Swiss Post with positive trend and increase in postage rates

With a corporate profit of 247 million Swiss francs, Swiss Post has made a strong start to the first half of 2021 and thus to its new strategic period. It generated a profit of 217 million Swiss francs more in the first half of the year than in the previous year. Operating revenue amounts to 3,630 million Swiss francs, which is more than seven percent higher than in the first half of 2020.

(Bern) The improved result is mainly attributed to the increasing volume of packages. Additionally, it is compared directly to the results from the first half of 2020, which were heavily impacted by the Corona-related lockdown. For Swiss Post, a solid financial foundation and profits are important as they allow for necessary investments to be financed without taxpayer money. This enables them to continue to provide nationwide basic services independently in the future. The positive result indicates that Swiss Post has recovered after a challenging year in 2020, thanks to significant adaptability and the commitment of all employees.

Package volumes increase, letter volumes decline

The new Logistics Services division achieved an operating result of 265 million Swiss francs in the first half of 2021, exceeding the previous year’s figure by 58 million Swiss francs. This result is primarily due to the increasing volume of packages. Compared to last year, the number of delivered packages rose by 15.8 percent. This increase is attributed to the ongoing boom in online shopping and the changed customer behavior due to the renewed lockdown at the beginning of 2021. From January to the end of June, Swiss Post delivered 105 million packages, compared to just over 90 million packages in the same period last year.

More newspapers and advertisements in Switzerland, as well as an increase in international letters, also contribute to the rise in results. Compared to last year, the decline in addressed letters in Switzerland was lower at 0.9 percent than in previous years. Since provisions from the previous year burdened the results, which have been eliminated this year, the operating result has improved further.

Postage for A and B mail will increase by ten cents

Swiss Post has also agreed with the price regulator to raise letter prices: Starting in 2022, an A mail letter in standard format will cost 1.10 Swiss francs (previously 1 Swiss franc), and a B mail letter will cost 90 cents (previously 85 cents). Letter prices have remained unchanged for 18 years. The structural costs for postal basic services, including the processing of a declining number of letters, have risen significantly during this time. This is partly due to general inflation and partly due to the increase in households and thus mailboxes in Switzerland. For comparison: Since 2004, Swiss wages have increased by an average of about 17 percent, housing/energy costs have risen by about 22 percent, and health insurance premiums have increased by 45 percent.

A bundle of price and service measures

The negotiations with the price regulator go far beyond the adjustment of letter prices. The two parties have agreed on a whole bundle of price and service expansions in their negotiations. Additionally, they have jointly decided on certain price adjustments. These further price adjustments affect, among other things, post office boxes, mail forwarding in case of address changes, and the international mailing of letters (details in the table below). Swiss Post has also agreed with the price regulator on price advantages for customers. For instance, private customers who frank their packages online benefit from an online discount of 15 percent. An exception applies to PostPac Priority packages weighing between 2 and 10 kilograms. Furthermore, postal workers will now pick up up to five packages free of charge from any SME in Switzerland upon request during their delivery rounds. Business customers who frank their packages online will also receive a 10 percent discount on the list price. List prices apply to private customers and SMEs with fewer than 750 packages per year who have not negotiated individual prices with Swiss Post. The list prices for packages remain unchanged. Swiss Post aims to alleviate the burden on companies in Switzerland during these economically challenging times with these accommodating measures, as they are the ones sending the majority of packages. “Thanks to a good half-year result, Swiss Post can keep package prices unchanged and thus support SMEs and accommodate the price regulator,” comments CEO Roberto Cirillo.

Consistent implementation of the “Post of Tomorrow” strategy

The pricing measures are just one of four strategic directions of the new strategy that Swiss Post has been implementing step by step since the beginning of the year. “Our primary goal is to provide high-quality basic services for the entire Switzerland at the same price everywhere. We want to continue to provide postal basic services independently in the future, without subsidies or taxpayer money. To achieve this, we are consistently pursuing four strategic directions and implementing them step by step since the beginning of the year. This way, we want to continue connecting people and businesses in Switzerland in the future,” says CEO Roberto Cirillo. The four strategic directions of the “Post of Tomorrow” include not only pricing but also efficiency measures, investments, and targeted growth.

Strengthening from within through efficiency gains

In implementing the new strategy, Swiss Post is also focusing heavily on itself: with efficiency measures. A milestone in terms of efficiency was achieved by Swiss Post at the beginning of the year: it merged the package and letter logistics into one large division. This was one of the largest mergers in Swiss Post’s history, involving more than 20,000 employees. Thanks to the great commitment of the employees, the merger proceeded smoothly. Particularly encouraging in this context are the current results of the 2021 employee survey, which remain stable at a high level and even show a slight improvement trend in some areas. For example, the value regarding sufficient decision-making freedom and team values have improved. Due to the ongoing pandemic and the organizational and structural changes brought about by the new strategy, the past months have been particularly challenging for many employees on various levels. Since the beginning of the year, Swiss Post has been able to bundle synergies from the two former logistics areas of letters and packages in the newly created Logistics Services division. It secures jobs and can continue to offer attractive positions in the future. For instance, today, postal workers deliver about half of all packages.

Substantial investments in logistics

Swiss Post has invested significantly in its logistics in recent years: around 260 million Swiss francs since 2017. In the last three years alone, Swiss Post has been able to put four new regional package centers into operation (in Ostermundigen, Vétroz, Cadenazzo, and Untervaz). Without these already made investments, Swiss Post would no longer be able to handle the current package volumes of up to 900,000 packages per day. The expansion and modernization of logistics continue. The future logistics network is to consist of at least four locations for letter sorting and at least 15 locations for package sorting by 2030—meaning at least seven more locations than today. In addition to the already realized four regional package centers, Swiss Post is focusing on further locations such as in Utzenstorf, Bützberg, Pratteln, Buchs (AG), and Rümlang. The letter center in Härkingen will also receive a package sorting facility and will be expanded. By 2030, Swiss Post plans to invest an additional approximately 1.2 billion Swiss francs in the expansion of sorting and delivery infrastructure. Through the planned capacity expansions, it can secure existing jobs in the sorting environment and is expected to create around 1,500 additional positions.

Future-oriented acquisitions

Another strategic direction focuses on growth through targeted acquisitions. To keep pace with the rapid changes of the times and to remain self-sufficient in the future, Swiss Post is growing in both existing and related core areas. Whenever possible, growth occurs organically from within Swiss Post. Where sensible, Swiss Post complements growth through carefully selected acquisitions of external companies.

Swiss Post needs to grow in connecting to international logistics networks and strengthen its position in the goods logistics market. Logistics is becoming increasingly global and does not stop at national borders. “We connect Switzerland to the world and offer companies in Switzerland real added value,” says Roberto Cirillo. This international connection cannot be ensured by Swiss Post within a useful timeframe without targeted acquisitions. Accordingly, it has already acquired selected logistics companies in the first half of the year.

Furthermore, Swiss Post significantly supports the Swiss economy and the population on the path to an increasingly digital future. Therefore, Swiss Post is also growing in the area of digital communication services. The confidentiality of letters should be transferred simply and securely into the digital world. Swiss Post has already made initial acquisitions, such as acquiring a majority stake in KLARA Business AG in the field of digital communication services. The acquisitions of the cloud provider Tresorit and the advertising marketing company Livesystems in early July also fall into this category.

Photo: © Swiss Post