Inflation and subdued consumer confidence affect Swiss Post’s finances

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At CHF70m (US$77m), Swiss Post’s result at the end of March 2023 was around CHF75m (US$83m) below the 2022 figure.

According to the company, the result reflects the challenging environment in which Swiss Post currently finds itself: fewer parcels and letters, short-term negative effects of the interest rate turnaround and persistently high inflation. However, Swiss Post achieved several further steps in its strategy in the first quarter: a new regional parcel center, completely carbon-neutral delivery in Zurich and Bern, and milestones in secure digital communication, for example in e-voting and communication with public authorities. With its financial foundation, additional efficiency measures and the price increases it is seeking, Swiss Post asserts that it is well-equipped to meet the challenges it faces.

Swiss Post’s result for the first quarter of 2023 was affected by difficult, volatile geopolitical and economic conditions. As expected, it was significantly lower than the very strong first quarter of the previous year – from January to March 2023, Swiss Post generated a group result of CHF70m (US$77m), down CHF75m (US$83m) year-on-year. At the same time, there was a slight increase in operating income, at CHF1.769bn (US$1.95bn). Group profit stood at CHF41m (US$45m), also well below the previous year’s figure of CHF160m (US$177m). However, Swiss Post’s sale of its subsidiary, Swiss Post Solutions (SPS), in the first quarter of 2022 had a considerable impact on profit.

Alex Glanzmann, head of finance at Swiss Post, said, “We knew that 2023 was going to be a very challenging year for Swiss Post. The first-quarter result now reflects this clearly. So it’s all the more important that we keep sight of the long-term perspective. We need to continue working consistently toward growth and development, sustainability, price adjustments and efficiency improvements, with the latter two elements of our strategy now particularly important.”

The lower quarterly result was reportedly due to four key factors. First, subdued consumer confidence in Switzerland, which remains well below the long-term average. The company found that people are doing less shopping online, and parcel volumes were down 3.6% compared with the prior-year period. Second, the trend toward digitalization caused a further decline in the number of letters sent (-4.4% compared with the first quarter of 2022) and a sharp drop in payments at post office counters (-19% compared with the same period in 2022). Third, the high level of inflation also had a major impact on Swiss Post, as costs for fuel, energy, transportation and materials rose significantly (Swiss Post pays its employees’ wages and salaries adjusted for inflation).

Fourth, the turnaround in interest rates had a negative impact on PostFinance’s quarter-on-quarter business performance. In the first quarter of 2022, PostFinance (the financial services unit of Swiss Post) was still generating income from customer asset fees and the interbank money market. Since interest rates turned upward, income from customer asset fees has completely disappeared, with PostFinance’s operating profit of CHF53m (US$58m) in the first quarter down by CHF35m (US$38m) year-on-year. On the other hand, the same period saw new income from interest on balances at the Swiss National Bank and higher returns on financial assets in interest operations. In the medium term, PostFinance expects interest income on financial assets to rise as a result of the turnaround in interest rates, although it will take some time for its positive impact to be reflected in Swiss Post’s results. PostBus (Swiss Post’s public bus subsidiary) benefited from a strong recovery in public transportation following the Covid-19 pandemic, carrying almost 45 million passengers in the first three months of the year, more than ever before. This helped produce a rise of CHF8m (US$8.8m) in operating income at the mobility services unit, despite higher operating costs as a result of inflation.

In the first quarter of 2023, Swiss Post took several steps in its ‘Swiss Post of tomorrow’ strategy. In March, Swiss Post began operations at a new regional parcel center in Pratteln, bringing it closer to households and companies in the greater Basel area and shortening delivery routes. Since February, the company has been delivering letters and parcels in Zurich and Bern exclusively using electric vehicles. In its efforts to bring the principle of mail secrecy into the digital age, Swiss Post also achieved important milestones in the first quarter. In collaboration with the Canton of Bern, it introduced the digital letterbox for the people of Bern. Additionally, Swiss Post’s e-voting system is now ready and available for the elections to be held in June in the cantons of Basel-Stadt, St. Gallen and Thurgau.

To keep up with the latest Swiss Post developments, click here.

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