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Swiss Post achieves solid annual result in first year as public limited company
Swiss Post achieved a solid result in the first year following its conversion to a public limited company. It generated Group profit normalized to take account of one-off items of 626 million francs (previous year: 772 million francs). The decline of 146 million francs is primarily due to Swiss Post being fully subject to taxation for the first time as a result of the conversion to its new legal structure. Normalized operating profit (EBIT) rose to 911 million francs (previous year: 860 million francs). All four markets contributed to the good annual result.
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Since 2013, Swiss Post has been a public limited company wholly owned by the Swiss Confederation. In the first year following its conversion, the company generated Group profit normalized to take account of one-off items of 626 million francs, down 19 percent on the previous year (772 million francs). The decline of 146 million francs is due to Swiss Post being fully taxed for the first time as a result of its new legal structure. At 8,575 million francs, normalized operating income was virtually unchanged from the previous year (8,576 million francs). Thanks to good cost management, which produced a reduction in operating expenses, normalized operating profit (EBIT) rose to 911 million francs (previous year: 860 million francs). The operating profit margin (EBIT return) increased to 10.6 percent (previous year: 10.0 percent). Investments amounted to 453 million francs (previous year: 443 million francs) and were financed as before entirely from the company’s own resources. Total assets grew moderately to 120,383 million francs (previous year: 120,069 million francs).
Swiss Post continues to require sound results throughout all Group units in order to ensure a high-quality universal service in the long term. At the General Meeting, the Board of Directors will propose paying a dividend of 180 million francs to the Confederation. As at 31 December 2013, total equity stood at 5.6 billion francs (before appropriation of profit).
Good results in all four markets
Swiss Post achieved good results in all four markets, but the trends varied from market to market. The results of the individual Group units were influenced by the transition to a new system for the charging of internal services. From 2013, all internal services are charged at market prices or at full cost, replacing the partial cost approach with respect to use of the post office network. Consequently, PostFinance, Post Logistics and PostMail make higher internal payments for services.
In the communication market, Swiss Post with its three Group units (PostMail, Swiss Post Solutions, Post Offices & Sales) generated a normalized operating profit (EBIT) of 238 million francs (previous year: 42 million francs). The volume of addressed letters fell by 2.0 percent. By contrast, the volume of unaddressed items increased by around 1.7 percent as a result of acquisitions.
The PostMail unit, the strongest pillar in the communications market with operating income of 2,959 million francs (previous year: 3,102 million francs), generated normalized operating profit (EBIT) of 324 million francs (previous year: 346 million francs, with the figure adjusted to allow comparison after discontinuation of the infrastructure contribution for the benefit of the Post Offices & Sales segment). The decline was the result of the effects of the outsourcing of international business to the joint venture Asendia and declining turnover from newspapers and addressed letters.
Swiss Post Solutions generated operating income of 616 million francs (previous year: 549 million francs). The acquisitions of Scalaris AG in Switzerland and Pitney Bowes Management Services in the UK generated additional income that exceeded the related additional expenses. As a result, normalized operating profit (EBIT) rose to 5 million francs (previous year: 3 million francs).
With normalized operating income of 1,697 million francs (previous year: 1,509 million francs), the Post Offices & Sales unit achieved a normalized result of –91 million francs (previous year: –307 million francs, with the figure adjusted to facilitate comparison after discontinuation of the infrastructure contribution from the PostMail segment). The improvement was mainly due to higher internal payments for services and successful cost management. The volumes of letters sent by private customers and the inpayment transactions processed continued to decline. However, the volume of parcels handed in over the counter by private customers remained unchanged.
In the logistics market, PostLogistics reported a normalized operating profit (EBIT) of 133 million francs (previous year: 149 million francs). Operating income rose to 1,581 million francs (previous year: 1,535 million francs). Parcel volumes increased by more than 3 percent year-on-year. However, the additional sales could not offset additional expenses caused by significantly higher internal payments for services.
In the retail financial market, PostFinance generated a normalized operating profit (EBIT) of 537 million francs, down 86 million francs on the previous year (623 million francs). The decrease is primarily due to higher internal payments for services and lower net interest income due to reduced margins. PostFinance was however able to reverse previously incurred impairment charges, contributing 59 million francs to the result. With cash inflows of almost 4.3 billion francs, PostFinance again received a significant amount of new money, albeit to a lesser extent than in the previous year (9.2 billion francs). Because banks now have to underlay their deposits with PostFinance with their own equity, the year saw cash outflows in the interbank sector. Overall, customer assets rose to an average of over 112 billion francs (previous year: 104 billion francs). At year’s end, 2.9 million customers had placed their trust in PostFinance.
In the passenger transport market, PostBus reported a normalized operating profit (EBIT) of 28 million francs (previous year: 35 million francs). Due to the expansion of services and increased frequencies, operating income rose to 812 million francs (previous year: 778 million francs). However, this increase could not offset the additional expenses caused by the expansion of services, and by a higher headcount and increased project costs.
Result affected by exceptional one-off items
Swiss Post’s financial result includes the following one-off items in 2013:
- The result of an initial, one-off recognition of deferred taxes as a consequence of being subject to full liability for taxation with effect from 1 January 2013 and other tax effects.
- The result of the plan amendment in staff costs resulting from adjustments to the principles underlying the Swiss Post pension fund.
- The negative impact on earnings of a provision due to an adjustment of the value of Swiss Post’s performance obligation from stamp sales.
The financial impact of these one-off items has been normalized to facilitate comparison with the previous year’s figures and to give an accurate representation of operating business. These are non-cash items and have no effect on distributable profit.
Growing challenges
The challenges facing Swiss Post are many and varied. Swiss Post will meet these challenges by following a strategy of long-term, gradual growth, by further optimizing costs in a socially responsible manner, and by pursuing market-driven pricing policies.
Swiss Post intends to continue providing its customers with first-class services in all four markets. Strategically, Swiss Post is focusing on the changes in customer behaviour and the new dynamics driven by technological change. As an integrated system provider, Swiss Post offers all-in solutions, reinforces and expands its core business with digital products, and creates growth potentials with innovative services – including in new business areas.
Group key figures
| Key figures | Unit | 2013 | 2012 |
|---|---|---|---|
| Operating income | CHF m | 8,470 | 8,576 |
| Normalized operating income[1] | CHF m | 8,575 | 8,576 |
| Operating profit (EBIT)[2] | CHF m | 1,241 | 860 |
| Normalized operating profit (EBIT)[1],[2] | CHF m | 911 | 860 |
| As % of operating income (EBIT return)[1] | % | 10,6 | 10,0 |
| Group profit | CHF m | 1,751 | 772 |
| Normalized Group profit[1] | CHF m | 626 | 772 |
| Total assets | CHF m | 120,383 | 120,069 |
| Equity | CHF m | 5,637 | 3,145 |
| Investments[3] | CHF m | 453 | 443 |
| Employees at Group (excluding trainees) | Full-time equivalents[4] | 44,105 | 44,605 |
| Of which abroad | Full-time equivalents[4] | 6,779 | 6,621 |
| Group trainees in Switzerland | Full-time equivalents | 2,024 | 2,015 |
| Addressed letters | Millions of items sent | 2,245 | 2,291 |
| Parcels | Millions of items sent | 114 | 111 |
1 ↑ Figures normalized to take account of one-off items.
2 ↑ Operating profit corresponds to the result before non-operating financial income and taxes (EBIT).
3 ↑ Investments in property, plant and equipment, shareholdings and intangible assets.
4 ↑ Average headcount expressed in terms of full-time equivalents (excluding trainees).
PostFinance Ltd key figures
| Key figures | Unit | 2013 | 2012 |
|---|---|---|---|
| Number of customers | Thousands | 2,888 | 2,922 |
| Number of customer accounts including pillar 3a | Thousands | 4,628 | 4,520 |
| Customer assets[1] | CHF m | 112,036 | 103,850 |
| Funds, securities, life insurance[1] | CHF m | 5,495 | 4,692 |
| Mortgages[2] | CHF m | 4,424 | 4,167 |
| Loans to business customers (taken up) | CHF m | 7,271 | 6,379 |
| E-finance users | Thousands | 1,546 | 1,463 |
| Headcount | Full-time equivalents[3] | 3,432 | 3,473 |
| Transactions processed | Millions, cumulative | 965 | 932 |
1 ↑ Cumulative average
2 ↑ PostFinance does not provide mortgages independently. It works with partner banks to do so.
3 ↑ Average headcount expressed in terms of full-time equivalents.
Selected key figures per segment (Group units)
| Communication market | Figure | Unit | 2013 | 2012 |
|---|---|---|---|---|
| Communication market | Operating profit EBIT[1],[2],[3] | CHF m | 238 | 42 |
| PostMail | Operating income[1] | CHF m | 2,959 | 3,102 |
| PostMail | Operating profit (EBIT)[1],[2],[3] | CHF m | 324 | 346 |
| Swiss Post Solutions | Operating income[1] | CHF m | 616 | 549 |
| Swiss Post Solutions | Operating profit (EBIT)[1],[2],[3] | CHF m | 5 | 3 |
| Post Offices & Sales | Operating income[1],[3] | CHF m | 1,697 | 1,509 |
| Post Offices & Sales | Operating profit (EBIT)[1],[2],[3] | CHF m | -91 | -307 |
| Logistics market | Figure | Unit | 2013 | 2012 |
|---|---|---|---|---|
| PostLogistics | Operating income[1] | CHF m | 1,581 | 1,535 |
| PostLogistics | Operating profit (EBIT)[1],[2],[3] | CHF m | 133 | 149 |
| Retail financial market | Figure | Unit | 2013 | 2012 |
|---|---|---|---|---|
| PostFinance[4] | Operating income[1] | CHF m | 2,377 | 2,356 |
| PostFinance[4] | Operating profit (EBIT)[1],[2],[3] | CHF m | 537 | 623 |
| PostFinance[4] | Inflow of new money | CHF m | 4,256 | 9,200 |
| Public passenger transport market | Figure | Unit | 2013 | 2012 |
|---|---|---|---|---|
| PostBus[5] | Operating income[1] | CHF m | 812 | 778 |
| PostBus[5] | Operating profit (EBIT)[1],[2],[3] | CHF m | 28 | 35 |
| PostBus[5] | Number of passengers in Switzerland | Persons (in millions) | 139 | 133[6] |
1 ↑ Operating income and operating profit (EBIT) by segment are now reported before management and licence fees and net cost compensation. The prior-year amounts have been adjusted.
2 ↑ Operating profit corresponds to the result before non-operating financial income and taxes (EBIT).
3 ↑ Figures normalized to take account of one-off items.
4 ↑ PostFinance is regulated by the Swiss Financial Market Supervisory Authority (FINMA) and therefore subject to its Bank Accounting Guidelines (BAG). There are differences between BAG and IFRS.
5 ↑ Within regional public transport, PostBus is subject to the DETEC ordinance on the accounting of licensed businesses (RKV). There are differences between RKV and IFRS.
6 ↑ Figures adjusted due to the switch to system-based levies in the regions of Ticino and Valais.