Swiss Post stays on course in a challenging environment

The Swiss Post generated a profit of 259 million francs in the first half of 2022, which is 12 million francs more than in the first half of the previous year. With an operating result of 294 million francs, it was 55 million francs above the previous year’s figure, while revenue amounted to 3460 million francs, which is 104 million francs more than a year ago.

(Bern) Overall, the results are better than in the first half of 2021. This has further strengthened the Post’s financial foundation and prepared it for the challenges of the coming months. The sharp rise in energy, fuel, and raw material prices, as well as the significant increase in inflation, are leading to considerably higher costs for the Post – particularly in logistics.

The Swiss Post has had a financially positive first half of the year. Even after the second quarter of 2022, profit, operating result (EBIT), and revenue (operating income) are better than in the first half of the previous year. “The half-year results meet our expectations; the Post is strategically and financially on course,” says Alex Glanzmann, CFO of the Post. “We have built a solid financial foundation over the past few years and further strengthened it in the first half of 2022. The Post is well prepared for the challenges of the coming months,” adds Alex Glanzmann. Indeed, the economic environment is very challenging – notably the sharp rise in inflation, record-high energy, fuel, and raw material prices, potential supply bottlenecks for essential goods, the tense geopolitical situation with the war in Ukraine, and the subdued consumer sentiment. All of this also affects operations at the Post.

The boom in the parcel market is flattening

The logistics services sector made the largest contribution to the group result in the first half of the year. It achieved an operating result of 229 million francs – however, this is 36 million francs less than the previous year’s figure. While the number of letters decreased by 2.8 percent to 893.5 million pieces, parcel volumes saw a more significant decline in the first half of 2022. The Post processed 95.6 million parcels in the last six months, which is 5.1 percent less than a year ago. The previously unbroken trend towards online shopping was slowed down in the first six months of this year. The reasons for this are the subdued consumer sentiment and the almost completely lifted COVID-19 measures – people are shopping more in stores again. However, in the long term, the Post still expects sustained growth in parcels. For example, the current parcel volume is 41 percent larger than that in the first half of 2018. The Post is continuing to push ahead with the planned expansion of its infrastructure for parcel processing – as more capacity is needed in the medium and long term. Only in this way can the Post process and deliver the growing parcel volumes efficiently and environmentally friendly in the future.

However, the parcel market is highly competitive, with high pressure on margins and prices. The sharply rising energy, fuel, and raw material prices in recent months have further increased this pressure. “We feel this significantly. Sorting and delivery cost us considerably more than a year ago,” says CFO Alex Glanzmann. For 2022, the Post expects additional costs in the parcel business totaling between 30 and 40 million francs. The Post is trying to compensate for these as much as possible on its own and will bear them in the second half of 2022 as well. However, starting next year, the Post will have to pass on some of the higher costs. Therefore, from January 1, 2023, the Post will introduce a variable energy surcharge and an inflation surcharge on parcel services for business customers. Approximately 3500 business customers with individually agreed prices for national parcel services are affected.

Positive results at PostFinance with a clouded outlook

PostFinance made a significant contribution to the positive half-year result of the Post. The bank benefited in the first half of 2022 from higher revenues from account fees and interbank business. This allowed PostFinance to compensate for the ongoing decline in interest margin business. Additionally, higher revenues from commission and service business contributed to the good result. The increase in the key interest rate on June 17, 2022, is considered correct by the Post. The Post and PostFinance welcome the return to positive interest rates – also in the interest of customers. In the short term, however, the SNB’s interest rate step negatively affects revenues from account fees and interbank business. Therefore, PostFinance expects a significantly lower yield in the interest business for the second half of the year. Although the bank anticipates that the outlook for traditional interest margin business will improve again in the medium term, the recovery will only occur gradually.

PostNetz stable, PostAuto with significantly more passengers

PostNetz was able to maintain its results despite losses in letters and fewer deposits at the counter, while the communications services sector is still in the process of being established and is developing as planned. Mobility services increased their operating result by 5 million francs compared to the first half of 2021. Notably, PostAuto recorded 20 percent more passengers than a year ago. The reasons for this are the expanded offerings and the recovering demand.

“Post of tomorrow” is the right way

The current developments in the markets reinforce the Post’s belief that it is on the right track with its strategy “Post of tomorrow.” It is expanding its infrastructure for the Swiss economy and the population. By acquiring logistics companies in neighboring countries, it is also reducing dependence on global supply chains. The Post is also developing its offerings in line with new customer needs and is growing in new business areas. “We are fulfilling our promise even in difficult times and providing the Swiss population and economy with the best possible products and services – as a driver for a modern Switzerland,” says Post CFO Alex Glanzmann.

Photo: © Swiss Post