Swiss Post’s Group result is in line with expectations in a challenging market. Thanks to the great commitment of the different business units and their employees, the result is declining less steeply than the deterioration in the operating framework, says Head of Finance Alex Glanzmann.
Swiss Post has a stable financial basis and a healthy equity and liquidity situation. All investments are financed entirely from our own resources. However, the pressure on the result and on income is increasing significantly. Our calculations show that unless we take countermeasures in the next two to three years, Swiss Post’s financial situation will continue to deteriorate over the next ten years.
The Group result still shows that, despite difficult market conditions, the individual business units are working very well, acting entrepreneurially and tackling the challenges they face. However, the pressure on Swiss Post must not be increased by additional regulatory requirements. Swiss Post wants to continue to finance all investments, and in particular the universal service, from its own resources in the future.
The decline in letter volumes is a fact we’ve faced for years. It is caused primarily by the digitization of our business customers’ operational processes, but of course also by the fact that our private customers are sending fewer letters. Thanks to optimization and efficiency measures, PostMail is managing to optimize operating expenses and keep its result stable. Nevertheless, the decline in letter volumes has a considerable impact: a fall of 1 percent in letter volume reduces EBIT by around 9 million francs – and last year, 4.8 percent fewer letters were sent.
We must have a clear focus to our investment strategy and set our course for the future.
Although units such as PostLogistics and Swiss Post Solutions are growth areas, they cannot offset the negative trends. The parcel market is fully deregulated, the price wars are tough and margins are slim. Swiss Post is also investing massively in processes and infrastructure to ensure the usual high standard of processing is maintained as volumes rise.
Despite the low interest income, PostFinance is generating a stable result. However, a reversal of the trend in interest operations is neither foreseeable nor realistic. In addition, the requirements for capital accumulation as a systemically important bank are increasing the pressure on Swiss Post’s result.
We are already working on them by further improving our efficiency in all units and by making clear decisions as to where the Group should or should not continue to invest. Swiss Post can build on its stable foundations, develop new business areas and modernize the universal service. To do so, we are taking advantage of our healthy equity base and good liquidity. The cornerstones for this ongoing development of Swiss Post are currently being set out in the strategy for 2021 and the following years.