Singpost Records Net Profit Growth of 2.5 percent for Q4 - May 18, 2009 [Press Release.]Weak economy impacted Group performance in fourth quarter
The Group’s revenue declined by 2.9 percent to S$115.6 million in Q4 FY2008/09, against the backdrop of a continuing weak economy.
Mail business posted a 2.1 percent drop in revenue to S$88.7 million, as a result of the decline in international mail contribution. Logistics revenue held steady against the same quarter last year. In Retail, revenue dipped 7.7 percent to S$16.1 million, attributed mainly to lower retail product sales.
Rental and property-related income improved by 49.7 percent to S$9.7 million as a result of higher rental income from Singapore Post Centre as well as additional income from the leasing of space at re-purposed post office buildings.
With prudent cost management and the reduction in labour and related expenses due mainly to benefits from the Jobs Credit Scheme, the Group’s total expenses was reduced by 6.5 percent in the fourth quarter. Lower depreciation expenses, compared to the same quarter last year which included an impairment charge of S$4.9 million for property, plant and equipment, also contributed to the reduction in total expenses. Additional provisions were made for doubtful debts in view of the poor economic environment.
Operating profit increased by 11.7 percent while net profit rose 2.5 percent to S$35.3 million.
Said Mr Wilson Tan, Group Chief Executive Officer of Singapore Post: “In the fourth quarter, we see the impact of the downturn on our business. While we have been focusing on cost containment and reduction, we have also been proactively seeking growth opportunities both locally and in the region.”
In the last quarter, SingPost has rolled out several new initiatives. In the area of Logistics, it launched S3 or Self-Storage Solutions, a one-stop integrated suite of services spanning warehousing, fulfillment and delivery, targeted at residential and commercial customers. On the Retail front, SingPost partnered United Overseas Bank to distribute HDB Home Loans at four post offices. It plans to offer the product at 24 post offices by the end of the year. During the quarter, SingPost also opened up an additional channel for remittances to Indonesia via its network of SAMs. Remittances to the Philippines and Visa Money Transfer are already available on SAMs.
On the regional front, SingPost had recently signed an agreement to acquire the remaining 50 percent stake in G3 Worldwide Aspac, a joint venture offering cross border mail logistics solutions in 10 countries/territories in Asia Pacific. With this acquisition, theGroup has a ready platform to extend and expand its footprint in the region.
Strong first half performance boosts full-year results
The Group’s revenue for the full year grew 1.8 percent to S$481.1 million. This was largely due to the stronger operating performance in the first half.
Mail revenue grew marginally by 0.9 percent to S$368.5 million in FY2008/09 while revenue from Logistics rose 5.5 percent to S$$72.4 million. Retail revenue increased 6 percent to S$65.3million.
Rental and property-related income increased 39.8 percent during the year as the Group benefited from higher rental income at Singapore Post Centre and the leasing of space at re-purposed post offices. Miscellaneous income was lower, due mainly to one-off items including the gains amounting to S$7.3 million largely from the disposal of two properties in the previous financial year.
The Group’s total expenses rose 1.5 percent in FY2008/09 while its net profit decreased by0.3 percent to S$148.8 million.
Said Mr Wilson Tan: “The outlook has become even grimmer, with the recession now further compounded by the unexpected outbreak of the swine flu. A continued deterioration in the economy will have an impact on the Group. We will manage by being prudent with costs and make the necessary adjustments on our business and processes to enhance efficiency and productivity.”
“We have activated our business contingency plans to ensure that there is no disruption to service and our customers can continue to rely on us as they did during the SARs outbreak. Precautionary measures have also been put in place to safeguard our staff during this period.”
He added: “Despite the difficult environment, we will continue to seek opportunities to build on our business and position ourselves for growth. We are looking at the regional markets and the recent acquisition of G3 Worldwide Aspac is a move in that direction. We will extend our core competencies into the region. The rapid growth in internet and m-commerce usage has also presented a new opportunity for us to extend our competencies into the e-space.”
Proposed final
The Group’s cash flow generation ability remained healthy. Free cashflow (net cash inflow from operating activities less cash capital expenditure) amounted to S$155.9million for FY2008/09, compared to S$160.9 million for the previous financial year.
In view of the Group’s current healthy cash flows, the Board of Directors is recommending a final dividend of 2.5 cents per share for FY2008/09. Together with the interim dividend payments of 1.25 cents per share for each of the first three quarters ofthe financial year, the total dividend for FY2008/09 would amount to 6.25 cents per share. The final dividend is subject to shareholders’ approval at the Annual General Meeting.
Royal Mail Group Increases Profit In The Face Of Tough Market And Economic Conditions But Challenges Remain - May 14, 2009 [Press Release.]Royal Mail Group made good progress in 2008-09 with operating profit increasing to 321 million pounds from 162 million pounds the previous year. First and Second Class letter targets were hit along with key business mail targets, and a raft of modernisation and efficiency measures introduced. Competition from electronic media and other postal operators intensified with almost ten million fewer letters a day being handled than just three years ago but the transformation of the business is well underway and on track to ensure it has the modern operation key to its future.
The Group’s performance came in the face of the worst economic conditions in decades. The robust performance in the face of such difficult market conditions underlines the long journey Royal Mail has taken from the time, seven years ago, when it was losing more than 1 million pounds a day and failing most of its quality targets to the position today where it is profitable and meeting its quality targets.
However real challenges remain:
- Mail volumes fell by 5.5 per cent during the year and are predicted to decline by a further 10 per cent in the current financial year due to competition from electronic communications and the economic downturn - with every 1 percent decline costing 70m pounds in revenue.
- The pension fund deficit has more than doubled since last year to 6.8 billion pounds in accounting terms with the actuarial valuation also likely to have increased significantly when it is revalued later this year.
- Cashflow is negative with an outflow in the year of 373m pounds as we step up our spending on modernising the business and continue to pay around 800 million pounds a year into the pension fund.
- The need to accelerate still further the modernisation of the mails business so that we can offset the challenges we face and continue to provide our customers with an affordable and high quality Universal Service: Royal Mail letters is already investing in equipment including handheld tracking devices, sophisticated machines to sort letters to the exact sequence in which they are delivered and a range of new delivery equipment better suited to the packets and parcels business on which our future depends.
- The need for fairer regulation that reflects the market in which we now operate with competition growing from electronic media as well as other postal operators.
- Key to our success is working with the Government to resolve the issues identified in the Hooper review of the industry.
Highlights
• Overall Group revenue increased by almost 2 percent to 9,560 million pounds despite the recession and the fall in mail volumes.
• The Group made an operating profit of 321 million pounds compared with 162 million pounds in 2007-8.
• All four Group businesses are in full-year profit for the first time in two decades - with Royal Mail Letters and the Post Office both moving from loss the previous year into profit.
• There was strong progress in modernising the Letters business and improving its efficiency in both deliveries and in sorting the mail. This helped the business to hit almost all its quality targets.
• There was an underlying 1.2 percent revenue increase in Post Office Ltd. When the annual 150 million pounds Social Network Payment to support loss-making Post Office branches is taken into account, the business made a 41 million pounds profit compared to a loss the previous year of 34 million pounds - a 75 million pounds improvement.
• GLS’s revenue and profit both benefitted from the strengthening of the euro against Sterling but underlying profit declined by 10 million pounds as trading got tougher in the second half of the year - in spite of an underlying revenue growth of 36 million pounds (2.4 percent) when the beneficial exchange rate was discounted.
• Parcelforce Worldwide grew its revenues in the face of the economic recession and increased its efficiency, achieving a 50 percent increase in operating profit to 12 million pounds.
Adam Crozier, Royal Mail Group’s Chief Executive, said: "Our people have delivered strong financial results and high quality customer service across all our businesses in the face of extremely challenging trading conditions. All four of the Group’s businesses are now in full-year profit for the first time in two decades, including Royal Mail Letters which made a small profit compared to the previous year’s loss, despite accelerating mail volume losses which mean the business is now handling ten per cent fewer letters and packets than a year ago."
Canada Post Announces Slim Profit For 2008 - May 14, 2009 [Press Release.]Canada Post Corporation reported a slim profit in its 2008 annual report, which was tabled in Parliament. The Corporation recorded a consolidated net income of $90 million on revenues of $7.7 billion. To remain profitable and meet its targets, Canada Post had to undertake a series of cost-cutting measures that enabled the Corporation to achieve a narrow operating margin of 1.8 per cent. Without these extraordinary efforts to reduce costs, the Canada Post segment (unconsolidated) would have lost more than $150 million.
The current economic crisis has not spared Canada Post. The fiscal period ending December 31, 2008, was one of the most challenging since the early 1990s for the 28-year-old Crown corporation. In spite of these challenges, Canada Post met the on-time service performance target of 96 per cent for the on-time delivery of Lettermail.
“I thank the Corporation’s dedicated and determined team of 72,000 employees for helping Canada Post meet its service promise to Canadians and to remain profitable in 2008,” said Rob Merrifield, Minister of State (Transport), responsible for Canada Post. “I am convinced that we have the committed management team and dedicated employees we need to continue to operate during this difficult economic downturn,” added Marc A. Courtois, chairman of Canada Post’s Board of Directors.
The strong financial performance of Canada Post’s subsidiaries, Purolator Courier Ltd. and SCI Group Inc., were largely responsible for the Corporation achieving income before taxes of $161 million. Canada Post’s cost of operations increased by 5.6 per cent, to $7.6 billion. Total volume for 2008 remained stagnant at 11.8 billion, a situation attributable in part to a 2 per cent decrease in transaction mail items.
“I would like to acknowledge the tremendous efforts of Canada Post employees and all our partners for last year’s results,” said the company’s president and CEO Moya Greene. “Also, I would like to thank all of our loyal customers, who have other options, but continue to choose Canada Post to connect with their customers and business partners. We are committed to maintaining this trust with continued quality service for all Canadians.”
USPS Ends 2Q ‘09 with $1.9 Billion Loss - May 7, 2009 [Press Release.]The U.S. Postal Service ended its second quarter (Jan 1 – March 31) with a net loss of $1.9 billion, as the economic recession and longer-term financial pressures, such as the diversion of letter mail to electronic alternatives, continued to reduce mail volume and revenue. Despite aggressive actions to reduce costs and grow revenue, the Postal Service will likely face a cash shortfall of over $1.5 billion at the end of the fiscal year.
The Postal Service has incurred net losses from operations in 10 of the last 11 fiscal quarters. The year-to-date net loss is $2.3 billion, compared to a loss in the same period last year of $35 million. A significant portion of the losses over this period can be attributed to an unprecedented decline in mail volume. In the second quarter, mail volume totaled 43.8 billion pieces, down 7.5 billion pieces, or 14.7 percent, compared to a year ago.
The second-quarter results include operating revenue of $16.9 billion, a decrease of nearly $2 billion, or 10.5 percent, from the same period last year, and operating expenses of $18.8 billion, a reduction of $782 million, or 4.0 percent, from the second quarter of last year. Complete second-quarter results are contained in the Postal Service Form 10-Q report, available later today at usps.com/financials.
“The economic recession has been tough on the mailing industry, and we have seen an unprecedented decline in mail volumes and revenue that continued to accelerate during the second quarter,” said Postmaster General John Potter during today’s Board of Governors meeting. “We are aggressively realigning our costs to match the lower mail volumes, while also maintaining the high level of service and reliability our customers expect. We are also taking a number of steps to grow revenue.”
The Postal Service has recently developed incentive programs to increase mail volume, including advertising mail and Priority Mail. In addition USPS has proposed a summer sale for Standard Mail, which is currently under review by the Postal Regulatory Commission.
The Postal Service continues to support H.R. 22, a House bill that would redirect a portion of the Postal Service’s prior payments to the Postal Service Retiree Health Benefits Trust Fund to pay its share of contributions for current retiree health benefits through 2016. If enacted, the legislation would reduce the projected 2009 net loss by approximately $2 billion and help enable the Postal Service to meet its 2009 financial obligations. The bill was introduced by Rep. John McHugh (R-NY) and co-sponsored by Rep. Danny Davis (D-IL). As of today, the bill has 297 co-sponsors.
Cost Reductions
“We are aggressively reducing work hours and other costs to limit losses, preserve cash and improve productivity,” said Joseph Corbett, chief financial officer and executive vice president. Initiatives designed to match work hours to reduced volume have resulted in a work-hour decline of 58 million hours – the equivalent of a reduction of 33,000 full-time employees – in the first half of FY 2009, despite an increase in the number of delivery points by 1.1 million from the same period last year. The work-hour reduction is on pace to meet the goal of reducing work hours by more than 100 million for the entire year, the equivalent of 57,000 full-time employees.
Corbett said other savings are coming from consolidating excess capacity in mail processing and transportation networks, realigning carrier routes, halting construction of new postal facilities, freezing Postal Service officer and executive salaries at 2008 pay levels, reducing travel budgets and similar measures.
Deutsche Post DHL 1Q Earnings: Revenue Decline - Cost Reductions To Be Accelerated - May 6, 2009 [Press Release.] Highlights:
- Underlying EBIT falls from 539 million euros to 312 million euros; reported EBIT at 27 million euros - Net income jumps to 944 million euros due to valuation of Postbank put optionsMAIL Corporate Division reports 25.5 percent drop in underlying EBIT amid lower volumes, higher wages
As a result of the global economic crisis, Deutsche Post DHL, the world's largest provider of logistics services, recorded a 12.9 percent drop in revenue to 11.5 billion euros in the first quarter of 2009. Underlying EBIT fell by 42.1 percent to 312 million euros.
The decrease was primarily caused by the unprecedented plunge in demand across all regions and sectors as well as reduced volumes and higher wages in the MAIL Corporate Division.
Reported EBIT on Group level totaled 27 million euros compared with 539 million euros in the previous year mainly because of non-recurring charges tied to the restructuring the Group's DHL Express business in the U.S.
"We have to act now to secure our profitability and jobs over the long term. There can't be any sacred cows," said Chief Executive Officer Frank Appel.
"While the latest data seem to indicate that we have reached a bottom in terms of shipping volumes, we are preparing to deal with a longer period of weak demand all across the world and therefore will relentlessly focus on reducing our cost base - particularly in MAIL and EXPRESS - as well as securing our solid cash position. For us, the crisis is also an opportunity: We are the global market leader and therefore have the necessary size and financial muscle to present ourselves very aggressively in the market." In that context, Appel referred to 1 billion euros of new business that the Group secured in the first quarter.
Outlook
Following the significant drop in volumes around the Group in the first quarter 2009, Deutsche Post DHL may now be reaching the bottom in terms of volume declines. If this were the case, the Group would expect to see increasing benefit in the second half of the year and in 2010 from its cost-cutting program.
In November, Deutsche Post DHL set a target of cutting at least 1 billion euros in non-operating costs by the end of 2010. The EXPRESS Corporate Division, which contributes the lion's share with 460 million euros to the program, expects to reach its target by the end of 2009 already. The other corporate divisions - MAIL with 180 million euros, GLOBAL FORWARDING, FREIGHT with 160 million euros, SUPPLY CHAIN with 130 million euros and Corporate Center with 70 million euros - will also strive to reach their cost-cutting targets earlier than planned.
In particular in the EXPRESS Corporate Division, the good progress in the restructuring of the DHL U.S. Express business will support the improvement in the second half of the year. This should lead to underlying group EBIT showing significantly lower reductions relative to 2008 than the Group has seen in the first quarter and expects to see in the second quarter of the year.
The positive effects as a result of the Postbank transaction should lead to a return to a positive net profit in 2009 as a whole - a substantial improvement on 2008.
TNT 1Q ’09 Results: Resilient Cash Flow In Challenging Operating Environment - May 4, 2009 [Press Release.]Group: Q1 2009 results impacted by continued declines in volumes Positive operating income in current economic circumstances, at euro 163 million Good free cash flow at euro 114 million
Express: Continued recessionary pressure on volumes, though decline seems stable since February Revenue decline of 15.5 percent, of which 5.1 percent due to lower fuel surcharge and foreign exchange Cost savings ahead of plan: in excess of euro 100 million (more than 7 percent of cost base) achieved in Q1 2009 Operating income strongly impacted by severe volume declines in weeks 1 and 2 offset by positive Easter impact in weeks 12 and 13 Operating income of euro 20 million on revenues of euro 1,364 million
Mail: Overall revenues at constant rates of exchange in line with last year Addressed mail volumes in the Netherlands 4.7 percent below Q1 2008 Emerging Mail & Parcels good revenue growth and operating income Negative product mix development, price pressure and higher operating expenses in Mail Netherlands Operating income euro 149 million, 23.2 percent below Q1 2008
CEO Peter Bakker comments: “The global economic operating environment has remained challenging. Despite this environment, I am pleased with the quick response of our management teams around the world. Significant cost savings have already been achieved without any sacrifice in our service levels towards our customers. The first quarter 2009 results continued the trend we saw at the end of 2008 and the beginning of this year.
International express volumes are under significant pressure and Domestic volumes saw declines as well, but as of February we saw no further acceleration in the decline. Our cost savings initiatives in Express have delivered first results and are clearly ahead of our previously guided savings target range for the full year.
An Post Reports Record Operating Profit For 2008. Steep Mail Volume Decline In First Quarter 2009 - April 30, 2009 [Press Release.]An Post has reported a record operating profit of €31.2m for 2008, amounting to 3.7 per cent of turnover. Profit after tax was €33.2m in 2008, the fifth consecutive profitable year for the Group.
At €850m, turnover was down €26m (2.9 per cent), reflecting a 2 per cent drop in mail volumes over the previous year.
Over the past five years An Post has achieved a €75m turnaround in Group operating profit whilst tightly controlling costs, driving up quality of service and managing significant growth in mail volumes for most of this period.
An Post’s performance in 2008 was influenced by first half growth in mail volumes, a strong retail performance, efficiencies achieved by the company’s Transformation programme and strict cost control.
Commenting on the 2008 performance after the company’s Annual General Meeting at the GPO, An Post Chairman John Fitzgerald said that 2008 is a year on which everyone in An Post can reflect with some pride.
“A most acceptable operating profit was achieved on the back of tight cost control in every aspect of the business. This prudent approach must continue as we are now in a radically different economic environment, and there is only one certainty for An Post – that is the imperative to continue to transform the business into an entity that can remain viable in a competitive market. That task must remain our central focus as we move towards 2011 when the postal market will be open to full competition.
“During 2008, a number of initiatives illustrated the company’s strategic focus on broadening its revenue base, including an increased emphasis on serving the specific delivery needs of online and catalogue retailers and customers; the expansion of financial services offerings such as banking and insurance through Postbank: and the announcement of a Mobile Virtual Network Operator (MVNO) partnership with Vodafone to go live later this year,” he added.
The retail business performed very strongly, with significant growth in financial services products and a steady increase in social welfare payments. A new retail strategy was developed to support Postmasters and staff in growing their business and improving the breadth and quality of their services to customers.
In 2008 An Post invested a total of €39m to support the continued improvement in mails quality of service, all funded from its operations, as part of an overall €150m investment over three years. The company has maintained the price of the basic stamp at 55c since March 2007. 79 per cent next day domestic delivery was achieved in 2008, up 2 per cent on 2007. International mail delivery targets were consistently exceeded for incoming and outgoing mail and An Post received the prestigious International Post Corporation Certificate for Excellence.
Speaking at the GPO, Donal Connell, An Post Chief Executive said “This financial performance means that we look to the future from a solid base of consistent improvements in virtually every aspect of our business. The unprecedented economic downturn, and its potential to affect our ongoing profitability, brings new and very serious challenges for everyone and a renewed cost focus, he said.
“It is important that we continue to focus on those things over which we have control, to remain competitive and not to lose sight of the reality of full market opening in some 20 months time. We are determined to compete in the marketplace; to be our customers’ supplier of choice and to continue to improve our quality of service. I am confident that An Post can meet the current challenges as a strong and leading player at the centre of the Irish economy,” he concluded.
Itella: Decline in Demand Eroded Profitability (1Q 2009) - April 30, 2009 [Press Release.]Highlights:
Itella Group's consolidated net sales rose to EUR 477.6 million in the first quarter of 2009. Net sales grew by 5.5%. Excluding the impact of acquisitions, net sales fell by 6.1%.
Consolidated EBIT decreased by 40.2% in the first quarter to EUR 19.9 million, representing 4.2% of net sales. EBIT shrank in all business groups.
The volumes of mail delivered by Itella fell significantly. The volume decline was strongest in first class letters (-10%), addressed direct marketing (-14%) and parcels (-10%).
In Finland, personnel expenses grew by 3.1% from the same period a year earlier.
Post Danmark: 1Q 2009 After Tax Profit Of Dkk 177 Million - April 30, 2009 [Press Release.]In the first quarter of 2009, Post Danmark achieved a profit after tax of DKK 177 million compared with DKK 371 million in the same period last year, down DKK 194 million. The lower profit mainly resulted from a decrease in income of DKK 224 million. The profit shows that the negative development in the fourth quarter of 2008 was continued in the first three months of this year, involving a continued pressure on volumes and on revenue in 2009 as a result. For this reason, Post Danmark's expectations for total operating profit in 2009 are adjusted downwards. Total operating profit is now expected to be significantly lower than in 2008.
- Post Danmark is strongly affected by the economic crisis. The volume of letters and parcels is falling at a pace we have never experienced before, which - in the first quarter - led to a massive drop of DKK 234 million in the company's operating profit, Mr Helge Israelsen, CEO of Post Danmark, says.
In light of the negative development in the economy and in volumes of Post Danmark as a result, the company has launched a number of cost savings activities, just as close follow-up takes place on initiated efficiency projects. In addition, a price increase will be implemented for letter-post items not encompassed by the exclusive right (letters below 50 grams) at 1 August 2009.
- The activities we are now starting are completely necessary for enabling Post Danmark to retain a reasonable, financial basis - a basis which is the precondition for our ability to continue to perform the tasks we are required to solve for Danish society. Despite our initiatives, there will still be considerable uncertainty about the company's financial development in the time ahead.
Total profit before tax for 2009 will be affected by Post Danmark's planned sale of its ownership interest in the Belgian postal company De Post - La Poste to CVC Capital Partners. The price for the ownership interest is EUR 373 million (approx. DKK 2.8 billion). If the transaction is completed as anticipated, in 2009, Post Danmark will be able to recognise a total of DKK 1.6 billion as gain on disposal of the ownership interest.
Posten: Economic Slowdown Causes Dip In Earnings - April 29, 2009 [Press Release.]Posten interim report January-March 2009 Highlights: - The merger between Posten and Post Danmark was approved by the EU Commission on April 21 - Net sales totaled SEK 7,601m (7,738) - Operating earnings totaled 394m (694) - Action programs in progress impacted earnings by SEK 230m - Continued strong financial position, equity-assets ratio of 45 percent
President and CEO, Lars G Nordström, comments: Posten's earnings were down two percent in the first quarter, to SEK 7,601m. Operating earnings totalled SEK 394m, SEK 300m less than the corresponding quarter last year. This is not unexpected considering the prevailing economic climate. The sharp economic deceleration has led to reduced demand for Posten's distribution solutions, primarily in the logistics and messaging operations. Stralfors has also been impacted by a drop in suborders under existing contracts, including a significant fall off in demand for labeling solutions for auto industry customers.
The messaging market continues to be characterized by increasing competition from other market players. The logistics market currently has overcapacity in relation to demand, resulting in strong pressure on prices. Existing distribution capacity is rolling along, though with lower fill ratios. Posten's infrastructure entails a high share of fixed costs. This becomes particularly noticeable when volumes decrease. It is therefore an asset that Posten has been able to face the prevailing sharp economic downturn from a strong financial position. We also see that our action program, estimated to have an overall positive impact on earnings of approximately SEK 1 billion this year, is proceeding according to plan. As a result, we will be able to act swiftly and flexibly to address the drop in volumes with actions in all areas of the operation. It is anticipated that the action program will have an impact on earnings of SEK 230m during the first quarter. We will now work to ensure that the remaining impact on earnings is achieved.
On April 21, we received the welcome news that the EU commission has approved the merger between Posten and Post Danmark. This means that we are now working towards merging Posten and Post Danmark into a combined group. The two companies offer high-quality, easily accessible postal services to Swedish and Danish citizens. In our continued work, we will seize the strengths of each operation and transform them into attractive offers for our customers. We are well-prepared from both sides to establish an organization that can quickly bring home the strategic advantages of this historic merger and create the most competitive Nordic alternative for all customers in need of communication and logistics solutions to, from and within the Nordic region
