GROUP OPERATING RESULTS
Profit for the first quarter of 2016 amounts to €367 million, an improvement of €56 million on the same period of 2015.
Operating profit is up 16.1% from €484 million for the first quarter of 2015 to €562 million for the first three months of 2016, benefitting from the positive performances of almost all the sectors in which the Group operates. The contribution to operating profit from the Postal and Business Services segment is up 46% (€177 million in the first quarter of 2016, compared with €121 million in the same period of 2015). This essentially reflects the positive contribution from the fees paid by BancoPosta RFC in return for use of the Group’s distribution network. The Financial Services segment recorded a strong performance, with operating profit of €267 million (€250 million in the first quarter of 2015), primarily linked to returns on BancoPosta RFC’s investments.
The Insurance Services and Asset Management segment reports operating profit of €108 million (up 11.3%) and an excellent operating performance, with €6.1 billion in premium revenue during the period (€4.9 billion in the first quarter of 2015).
Reclassified consolidated statement of profit or loss
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2016 | 2015 | Values | % |
| Revenue from sales and services and insurance premium revenue | 8,277 | 7,142 | 1,135 | 15.9% |
| Postal and Business Services | 923 | 969 | (46) | -4.7% |
| Financial Services | 1,165 | 1,178 | (13) | -1.1% |
| Insurance Services and Asset Management | 6,132 | 4,931 | 1,201 | 24.4% |
| Other Services | 57 | 64 | (7) | -10.9% |
| Other income from financial and insurance activities | 1,467 | 1,385 | 82 | 5.9% |
| Financial Services | 389 | 317 | 72 | 22.7% |
| Insurance Services and Asset Management | 1,078 | 1,068 | 10 | 0.9% |
| Other operating income | 15 | 16 | (1) | -6.3% |
| Postal and Business Services | 13 | 14 | (1) | -7.1% |
| Financial Services | 2 | 2 | - | n/s |
| Total revenue | 9,759 | 8,543 | 1,216 | 14.2% |
| Cost of goods and services | 600 | 617 | (17) | -2.8% |
| Net change in technical provisions for insurance business and other claims expenses | 6,728 | 5,734 | 994 | 17.3% |
| Other expenses from financial and insurance activities | 197 | 15 | 182 | n/s |
| Personnel expenses | 1,505 | 1,498 | 7 | 0.5% |
| Capitalised costs and expenses | (4) | (5) | 1 | -20.0% |
| Other operating costs | 20 | 55 | (35) | -63.6% |
| Total costs | 9,046 | 7,914 | 1,132 | 14.3% |
| EBITDA | 713 | 629 | 84 | 13.4% |
| Depreciation, amortisation and impairments | 151 | 145 | 6 | 4.1% |
| Operating profit/(loss) | 562 | 484 | 78 | 16.1% |
| Finance income/(costs) | 3 | 2 | 1 | 50.0% |
| Profit/(loss) on investments accounted for using the equity method | 3 | - | 3 | n/s |
| Profit/(Loss) before tax | 568 | 486 | 82 | 16.9% |
| Income tax expense | 201 | 175 | 26 | 14.9% |
| Profit for the period | 367 | 311 | 56 | 18.0% |
n/s: not significant
Total revenue by operating segment
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2016 | 2015 | ||
| Postal and Business Services | 936 | 983 | (47) | -4.8% |
| Financial Services | 1,556 | 1,497 | 59 | 3.9% |
| Insurance Services and Asset Management | 7,210 | 5,999 | 1,211 | 20.2% |
| Other Services | 57 | 64 | (7) | -10.9% |
| Total revenue | 9,759 | 8,543 | 1,216 | 14.2% |
Total revenue of €9,759 million is up 14.2% on the same period of 2015. The improvement primarily reflects the positive performance of insurance services and asset management, where total revenue amounts to €7,210 million (up 20.2% on the first quarter of 2015).
Postal and Business Services contributed total revenue €936 million, registering a reduction of 4.8% (€983 million in the first quarter of 2015) due to the expected decline in traditional letter post.
Total revenue from Financial Services amounts to €1,556 million, marking an increase of 3.9% due to a rise in “Other income from financial activities”, which is up from €317 million in the first quarter of 2015 to €389 million in the same period of 2016. This income is primarily generated by the sale of available-for-sale financial assets, in which the postal current account deposits of BancoPosta RFC’s private customers are invested.
As noted above, the Insurance Services and Asset Management segment which, from 1 January 2016, also includes the activities of BancoPosta Fondi Sgr, delivered excellent results during the period, with Poste Vita and its subsidiary, Poste Assicura, recording premium revenue of €6.1 billion (premium revenue of €4.9 billion in the same period of 2015). This primarily reflects the performances of traditional Class I investment and savings products, where the Group has built up a strong presence. Other income from financial and insurance activities is up €10 million from €1,068 million in the first quarter of 2015 to €1,078 million in the same period of 2016.
Total revenue from Other Services amounts to €57 million (€64 million in the same period of 2015) and is generated by Poste Mobile.
Cost of goods and services
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2016 | 2015 | ||
| Services | 467 | 465 | 2 | 0.4% |
| Lease expense | 86 | 88 | (2) | -2.3% |
| Raw, ancillary and consumable materials and goods for resale | 37 | 42 | (5) | -11.9% |
| Interest expense | 10 | 22 | (12) | -54.5% |
| Total | 600 | 617 | (17) | -2.8% |
The cost of goods and services is down 2.8% from €617 million in the first quarter of 2015 to €600 million in the first quarter of 2016, primarily reflecting a reduction in the cost of funding, represented by interest paid to customers by BancoPosta RFC.
The net change in technical provisions for the insurance business and other claims expenses, which is closely linked to the above growth in premium revenue recorded by Poste Vita, amounts to €6.7 billion (€5.7 billion in the first quarter of the previous year).
Other expenses from financial and insurance activities are up from €15 million in the first quarter of 2015 to €197 million in the same period of 2016, reflecting the greater impact of movements in the fair value of financial instruments, for the most part attributable to the subsidiary, PosteVita.
Personnel expenses
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2016 | 2015 | ||
| Salaries, social security contributions and sundry expenses (*) | 1,498 | 1,492 | 6 | 0.4% |
| Redundancy payments | 6 | 9 | (3) | -33.3% |
| Net provisions (uses) for disputes | 1 | (3) | 4 | n,s, |
| Total personnel expenses | 1,505 | 1,498 | 7 | 0.5% |
n/s: not significant Increase/(decrease)
(*)This includes the following items: salaries and wages; social security contributions; employee termination benefits; temporary work; Directors’ fees and expenses; other costs (cost recoveries).
Ordinary personnel expenses, linked to salaries, contributions and sundry expenses, amount to €1,498 million, marking a slight increase with respect to the first quarter of 2015 (up 0.4%).
The cost of early retirement incentives during the quarter amounts to €6 million (€9 million in the same period of the previous year) and regards management personnel. The cost of early retirement incentives for non-management staff was covered by a portion of the provisions for restructuring charges, made at the end of the previous year to cover the estimated costs to be incurred by Poste Italiane for early retirement incentives for employees leaving the Company by 31 December 2017.