“Swiss Post is on a solid financial footing”
The coronavirus crisis had a major impact on Swiss Post’s interim results. In the first six months of the year, Swiss Post generated operating profit of 61 million francs. That is 208 million down on the previous year. Group profit came in at 30 million francs, which represents a decline of 163 million francs. Head of Finance Alex Glanzmann looks at the results in an interview and explains why there is still nothing to stop the new strategy from being implemented. In fact, quite the opposite.
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Alex Glanzmann, the coronavirus outbreak has pretty much dominated our everyday lives since March. What impact has the pandemic had on Swiss Post?
Recent months have highlighted just how important Swiss Post is to the people of this country and to the Swiss economy. The coronavirus pandemic has intensified long-term trends in the postal sector. This means fewer letters but more parcels are being sent. I’ve been really impressed by how our employees have risen to the challenges presented by the pandemic and are reliably providing postal services for Switzerland day in, day out. In April alone, we handled 17 million parcels – a new record. Swiss Post showed its strength during the crisis.
However Swiss Post’s result is down on the previous year despite all the efforts made. Why is that?
People have been shopping much more online due to the coronavirus pandemic. This is reflected in parcel volumes, which are up by 22 percent on the previous year. It also explains why PostLogistics’ operating profit of 108 million francs is 40 million up on the previous year’s figure. But the remaining business units posted sharp declines in their results, specifically, in some cases, as a result of the coronavirus crisis. Overall this led to a poorer Group result for the first half-year. Depending on economic performance and the coronavirus situation, we have to expect a year-end decline in profit in the low hundreds of millions.
What impact will the poorer result have on Swiss Post exactly?
The significant fall in profit clearly means we will build up fewer additional funds, but Swiss Post still remains on a solid financial footing. However the further development of Swiss Post is essential – the trend of fewer letters but lots more parcels alone highlights this. We can finance all required and planned investments, our services and the universal service from our own resources. The trends – the increase in parcels and decline in letters – are clearly set to continue. The interim results reaffirm our view that we must continue to drive forward Swiss Post’s development. We’re doing so with the new “Swiss Post of tomorrow” strategy.
Can the new strategy be implemented as planned despite the poorer result?
Nothing is preventing us from implementing the strategy. As I said, Swiss Post is on a sound financial footing: over the past seven years since Swiss Post became a company limited by shares, we have built up financial reserves of 1.3 billion francs. That is a very strong basis for taking the company forward – but we need to go ahead with the implementation in a systematic, targeted way.
What do you expect from the new Group strategy as Head of Finance?
My priority is to ensure Swiss Post remains a healthy, competitive company relevant to Switzerland, which can finance the universal service from its own resources and offers attractive, viable jobs for the future. We additionally aim to stabilize our operating profit at around 400 million francs by 2024. To achieve this we are investing an additional 200 to 400 million francs each year over the next few years – primarily in the two growth areas of logistics and communication services.