Swiss Post calls for renegotiation on USO as profits fall 9.8%

Swiss Post reports revenue

In part blaming the universal service obligation for its financial woes, Swiss Post reported a 9.8% y-o-y fall in EBIT to CHF 323m (€335m) on revenues up by 6.1% to CHF 7,279m (€7,534m) in 2023.

Across the company’s business lines:

  • Logistics Services had a 6.4% decline in operating profit to CHF 335m (€348m) on revenues that declined by 1.6% to CHF 4,124m (€4,283m)
  • The Postal Network saw a 5.2% decline in operating income to CHF 547m (€567m) and a 31% increase in losses to CHF 91m (€94.5m)

Where the banking arm of Swiss Post benefitted from high interest rates, these economic conditions posed a negative force on other elements of the business, notably parcels. In 2023, parcel volumes fell by 4.6% y-o-y to 185m pieces, caused by high interest rates and inflation that impacted consumer confidence. It also affected advertising in the country, which in turn led to direct mail volume declines.

Swiss Post CFO Alex Glanzmann said the overall financial result “reflects the decline in volumes in our core business as well as the impact of inflation. This means it’s vitally important that we continue to expand where new requirements emerge and adapt or optimise our services where demand is falling.”

Universal service obligation under review?

Letter volumes fell by 5.6% y-o-y to 1,647m pieces, led in a large part by the pan-European decline in demand for letter mail. In its 2023 Annual Report, the Swiss postal operator says that of the universal service obligation that it receives no state aid for its monopoly on mail items under 50 grammes, and costs Swiss Post CHF 260m (€270m) a year.

CEO Robert Cirillo said, “We want to continue providing the highest level of quality worldwide for our universal service products – in other words, our services for letters, parcels and payment transactions.”

The company said in the Annual Report, “Swiss Post wants to continue providing a contemporary and relevant public service for the Swiss population and economy: a relevant, high quality universal service that is present in all regions in the country, and it wants to continue providing this service without state support. However, this requires the current statutory framework to be modernised and modified in line with the changing needs of the public and the economy.”

The Swiss government has not responded to this call for the variation in the USO, though may well do in the coming months. Thanks to the country’s unique referendum system, such a response may well lead to a public vote on the matter. A number of other European countries have varied their USOs in recent months, and the ongoing financial situation faced by Swiss Post may well lead to public debate around the issue. For now the government is apparently silent. 

Author: Richard Shrubb