takes time. This means Communication Services continues to post a negative result, as expected.

Encouraging outlook at PostFinance

From 1 January to 30 September 2023, PostFinance generated an operating profit of CHF 200 m, down CHF 18m year-on-year. By the end of September, rising capital market interest rates and interest paid on deposits held with the Swiss National Bank (SNB) were still unable to offset the loss of income from the negative interest environment. In the current interest rate environment, PostFinance expects an increase in the interest margin and continual improvement in its earnings situation. PostFinance continues to enjoy a high level of customer trust. With the turnaround in interest rates, customer deposits have risen by CHF 500m compared with the previous year. Non-interest-sensitive customer assets, such as funds and e-trading, have increased by CHF 2.1bn since September 2022.

Swiss Post is investing in the future with “Swiss Post of tomorrow”

For 2023, Swiss Post expects the result to be down on the previous year. It is confident that the interest rate trend and its consistent implementation of the “Swiss Post of tomorrow” strategy will have a positive impact on the result from next year. The “Swiss Post of tomorrow” strategy is based on the four pillars of development, growth, efficiency and pricing as well as corporate responsibility. “With the ‘Swiss Post of tomorrow’ strategy, we’re transforming Swiss Post and investing in our future. But we’re also working on our costs. We firmly believe we’re on the right path and will continue to consistently pursue it,” says Alex Glanzmann. “The volume developments clearly show that Swiss Post has to adapt its business model. That’s why we’re expanding our digital business for customers.”

Source: Swiss Post