GROUP OPERATING RESULTS
Profit for the first quarter of 2017 amounts to €351 million, down €16 million on the first quarter of the previous year.
Operating profit totals €526 million (€562 million for the first quarter of 2016) and reflects reduced contributions from the Postal and Business Services segment (operating profit down €42 million compared with the first quarter of 2016) and the Financial Services segment (operating profit down €39 million compared with the first quarter of 2016).
The reductions were only partially offset by a positive contribution to operating profit from the Insurance Services and Asset Management segment (up €47 million on the first quarter of 2016), having benefitted from, among other things, the performance of inflows into mutual investment funds.
Reclassified consolidated statement of profit or loss
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2017 | 2016 | ||
| Revenue from sales and services and insurance premium revenue | 8,011 | 8,277 | (266) | -3.2% |
| Postal and Business Services | 900 | 923 | (23) | -2.5% |
| Financial Services | 1,119 | 1,165 | (46) | -3.9% |
| Insurance Services and Asset Management | 5,942 | 6,132 | (190) | -3.1% |
| Other Services | 50 | 57 | (7) | -12.3% |
| Other income from financial and insurance activities | 1,513 | 1,467 | 46 | 3.1% |
| Financial Services | 398 | 389 | 9 | 2.3% |
| Insurance Services and Asset Management | 1,115 | 1,078 | 37 | 3.4% |
| Other operating income | 15 | 15 | – | n/s |
| Postal and Business Services | 14 | 13 | 1 | 7.7% |
| Financial Services | 1 | 2 | (1) | -50.0% |
| Total revenue | 9,539 | 9,759 | (220) | -2.3% |
| Cost of goods and services | 592 | 600 | (8) | -1.3% |
| Net change in technical provisions for insurance business and other claims expenses | 6,574 | 6,728 | (154) | -2.3% |
| Other expenses from financial and insurance activities | 135 | 197 | (62) | -31.5% |
| Personnel expenses | 1,480 | 1,505 | (25) | -1.7% |
| Capitalised costs and expenses | (9) | (4) | (5) | n/s |
| Other operating costs | 99 | 20 | 79 | n/s |
| Total costs | 8,871 | 9,046 | (175) | -1.9% |
| EBITDA | 668 | 713 | (45) | -6.3% |
| Depreciation, amortisation and impairments | 142 | 151 | (9) | -6.0% |
| Operating profit/(loss) | 526 | 562 | (36) | -6.4% |
| Finance income/(costs) | 2 | 3 | (1) | -33.3% |
| Profit/(loss) on investments accounted for using the equity method | 4 | 3 | 1 | 33.3% |
| Profit/(Loss) before tax | 532 | 568 | (36) | -6.3% |
| Income tax expense | 181 | 201 | (20) | -10.0% |
| Profit for the period | 351 | 367 | (16) | -4.4% |
n/s: not significant
Total revenue by operating segment
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2017 | 2016 | ||
| Postal and Business Services | 914 | 936 | (22) | -2.4% |
| Financial Services | 1,518 | 1,556 | (38) | -2.4% |
| Insurance Services and Asset Management | 7,057 | 7,210 | (153) | -2.1% |
| Other Services | 50 | 57 | (7) | -12.3% |
| Total revenue | 9,539 | 9,759 | (220) | -2.3% |
Total revenue of €9.5 billion is down 2.3% on the first quarter of 2016. A more detailed look shows that Postal and Business Services contributed total revenue of €914 million, registering a reduction of 2.4% compared with the first quarter of 2016, due to a decline in traditional letter post.
Total revenue from Financial Services amounts to €1,518 million, marking a decline of 2.4%, primarily as a result of lower commissions earned on the distribution of postal savings products. The impact of this was only partly offset by an increase in “Other income from financial activities”, which is up from €389 million in the first quarter of 2016 to €398 million in the first quarter of 2017.
The Insurance Services and Asset Management segment contributed €7.1 billion to total revenue (€7.2 billion in the same period of the previous year), with premium revenue amounting to €5.9 billion (premium revenue of €6.1 billion in the same period of 2016). This represents a solid performance for the period, given the sharp decline in the Life market compared with the positive performance of 2016 (market data for new business to February 2017 shows a contraction of approximately 17% at national level). T
otal revenue from Other Services amounts to €50 million (€57 million in the same period of 2016).
Personnel expenses
| for the three months ended 31 March | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2017 | 2016 | ||
| Salaries, social security contributions and sundry expenses(*) | 1,487 | 1,501 | (14) | -0.9% |
| Redundancy payments | 2 | 6 | (4) | -66.7% |
| Net provisions (uses) for disputes | (7) | 1 | (8) | n/s |
| Amounts recovered from staff due to disputes | (2) | (3) | 1 | -33.3% |
| Total personnel expenses | 1,480 | 1,505 | (25) | -1.7% |
n/s: not significant
(*) This includes the following items: salaries and wages; social security contributions; employee termination benefits; temporary work; Directors’ fees and expenses; other costs (cost recoveries).
Personnel expenses are down 1.7% from €1,505 million in the first quarter of 2016 to €1,480 million in the same period of 2017, largely due to a reduction in the ordinary component, linked to salaries, contributions and sundry expenses (down €14 million). This reflects a reduction in the average workforce employed during the period (approximately 4,700 fewer full-time equivalents or FTEs compared with the same period of the previous year), which has offset the increased costs resulting from a public holiday falling on a Sunday and provisions linked to the expected increase in pay in the renewed national collective labour contract.
The cost of early retirement incentives incurred during the quarter amounts to €2 million (€6 million in the first quarter of 2016) 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.