GROUP OPERATING RESULTS
FINANCIAL REVIEW
| Six months ended 30 June | ||||
|---|---|---|---|---|
| Results of operations (€m) | 2018 | 2017 | Increase/(decrease) | |
| Revenue | 5,429 | 5,498 | (69) | -1.3% |
| of which: | ||||
| Mail, Parcels and Distribution | 1,761 | 1,812 | (51) | -2.8% |
| Payments, Mobile and Digital | 307 | 278 | 29 | 10.4% |
| Financial Services | 2,676 | 2,710 | (34) | -1.3% |
| Insurance Services | 685 | 698 | (13) | -1.9% |
| Total costs | 4,104 | 4,370 | (266) | -6.1% |
| of which: | ||||
| Total personnel expenses | 2,846 | 2,934 | (88) | -3.0% |
| of which personnel expenses | 2,827 | 2,930 | (103) | -3.5% |
| of which early retirement incentives | 19 | 4 | 15 | n,s, |
| Other operating costs | 1,258 | 1,436 | (178) | -12.4% |
| EBITDA | 1,325 | 1,128 | 197 | 17.5% |
| Depreciation, amortisation and impairments | 272 | 281 | (9) | -3.2% |
| EBIT | 1,053 | 847 | 206 | 24.3% |
| EBIT Margin | 19.4% | 15.4% | 4.0% | |
| Finance income/(costs) | 22 | (75) | 97 | n,s, |
| Profit before tax | 1,075 | 772 | 303 | 39.2% |
| Income tax expense | 340 | 262 | 78 | 29.8% |
| Profit for the period | 735 | 510 | 225 | 44.1% |
| Earnings per share | 0.563 | 0.391 | 0.172 | 44.1% |
Consolidated operating results
The performance in the first half of 2018 has resulted in consolidated operating profit of €1,053 million, an increase of 24.3% compared with the same period of the previous year (€847 million). This primarily reflects reductions in operating costs and personnel expenses.
The Group’s total revenue amounts to €5.4 billion, marking a slight decline of €69 million (1.3%) compared with the same period of the previous year.
In detail, total revenue from Mail, Parcels and Distribution services amounts to €1,761 million, a reduction of 2.8% compared with the first half of 2017. This reflects a decrease in traditional letter post, partially offset by the performance of parcels, where volumes were up 7.3% from 55 million items in the first half of 2017 to 59 million.
The Payments, Mobile and Digital segment contributed €307 million to total revenue, up 10.4% on the first half of 2017. This figure includes revenue from payment services, e-money products and PosteMobile SpA’s telecommunications services.
Total revenue from Financial Services amounts to €2,676 million, a reduction of 1.3% compared with the €2,710 million of the first half of 2017. Despite a 16% increase in commission income on the collection of postal savings deposits, reflecting the mechanisms established in the new Agreement with Cassa Depositi e Prestiti, the figure reflects a reduction in realised gains, in line with the Group’s new strategy of reducing the dependence of its results on extraordinary items and a decrease in revenue due to the sale of Banca del Mezzogiorno–MCC, completed on 7 August 2017.
The Insurance Services segment contributed €685 million to total revenue (€698 million in the same period of the previous year), marking a reduction of €13 million and reflecting a slowdown in the Life business, where premium revenue is down from €11.1 billion in the first half of 2017 to €8.8 billion.
As anticipated, total costs are down from the €4.4 billion of 2017 to €4.1 billion, marking a decline of 6.1%.
Personnel expenses are down 3.0% from €2,934 million in the first half of 2017 to €2,846 million in 2018, primarily reflecting a decrease in the average workforce (approximately 2,700 fewer FTEs compared with the same period of the previous year) and increase costs relating to renewal of the related contract, estimated in 2017.
The cost of early retirement incentives during the first half amounts to €19 million (€4 million in 2017) and primarily regards management personnel, with the remaining personnel being covered by the pre-existing scheme.
Other operating costs are down from €1,436 million in the first half of 2017 to €1,258 million in 2018, a reduction of 12.4%. This reflects higher provisions for risks and charges in the first half of 2017, for the most part linked to financial instruments and investment products sold in previous years, whose performance has not been in line with customers’ expectations.
After depreciation, amortisation and impairments for the period (€272 million in the first half of 2018, compared with €281 million in the first half of 2017), net finance income for 2018, unlike 2017 which reflected the impairment loss of €82 million on the Contingent Convertible Notes subscribed for by Poste Italiane in December 2014 and issued by Midco SpA (the company that owns 51% of Alitalia SAI), and income tax expense for the period, profit for the period amounts to €735 million, marking an increase of 44.1% compared with the figure for the first half of 2017 (€510 million).
OPERATING RESULTS BY OPERATING SEGMENT
| Six months ended 30 June 2018 | Mail, Parcels & Distribution | Payments, Mobile & Digital | Financial Services | Insurance Services | Adjustments and eliminations | Total |
|---|---|---|---|---|---|---|
| Total revenue | 4,216 | 472 | 3,191 | 685 | (3,135) | 5,429 |
| External revenue | 1,761 | 307 | 2,676 | 685 | - | 5,429 |
| Intersegment revenue | 2,455 | 165 | 515 | - | (3,135) | - |
| Total costs | 4,032 | 371 | 2,783 | 325 | (3,135) | 4,376 |
| Total personnel expenses | 2,760 | 16 | 50 | 20 | - | 2,846 |
| of which personnel | 2,749 | 16 | 43 | 19 | - | 2,827 |
| of which early retirement | 11 | - | 7 | 1 | - | 19 |
| Other operating costs | 985 | 85 | 147 | 41 | - | 1,258 |
| Depreciation, amortisation | 252 | 12 | - | 8 | - | 272 |
| Intersegment costs | 35 | 258 | 2,586 | 256 | (3,135) | - |
| EBIT | 184 | 101 | 408 | 360 | - | 1,053 |
| EBIT MARGIN | 4.4% | 21.4% | 12.8% | 52.6% | 19.4% | |
| Finance income/(costs) | (14) | - | 7 | 29 | - | 22 |
| Profit/(Loss) before tax | 170 | 101 | 415 | 389 | - | 1,075 |
| Income tax expense | 56 | 24 | 122 | 138 | - | 340 |
| Profit for the period | 114 | 77 | 293 | 251 | - | 73 |