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Swiss Post on track in challenging market environment

In the first three quarters of 2014, Swiss Post generated Group profit of 494 million francs (previous year: 535 million francs). At 632 million francs, operating profit (EBIT) is down on the previous year’s figure (769 million francs). This decrease is due to lower operating profit in the retail financial market. Operating profit increased in the passenger transport market and also improved in the communication and logistics market thanks to good cost management.

After the first nine months of 2014, Group profit at Swiss Post stood at 494 million francs, which represents a decline of 7.7 (7.663) percent year-on-year. Operating profit fell by 137 million francs to 632 million francs. The decline in operating profit is due to the lower contribution to results from the retail financial market. The number of addressed letters continued to fall. The logistics market faced intense competition.

In the communication market, Swiss Post recorded an operating profit of 188 million francs in the three quarters of 2014 (previous year: 178 million francs). This improvement is due to positive income trends in the Swiss Post Solutions segment and lower expenses in the PostMail segment. Operating income at PostMail and Post Offices & Sales decreased as a result of volume factors. The number of addressed letters fell by 2.5 percent, while the number of unaddressed items was up 2.7 percent. In the logistics market, Swiss Post recorded an operating profit of 97 million francs, which is around three million francs more than in the prior-year period. The increase is due to business optimization measures. Operating income declined as a result of intense competition. Parcel volumes rose by two percent. The passenger transport market is growing steadily. Swiss Post achieved an operating profit of 36 million francs in this market (previous year: 27 million francs). This increase was mainly due to the expansion of services in Switzerland and France as well as to one-off transport revenue, particularly as a result of adjustments to cost apportionment of the fare networks.

PostFinance result impacted by higher impairment charges

In the retail financial market, PostFinance is still facing a difficult market environment due to persistently low interest rates, recording an operating profit of 309 million francs (previous year: 443 million francs). Net interest income before impairment remained virtually on a par with the prior-year period despite increased customer deposits. Higher portfolio impairment charges and a rise in non-staff costs led to a drop in results. The inflow of new money totalled 1,010 million francs in the first three quarters of the year, and average customer assets comprised 115 billion francs in September.

Outlook

In light of the current position, Swiss Post expects to record a solid result for 2014 as a whole. Group profit may however be below the previous year’s level.

Group key figures

Unit Q1 - Q3
2014
Q1 - Q3
2013
Year
2013
Operating income[1] CHF m 6,183 6,257 8,575
Operating profit (EBIT)[1],[2] CHF m 632 769 911
As a % of operating income (EBIT return) % 10.2 12.3 10.6
Group profit[1] CHF m 494 535 626
Total assets CHF m 123,949 118,184 120,383
Equity CHF m 5,431 4,967 5,637
Cash flow from investing activities CHF m -528 -196 -309
Employees at Swiss Post Group FTEs[3] 44,687 43,855 44,105

1  Previous year’s figures normalized to take account of one-off items
2  Operating profit corresponds to earnings before net non-operating financial income and taxes (EBIT).
3  FTEs = Full-time equivalents. Average expressed in terms of full-time equivalents, excluding trainees.

PostFinance Ltd key figures

Unit[1] Q1 - Q3
2014
Q1 - Q3
2013
Year
2013
Number of customers Thousands 2,928 2,958 2,888
Number of customer accounts[2] Thousands 4,726 4,597 4,628
Inflow of new money[3] CHF m 1,010 563 4,256
Customer assets[3] CHF m 115,467 109,605 113,580
Customer assets in partner solutions[3] CHF m 6,825 5,753 6,042
Mortgages[4] CHF m 4,621 4,355 4,424
Loans to business customers (taken up) CHF m 7,926 7,116 7,271
E-finance users Thousands 1,607 1,528 1,546
Headcount FTEs[5] 3,433 3,436 3,432
Transactions processed Millions,
cumulative
727 704 965

1  At end of period (unless otherwise stated)
2  New calculation from 1.1.2014
3  Monthly average from 2014, previous years restated
4  In cooperation with partner banks
5  FTEs = Full-time equivalents. Average expressed in terms of full-time equivalents. Headcount at PostFinance parent company

Selected key figures per segment (Group units)

30 September 2014 Operating income
(CHF m)[1]
Operating profit
(CHF m)[1],[2]
Communication market 3,500 188
PostMail 2,113 259
Swiss Post Solutions 483 8
Post Offices & Sales 1,168 -79
Logistics market PostLogistics 1,138 97
Retail financial market PostFinance[3] 1,688 309
Passenger transport market PostBus[4] 627 36
Other[5] 650 2
30 September 2013 Operating income
(CHF m)[1],[6]
Operating profit
(CHF m)[1],[2],[6]
Communication market 3,496 178
PostMail 2,158 248
Swiss Post Solutions 426 0
Post Offices & Sales 1,192 -70
Logistics market PostLogistics 1,152 94
Retail financial market PostFinance[3] 1,780 443
Passenger transport market PostBus[4] 602 27
Other[5] 668 27

1  Operating income and operating profit by segment are reported before management, licence fee and net cost compensation.
2  Operating profit corresponds to earnings before net non-operating financial income/expenses and taxes (EBIT).
3  PostFinance Ltd also applies the Swiss Financial Market Supervisory Authority’s Bank Accounting Guidelines (BAG). There are differences between the BAG and the IFRS results.
4  In the field of regional public transport, PostBus Switzerland Ltd is subject to the DETEC ordinance on the accounting of licensed businesses (RKV). There are differences between the RKV and the IFRS results.
5  Includes service units (Real Estate and Information Technology) and management units (e.g. Human Resources, Finance and Communication).
6  Normalized figures