Market Flash Issue 378 | 10 September 2008 print next/media/documents/public/market-flash/300-400/mf378.pdfMarket Flash Issue 378 | 10 September 2008 EUROPE La Poste to Raise Funds

Market Flash Issue 378 | 10 September 2008

EUROPE

LaPostetoRaiseFundsfromStockMarket HighCostsDepressLaPosteProfit PostenABEarningsLowerinFirstHalf PostDanmarkSeesProfitsRise NorwayPostLooksforNewRevenue SwissPostEBITContinuestoClimb CorreiosSeesProfitsGrow AustrianPostIncreasesShareofAdMail RoyalMailLetterQualityofService

nears92% GLSNetherlandsClaimsPerfectQuality AmtrakGoesintoAdministrationAgain GeoPostSellsFrenchSubsidiary FedExUpgradesDeliveryTimestotheUS Romania’sPegasusJoinsDPDNetwork ExpressOperatorsMergeinRomania HermesForcedtoImposeFuelSurcharge UKMailWinsDeliveryContract DHLAppointsChiefforEEMEARegion EmpostDelaysitsMarketFlotation

AMERICAS

YoungCanadiansValueBillReminder DHLAirliftPlanGivenOK UPSFreightImprovesTransitTimes FedExGoesDomesticinMexico

ASIA-PACIFIC

KiwibankProfitsReachNZD36.8M TollGrowingDespiteHeavyLoss NewPostageRatesDueinAustralia FedExCutsDomesticRatesinChina EMSChinaOffersSameDayService PhilPostandUSPSPlanExpatRemittance TNTOpensFreightCentreinHanoi

In this issue

www.ipc.be To access breaking news on the postal industry, visit our website www.ipc.be and subscribe to the RSS feeds. News archives and reports can also be accessed from our on-line media centre. Market Flash readers who have not yet requested a password, can do so by contacting Britt Janssens at

[email protected]

La Poste to Raise Funds from Stock Market

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Groupe La Poste has unveiled plans to restructure into a limited

company and to float a minority holding on the stock exchange to

raise EUR 2.5 to EUR 3.5 billion for investment in growth.

Group president Jean-Paul Bailly, told a news conference in Paris

that legal restructuring from La Poste’s present status as an auton-

omous public sector organisation might be completed by January

2010. That would pave the way for a flotation in January 2011.

The restructuring plan is being formally presented to the French

Government. The funds raised by the flotation would be used to

fund La Poste’s development, including acquisitions. At present,

La Poste does not have the financial means to achieve its growth

strategy.

Key strategic aims are to buy or develop mail operations in other

European countries and to complete the domestic mail product

portfolio. In the express market, La Poste wants to complete its

European network - in Germany, Spain and Italy in particular - and

make targeted acquisitions outside Europe.

After the announcement, six postal unions criticised the restruc-

turing plan and warned of large-scale job losses. They called for a

national strike on September 23 in protest. They said they would

organise demonstrations across France and would begin collecting

signatures for a petition against La Poste’s plans.

THE NATURAL PARTNER FOR THE POSTAL INDUSTRY

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http://www.ipc.be

Issue 378 | 10 September 2008 print next

Europe

High Costs Depress La Poste Profit

Prior to announcing plans to restructure and raise funds on the

stock market, La Poste released its half-year figures to reveal a

drop in profits caused by lower mail volumes, higher costs and

economic slowdown.

Operating profit dropped 10.9 percent compared with the first six

months last year to EUR 671 million on a comparable basis. Net

profit was 19 percent lower at EUR 481 million.

Group revenue rose by 2.3 percent on a like-for-like basis and

excluding Europe Airpost, the aviation business sold by La Poste.

However, operating costs rose 3.3 percent owing to fuel price

increases, investment costs and other effects.

The mail business suffered a 0.6 percent revenue drop to EUR 5.86

billion and a 2.7 percent volume drop. La Poste said this came

about because large mail customers scaled back their business in

difficult economic conditions.

The GeoPost express division increased its revenues by 8.2 percent

to EUR 1.64 billion; La Poste said it achieved higher profits but did

not disclose the figure. Cross-border sales rose by eleven percent

and domestic business in Eastern Europe and Germany was

stronger. Chronopost experienced a “significant” turnaround.

Revenue from the domestic parcels operation, Coliposte, rose by

six percent to EUR 685 million on the back of growth in online

purchases. Quality of service for second day delivery rose to

92.4 percent.

La Poste said it would continue to seek acquisitions in the

second half of the year while implementing measures to

ensure it meets its financial targets for the full year.

Posten AB Earnings Lower in First Half

Posten AB increased net sales by four percent to SEK15.59 billion

in the first six months owing mainly to its acquisition of Tollpost

Globe. Operating earnings were SEK 223 million lower than the

same period last year at SEK 1.16 billion as a result of higher

transport and wage costs.

Posten Logistics achieved nine percent organic growth and a

24 percent net sales increase. The Strålfors information logistics

and graphics business reported growth of eleven percent. Posten

Messaging (mail), however, fell two percent, or SEK 192 million.

Posten said it is uncertain how much the Swedish economy will

slow down and how that will affect volumes in core operations:

“We predict the negative trend in volumes will continue, mainly

in mail operations as substitution accelerates.” It commented that

competition from international players is intensifying.

The company is currently preparing an action plan following

approval by the Swedish and Danish parliaments for a merger

between Posten AB and Post Danmark.

EuropeAmericasAsia-Pacific

THE NATURAL PARTNER FOR THE POSTAL INDUSTRY PAGE � - Issue 378


PAGE 3 - Issue 378THE NATURAL PARTNER FOR THE POSTAL INDUSTRY

Post Danmark Sees Profits Rise

Post Danmark achieved a significant increase in pre-tax profit in its

first half year from DKK 355 million last year to DKK 616 million.

Describing the profit performance as “somewhat better than

expected,” income rose two percent while expenses dropped

almost 1.5 percent below last year’s level. That resulted from a

DKK 126 million downward adjustment in the group pension and

higher income from De Post/La Poste in Belgium.

Changes in Post Danmark’s distribution structure allowed it to

reduce staff levels.

The planned merger with Posten AB of Sweden is still due to

come into effect in January 2009. In preparation, Post Danmark

and Norway Post have signed an agreement on the transfer of

Post Danmark’s shares in PNL to Norway Post. Post Danmark will

have the right to continue customer relationships with the Danish

customers.

The company said it anticipates a higher full year profit in 2008

than last year.

Norway Post Looks for New Revenue

Norway Post is to implement a special four-year programme to

reduce costs and identify new revenues in the face of slower

economic growth and an expected acceleration in the decline in

letter volumes.

“We have to adapt to the reality and market around us. This is

why we are working purposefully to identify new areas that

can provide income and make our production work more effec-

tively so that we have as efficient a value chain as possible,” said

Norway Post chief executive officer, Dag Mejdell.

Revenue in the first half year increased by 7.3 percent to NOK

14.4 billion. Earnings before interest and tax (EBIT) were NOK 311

million before recurring items, compared with NOK 269 million in

the first half of 2007.

Revenue growth resulted mainly from acquisitions, volume

increases for logistics products and a high level of activity at Ergo-

Group. In the postal business some letter products saw volume

decline while staff and transport costs rose.

Import parcels experienced twenty percent volume growth

compared with the previous year with the largest increase - 130

percent - occurring in parcels from the United States as Norwe-

gians took advantage of the weaker dollar.

During the second quarter, Norway Post delivered 87.2 percent of

priority letters the day after posting.



PAGE � - Issue 378THE NATURAL PARTNER FOR THE POSTAL INDUSTRY


Swiss Post EBIT Continues to Climb

Swiss Post’s group profit of CHF 425 million in the first half of

2008 was CHF 82 million lower than this time last year when the

company achieved a record result.

The decline was due mainly to higher spending as a result of

increased costs. In addition, the loss of press subsidies was not

fully offset.

Operating income (EBIT) continued to climb, however, to reach

CHF 4.37 billion compared with CHF 4.3 billion last year.

In the PostMail business, addressed letter volume declined by 1.3

percent. Federal subsidies for newspaper transportation reduced

by CHF 25 million to push the division’s result down by CHF 16

million to CHF 134 million.

PostLogistics lifted its operating income eighteen percent to CHF

751 million, but posted a result that was down by CHF 24 million

to CHF 18 million due to a higher headcount and rising fuel

prices.

Swiss Post International’s result dropped by CHF 8 million to CHF

16 million, partly as a result of exchange rate movements. Stra-

tegic Customers & Solutions, the group unit that includes the

GHP and MailSource subsidiaries, posted a slightly lower year-on-

year result of CHF 8 million.

The Post Offices & Sales unit, which ceded its delivery role to

PostMail and thus had to forego the relevant compensation,

reported a loss of CHF 38 million. PostFinance, however, lifted its

result by CHF 14 million to CHF 154 million on the back of a high

inflow of new money and an improved interest result.

Describing its half year performance as “mixed,” Swiss Post said

it expected its full year result to be lower than 2007 but on a par

with previous years.

Correios Sees Profits Grow

CTT Correios de Portugal has achieved 14.9 percent growth in it

net profit to EUR 31.6 million in the first half of 2008 compared

with the same period last year.

Group consolidated operating revenue rose by 4.1 percent to

EUR 427.1 million with all business areas contributing to growth.

The CTT Expresso and Tourline express businesses achieved 9.6

percent growth.

In the half year, the quality of service index reached 188.2

compared with 138.8 in the same period last year.

The company has won a tender to work with Empresa de Correos

de Chile on a delivery modernisation project funded by the

Universal Postal Union Quality of Service Fund.




Austrian Post Increases Share of Ad Mail

Austrian Post has gained a national delivery network in Hungary

for unaddressed direct mail with the acquisition of Cont Media

Hungary kft.

Cont Media has a network in western Hungary and Pest to

complement the network of market leader Feibra Hungary, which

Austrian Post already owns. The two companies are estimated

jointly to have a sixty percent share of the Hungarian unaddressed

mail market.

Royal Mail Letter Quality of Service nears 92%

Royal Mail’s quality of service for stamped first class mail in the

three months to the end of June was 91.9 percent while second

class mail achieved a 98.5 percent performance level.

Both results were marginally below targets while bulk mail services

Mailsort and Presstream, Postage Paid Impression (PPI) mail and

standard parcels all exceeded their targets.

GLS Netherlands Claims Perfect Quality

GLS in the Netherlands claims to have achieved almost 100

percent on-time delivery of express parcels in the past six months.

The service offers next business day delivery with time-definite

options for delivery by 09.00 or 12.00 hours.

“The morning delivery by 12:00 is especially sought-after,” said

Milo Kars, director sales and operations at GLS Netherlands.

“seventy percent of express shippers make use of this option.”

Amtrak Goes into Administration Again

Struggling United Kingdom business-to-consumer parcels

company Amtrak has stopped trading, leaving 900 employees

facing redundancy and customers waiting for deliveries.

The company is in administration for the second time since

January 2007. Joint administrators from Ernst & Young said they

were assessing the financial situation of the business and as a

result collection and delivery could be disrupted.

Amtrak was sold last year to Netfold, which said it was confident

of securing the company’s future. Earlier this year, Amtrak

announced it was investing in 100 new Sprinter delivery vans

after acquiring 100 Ford Transits and eighteen double-deck

trailers for linehaul transportation. It also said it was investing in IT

to improve operational efficiency.

GeoPost Sells French Subsidiary

La Poste’s express parcels division, GeoPost, is selling Chronopost

subsidiary Taxicolis to express operator Flash Europe International.

Taxicolis specialises in personal delivery of express shipments

and high value health and breakable products within France.

GeoPost said it wanted to focus on its core express parcel delivery

business.

Flash Europe is present in ten countries. With Taxicolis it will have

revenues of EUR 110 million and 320 employees.




FedEx Upgrades Delivery Times to the US

FedEx Express has upgraded its two-day service from Europe to

major east coast United States cities to offer next day International

Priority delivery in more than 3,500 zip codes at no extra cost.

Customers already using the next day service will have their pick-

up times extended by up to six hours, the company says.

FedEx is to launch a new westbound trans-Atlantic flight between

Paris and Newark, New Jersey, to support the service upgrade.

Romania’s Pegasus Joins DPD Network

DPD is to integrate

t h e R o m a n i a n

parcels and express

operator, Pegasus,

into its network as

part of its inter-

n a t i o n a l i s a t i o n

strategy.

GeoPost which owns an 83 percent stake in DPD, acquired an 80

percent stake in Pegasus earlier this year.

The integration follows a strategic alliance between DPD and

Pegasus in February. Pegasus already offers DPD-branded products

in Romania and uses the DPD network for international traffic.

Express Operators Merge in Romania

Romanian express operators TCE Logistica and Curiero have

received the go-ahead to merge following approval by the compe-

tition council.

Curiero and its subsidiaries are being taken over by retail group

RTC Holding which will operate Curiero’s freight and parcels

services through its TCE Logistica subsidiary.

TCE is the smaller but financially stronger of the two companies.

It achieved revenues of EUR 11 million last year compared with

revenues of EUR 14 million recorded by Curiero.

Hermes Forced to Impose Fuel Surcharge

German parcels operator Hermes Logistik has introduced a diesel

surcharge in the face of sharply increasing fuel prices.

Since August 20, its invoices have been showing a EUR 0.20

surcharge on domestic parcels and EUR 0.40 on international

parcels in Europe. The company said it could no longer absorb the

higher fuel costs despite “many savings measures and the use of

modern vehicles.”

The cheapest Hermes rate is now understood to be EUR 4.10,

including the surcharge, compared with DHL’s lowest rate of EUR

3.90. DHL said it had no plans to impose a fuel surcharge.

UK Mail Wins Delivery Contract

United Kingdom mail operator UK Mail has won a GBP 1 million

contract to provide round-the-clock repair and maintenance

support on behalf of Affiniti, a network solution and communica-

tions integrator.

UK Mail will supply time-critical parts to field engineers, storing

more than 10,000 different parts at its eighteen Specialist Services

sites. The contract includes inventory management and stock

control capable of releasing goods within thirty minutes.

DHL Appoints Chief for EEMEA Region

DHL Express has appointed long-time employee John Pearson

as chief executive officer of its eastern Europe, Middle East and

Africa (EEMEA) region.

Mr Pearson has more than twenty years’ experience with the

company and moves to his new position from the company’s

global office where he was executive vice president commercial.


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Empost Delays its Market Flotation

Emirates Post has postponed its planned initial public offer (IPO)

owing to market conditions and has said it will review its position

in the light of market performance in the next two quarters.

The company plans to appoint a consultant to rework its group

strategy.

Meanwhile, Empost Cargo and Logistics is reported to have

achieved good results since it was established last year. The

business is expected to achieve twenty percent growth this year.

EuropeAmericaAsia-Pacific

Issue 378 | 10 September 2008

Swiss Post Takes on More ApprenticesSwiss Post is offering jobs in logistics, sales/communication, IT and maintenance to 700 appren-tices next year, ten percent more than this year. Since August, Swiss Post has trained 1,670 young people in twelve different courses.

TNT Cuts Transit Time for Less Urgent ParcelsTNT Germany has cut transit times to about thirty countries worldwide for i ts Economy Express service. New routing via Frankfurt Airport has reduced delivery time for less urgent parcels by two days to countries in south east Asia and by one day to south America.

Aramex Opens Centre in BahrainAramex is opening a 4,000sq metre logistics centre at the Bahrain International Airport F re e Z o n e t o s u p p o r t i t s expanding supply chain solutions network across the Gulf states. The centre will combine sea, air and land freight capabilities.

Trans-o-flex Invests in German Sorting CentreAustrian Post’s German logistics group trans-o-flex has invested EUR 13 million in a 37,500sq metre sorting centre in Herford, north-west Germany, to boost capacity in its domestic and European network.

TNT to Maintain Quality in PolandTNT Express plans to open five new facilities in Poland this year to support plans for growth in operations up to two percent a year, a rate at which it believes it can sustain the quality of its services in the country.

Joint Stamp Issue Celebrates Old Rhine BridgeSwiss Post and Deutsche Post are jo int ly issuing a stamp featuring the historic Old Rhine Bridge which links Stein in Swiss Canton Aargau with the German town of Bad Säckingen.

>>In Brief - Europe



AmericasYoung Canadians Value Bill Reminder

About half of Canadians aged between 18 and 35, say they

would value an email reminder to pay their monthly bills on time,

according to a national survey by Canada Post’s online bill delivery

service, epost.

The group agreed that a monthly reminder would be helpful,

while only 24 percent of respondents in the 55-plus age group

and 35 percent in the group aged between 35 and 54 considered

that an email reminder would be of value.

The survey found that 69 percent of Canadians are paying their

bills online.

DHL Airlift Plan Given OK

The planned airlift cooperation deal between DHL and United

Parcel Service (UPS) is understood to have the blessing of the

United States Department of Transportation.

At the end of May DHL parent company Deutsche Post World Net

(DPWN) announced a cost-saving plan that includes a 10-year,

USD 10 billion contract to transfer all domestic and international

airlift in the US to UPS (Market Flash No 374).

Transport Secretary Mary Peters, responded to a letter from Ohio’s

governor calling on the federal government to block the deal on

competition grounds. Ms Peters said DHL’s restructuring “would

not constitute an unfair or deceptive practice or unfair method of

competition.”

Ohio’s governor said he would continue with efforts to obtain an

anti-trust investigation through the US Department of Justice.




UPS Freight Improves Transit Times

UPS Freight has announced improved transit times on more than

1,200 traffic lanes originating in the Midwest, north east and mid-

Atlantic regions of the United States.

“These enhancements are part of a continual process to add value

for customers by improving the velocity of our network,” said UPS

Freight president Jack Holmes. “We have reduced transit times on

more than 10,000 lanes in the last 18 months.”

On-time performance guarantees that were first announced

earlier this year will be extended to the new transit times at no

additional cost.

FedEx Goes Domestic in Mexico

FedEx Express is to launch a domestic service in Mexico, its first in

Latin America.

FedEx Express Nacional, a next day service nationwide, will begin

operating on October 6 to any address in the country.

The service, backed by track and trace and a delivery guarantee,

will offer premium next day delivery at 10.30 hours as well as the

standard, next business day service. FedEx Express Nacional will

be available at all its existing facilities in Mexico and through its

network of authorised ShipCenters.

The company also has domestic operations in China, India and

the United Kingdom.


UPS Trains Pilots in AnchorageUnited Parcel Service (UPS) has opened a flight training facility in Anchorage, Alaska the company’s gateway to Asia, to reduce the time spent away from home for its pilots based there.

>>In Brief - Americas



Asia-PacificKiwibank Profits Reach NZD 36.8M

N e w Z e a l a n d P o s t ’s

Kiwibank has announced

profits after tax of NZD

36.8 million for the twelve

months to June 30.

The “very satisfactory” result in a challenging economic envi-

ronment has been achieved with the help of a 57 percent increase

to NZD 5.6 billion in loans and advances and a 46 percent increase

to NZD 4.8 billion in retail deposits.

The increases in the loan portfolio included the acquisition of

AMP home loan with a portfolio of NZD 700 million.

The bank said its strong deposit growth allowed it to be largely

self-funded for residential and small business loans. That reduced

exposure to more expensive and volatile wholesale markets.

Toll Growing Despite Heavy Loss

Australia’s Toll Holdings has announced heavy losses resulting

from disposal of its 63 percent stake in domestic airline Virgin

Blue. It said, however, that its underlying profits showed strong

growth in the year to June.

The financial year ended with an overall loss for the company of

AUD 695 million which included AUD 952 million on discontinued

operations including an AUD 1.2 billion write-down on the value

of Toll’s Virgin Blue stake.

Net profit from continuing operations increased, said the

company, by 24 percent to AUD 258 million on revenues up by

15.4 percent to AUD 5.6 billion. Operating profit (EBIT) rose by 18

percent to AUD 429 million.

In Australia, 7.5 percent organic growth coupled with acquisitions

generated an increase in revenues to AUD 4.42 billion.




New Postage Rates Due in Australia

Australia Post will introduce price changes on September 15 on

domestic and international services owing to increased costs.

It will also introduce new price categories: a discounted rate for

mail that is metered or imprinted as part of a charge account;

acquisition mail covering unaddressed direct mail.

FedEx Cuts Domestic Rates in China

FedEx Express has been reducing prices on is Chinese domestic

services to such a low level that next day delivery in the Yangtze

River Delta region begins at USD 1.

Commentators have said that super-low prices will take business

away from local companies already reporting losses owing to

rising labour and fuel costs.

EMS China Offers Same Day Service

China Post has launched a same day document express service

between Beijing and the north-eastern port city of Tianjin under

its EMS brand.

The service, costing from CNY 20 for a 500g document, uses rail

transport. Items handed into designated post offices or collected

from shippers before 11.00 hours will be delivered by 18.00 hours

on the same day.

PhilPost and USPS Plan Expat Remittance

The Philippine Postal Corporation (PhilPost) is working with the

United States Postal Service to establish a low-cost remittance

service between the 4.4 million Filipinos in the US and their rela-

tives at home.

The project is in line with the Philippine Government’s directive to

bring down remittance fees for overseas Filipino workers. These

send USD 15 billion a year back to the Philippines. More than half

comes from the US.

TNT Opens Freight Centre in Hanoi

TNT Express has opened its international and domestic operations

centre, in Vietnam’s Hanoi as part of its growth plan for southeast

Asia.

The new 1,200sq metre facility, part of a EUR 1 million investment

in Hanoi, is designed to handle heavy freight. It employs ninety

full-time staff who will manage the facility round the clock.


Issue 378 | 10 September 2008

PAGE 1� - Issue 378THE NATURAL PARTNER FOR THE POSTAL INDUSTRY

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ABOUT THIS PUBLICATION

IPC Market Flash is a bi-weekly newsletter providing a comprehensive look at new developments emerging in the international postal marketplace. It is published by the Markets and Communication Department of the International Post Corporation.

IPC Market Flash is sent out exclusively to IPC member posts. If you would like to contribute an article or photograph to this publication please contact us via email at [email protected] or send your submissions to : IPC Head of CommunicationAvenue du Bourget, 441130, Brussels Belgium

While every care has been taken to ensure the accuracy of this report, the facts and estimates stated are based on information and sources which, while we believe them to be reliable, are not guaranteed. No liability can be accepted by International Post Corporation, its directors or employees, for any loss occasioned to any person or entity acting or failing act as a result of anything contained in or omitted from this report.

Documents

Market Flash Issue 378 | 10 September 2008 print next/media/documents/public/market-flash/300-400/mf378.pdfMarket Flash Issue 378 | 10 September 2008 EUROPE La Poste to Raise Funds