Weaker mail volumes at La Poste offset by performance at GeoPost division

La Poste’s revenue grew just 1.1% to €23.3bn in 2016, while operating income came in at €975m, up 11.5%, after intercompany and unallocated losses, as well as other eliminations, were included. 

The company’s operating margin improved by 40 basis points to 4.2%, while net income margin climbed by 80 basis points to 3.6%, resulting in net income of €849m for the year, up 33.6% against 2015. However, exchange rate swings hit profits to the tune of €177m, mainly due to the weakness in sterling.

Other headline figures included €3.7bn of net debt, which rose slightly by €62m, and a significantly higher book value of equity. In the year, La Poste devoted €1.14bn to capital expenditures, up almost 15% on the year before. That represented 4.9% of annual sales.

Annual revenues in its core services – the mail and parcels businesses – dropped 0.9%, with turnover from service and mail alone, which accounted for 80% of the unit’s total sales falling 2% to €9.15bn, due to “declining addressed mail volumes (-5.2%) as well as an unfavourable mix/product effect”, which were partly offset by growth in other areas.

Meanwhile, “parcels (Colissimo) achieved a 3.6% increase in revenue to €1.65bn”, boosted by an annual volume growth of 6.6%, particularly helped by a strong fourth quarter, although this was partly offset by the price/customer mix.

Combined operating income from services, mail and parcels dropped 16.2% to €584m from €697m one year earlier, but its profit gains elsewhere were material. 

In fact, the sizeable GeoPost division saw turnover grow 8.6% to €6.1bn, backed by strong volumes growth of 11.2%.

This unit is strategically important, as it covers the business-to-business and business-to-consumer deferred express markets in both France and abroad. It was also boosted by positive trends in new market segments “such as temperature-controlled product transportation in the pharmaceutical/healthcare and food product industries”.

Notably, GeoPost’s operating income surged 63.6% to €438m, compared to €268m in 2015, thanks to the “combined effect of rising volume and cost control” as well as several acquisitions (Armadillo, JadLog, and others). 

Other unrelated units such as La Banque Postale (2016 revenues: €5.6bn) and Digital Services (2016 revenues: €609m) enjoyed mixed fortunes, with the latter being by the best performer in growth terms, although La Banque Postale remains the largest and most stable profit pool at group level, despite operating income being down 2% to €834m in the past year.

Source: Transport Intelligence, February 28, 2017

Author: Alessandro Pasetti