Group operating results
| (€m) | Q1 2019 | Q1 2018 | Increase/(decrease) | |
|---|---|---|---|---|
| Total revenue | 2,842 | 2,884 | (42) | -1.5% |
| of which: | ||||
| Mail, Parcels & Distribution | 880 | 899 | (19) | -2.1% |
| Payments, Mobile and Digital* | 140 | 130 | 9 | 7.3% |
| inancial Services* | 1,485 | 1,532 | (47) | -3.1% |
| of which gross capital gains | 261 | 402 | (141) | -35.1% |
| Insurance Services | 337 | 324 | 14 | 4.3% |
| Costs | 2,037 | 2,049 | (13) | -0.6% |
| of which: | ||||
| Total personnel expenses | 1,438 | 1,430 | 8 | 0.5% |
| of which personnel expenses | 1,435 | 1,425 | 10 | -0.7% |
| of which early retirement incentives | 3 | 6 | (3) | -50.0% |
| of which disputes and other extraordinary items | 0 | (1) | 1 | -104.4% |
| Other operating costs | 599 | 619 | (20) | -3.3% |
| EBITDA | 805 | 835 | (30) | -3.6% |
| Depreciation, amortisation and impairments | 188 | 132 | 56 | 42.5% |
| EBIT | 617 | 703 | (86) | -12.2% |
| EBIT Margin | 21.7% | 24.4% | -2.7% | |
| Finance income/(costs) | 6 | 8 | (2) | 22.5% |
| Profit before tax | 623 | 711 | (88) | -12.3% |
| Income tax expense | 184 | 226 | (41) | -18.3% |
| Net profit | 439 | 485 | (46) | -9.5% |
| Earnings per share | 0.34 | 0.37 | (0.03) | -9.5% |
* The figures for Q1 2018 have been reclassified on the basis of the new scope of the Payments, Mobile & Digital SBU.
| Group Workforce | Q1 2019 | Q1 2018 | Increase/(decrease) | |
|---|---|---|---|---|
| Average worforce expressed in full-time equivalent terms | 130,898 | 135,470 | (4,842) | -3.6% |
| Ordinary unit cost of labour (€000) | 43.8 | 42.0 | 1.9 | 4.4% |
| Financial position (€m) | At 31 March 2019 | At 31 December 2018 | Increase/(decrease) | |
|---|---|---|---|---|
| Non-current assets | 4,308 | 3,035 | 1,273 | 41.9% |
| Net working capital | 2,328 | 1,737 | 591 | 34.0% |
| Gross invested capital | 6,636 | 4,772 | 1,864 | 39.1% |
| Sundry provisions and other assets/liabilities | (1,825) | (2,039) | 214 | -10.5% |
| Net invested capital | 4,811 | 2,732 | 2,079 | 76.1% |
| Equity | 7,876 | 8,105 | (229) | -2.8% |
| Net funds | (3,065) | (5,372) | 2,307 | -42.9% |
| Net debt/(funds) of the Mail, Parcels & Distribution SBU | 675 | (1,131) | 1,806 | -159.7% |
The Group’s total revenue of €2.8 billion is down €42 million compared with the first quarter of 2018 (a reduction of 1.5%).
In detail, revenue generated by the Mail, Parcels and Distribution SBU amounts to €880 million, a 2% reduction compared with 2018. This reflects a decrease in traditional letter post and in other revenue, partly offset by the performance of parcels, where volumes were up 19.4% from 29 million items in the first quarter of 2018 to 35 million in the first quarter of 2019, resulting in a 14.6% increase in revenue from €175 million to €201 million.
The Payments, Mobile and Digital SBU contributed revenue of €140 million, up 7.3% compared with the same period of the previous year, reflecting a good performance from card payments, where growth was 14.4%.
Revenue generated by the Financial Services SBU amounts to €1,485 million, a reduction of €47 million (-3.1%) compared with the first quarter of the previous year. This reflects a decrease in gross realised gains (down €141 million) in line with the Group’s new strategy of reducing the dependence of its results on non-recurring items.
The Insurance Services SBU contributed total revenue of €337 million, marking an increase of €14 million. The improvement reflects the increase in the net investment result, which benefitted from the greater volume of assets under management, and a positive contribution from the P&C business.
Total costs, including depreciation, amortisation and impairments, amount to €2,225 million (€2,181 million in the first quarter of 2018) and, include a reduction in other operating costs (down €20 million).
Personnel expenses of €1,438 million are up €8 million (+0.5%) on the first quarter of 2018, reflecting an increase in the per capita cost linked to the full entry into force of the latest collective labour agreement (for 2016-2018), largely offset by a reduction in the average workforce employed during the quarter (over 4,800 fewer FTEs compared with 2018).
Depreciation, amortisation and impairments amount to €188 million, an increase of 42.5% due to the greater amount of depreciation resulting from first-time adoption of the new accounting standard, IFRS 16 (depreciation of right-of-use assets).
Consolidated EBIT of €617 million is down €86 million (-12%) compared with the same period of the previous year (€703 million). This essentially reflects the reduction in gross realised gains (down €141 million).
The Financial Services and Insurance services made positive contributions to EBIT, registering improvements of 9.3% and 4.9%, respectively.
After income tax expense for the period, net profit for the quarter totals €439 million (€485 million in the first quarter of 2018). Profit for the period after adjusting for non-recurring items, including gross gains on the securities portfolio and measurement of the shareholding in Visa under IFRS 9, amounts to €231 million.
OPERATING RESULTS BY STRATEGIC BUSINESS UNIT
MAIL, PARCELS AND DISTRIBUTION
The Mail, Parcels and Distribution Strategic Business Unit saw a decline in revenue (down €19 million, or 2%), primarily due to a decrease in traditional letter post (down €35 million), offset by increased revenue from parcels (up €26 million) in the B2B and B2C segments, and a reduction in other revenue following a reorganisation of Mistral’s business model, involving a closer focus on the airline’s cargo business and the its withdrawal from the passenger transport market.
EBIT also reflects an increase in variable costs linked to the growth in parcel volumes.
PAYMENTS, MOBILE AND DIGITAL
Revenue from card payments is up 10%, thanks to growth in the use of Postepay Evolution cards (up 30%) and an increase in volumes (an increase in the average value of card transactions and payments).
EBIT is stable at €57 million due to provisions for indirect taxes (VAT).
FINANCIAL SERVICES
Revenue is down 3%, primarily due to a reduction in gross realisable gains (down €141 million), in line with the objective in the Deliver 2022 Plan to reduce the dependence of the SBU’s results on non-recurring items.
EBIT is up 9%, primarily due to a reduction in costs.
INSURANCE SERVICES
Revenue from the Insurance Services SBU is up €14 million and is primarily generated by the Life business.
EBIT is up 5% to €151 million, compared with the €144 million of the first quarter of 2018, thanks in part to a good performance from the P&C segment (up 30%) driven by growth across all lines of business.
| Q1 2019 (€m) | Mail, Parcels & Distribution | Payments, Mobile and Digital | Financial Services | Insurance Services | Adjustments and eliminations | Total |
|---|---|---|---|---|---|---|
| Total revenue | 2,211 | 235 | 1,678 | 338 | (1,620) | 2,842 |
| External revenue | 880 | 140 | 1,485 | 337 | - | 2,842 |
| Intersegment revenue | 1,331 | 96 | 193 | 0 | (1,620) | - |
| Total costs | 2,063 | 178 | 1,417 | 187 | (1,620) | 2,225 |
| Total personnel expenses | 1,407 | 9 | 12 | 10 | - | 1,438 |
| of which personnel expenses | 1,404 | 9 | 11 | 10 | - | 1,435 |
| of which early retirement incentives | 2 | - | 1 | - | - | 3 |
| of which disputes and other extraordinary items | 0 | - | 0 | - | - | 0 |
| Other operating costs | 460 | 73 | 44 | 23 | - | 599 |
| Depreciation, amortisation and impairments | 176 | 6 | 0 | 6 | - | 188 |
| Intersegment costs | 20 | 91 | 1,361 | 148 | (1,620) | - |
| EBIT | 148 | 57 | 261 | 151 | - | 617 |
| EBIT MARGIN | 6.7% | 24.2% | 15.6% | 44.7% | - | 21.7% |
| Finance income/(costs) | 2 | 2 | 1 | 0 | - | 6 |
| Profit/(Loss) before tax | 151 | 59 | 263 | 151 | - | 623 |
| Income tax expense | 49 | 16 | 72 | 46 | - | 184 |
| Net profit | 101 | 42 | 190 | 105 | - | 439 |