Paris - April 15th, 2010
La Poste Group unveils "Ambition 2015" strategy
The Chairman and CEO of La Poste Group, Jean-Paul Bailly, today presented the publicly-owned company’s new strategic plan Ambition 2015 to the Board of Directors. The plan establishes the priorities and change management principles for adapting to the profound evolution in La Poste’s business environment, and making the company - a European leader in logistics and financial services - best-placed to serve the French public. It targets a gradual return to the levels of profitability generated by La Poste in recent years, incorporating an investment programme whose implementation primarily depends on a forthcoming €2.7 billion capital increase. The strategic plan unveiled today will be one of the elements used by the French government and Caisse des Dépôts to prepare for the important next step in the development of La Poste.
The five priorities of La Poste Group for 2015
1. Fulfilling its four public service missions (universal postal service, press transportationand delivery, banking accessibility and regional planning), which underpin essential aspects of daily life in France. The Law of 9 February 2010 restated the details of each of these missions.
2. Achieving sustainable growth in all sectors, by increasing consolidated revenues, keeping costs under control, raising operating profitability, developing partnerships and improving customer satisfaction.
3. Focusing on the quality of services in all group businesses. This endeavour is already bearing fruit, with improved complaint handling, clearer communications and reduced waiting times in post offices. The rollout of a new design concept for post offices and the high quality of La Banque Postale’s customer care are also indicative of the group’s commitment in this area.
4. Fostering innovation through the development of new services (Digiposte, ‘hybrid mail services’, the new Coliposte service, mobile phone access, development of La Banque Postale’s multi-channel marketing).
5. Developing new businesses and entering new markets in Europe, in particular through acquisitions.
These five priorities are aimed at making La Poste a leading example of a modernpublic enterprise.
Implementing the five priorities on the basis of two change management principles
Against a backdrop of fierce competition on all of its markets, and with its traditional mail business constantly evolving, the company’s strategic plan will be executed in line with La Poste’s social model principle, which is dedicated in particular to guaranteeing no compulsory redundancies, promoting equal opportunities, providing on-the-job and class-based training for new recruits, skills development and good working conditions, ensuring the safety of postal workers and sharing the fruits of success.
La Poste’s second key principle is sustainable development, exemplified by large-scale projects involving electric-powered vehicles, goods transport, efficient energy management, responsibly sourced paper and waste management, as well as day-to-day measures such as eco-driving, the dissemination of good practice, and raising managers’ awareness of sustainability issues.
La Poste Group’s ambitions for 2015
The 2015 Ambition programme sets new financial targets for the group. A diversified business portfolio will be the key to a gradual return to the levels of profitability enjoyed before the economic crisis hit and the accelerated decline in postal traffic. The group is forecasting a slight increase in its revenues over the period, to close to €22 billion (excluding external growth) in 2015, with an operating margin of around 8%.
Along with other European postal operators, La Poste Group is projecting a 30% drop in mail volumes by 2015.
The strategy of the mail business is to become a premium communications medium, offering businesses and individuals a 21st century service combining print formats with the most advanced digital technologies. To do this, between now and 2012 the mail business will fully modernise its industrial systems, adjusting costs to volumes, and from this year, offer new, innovative services and develop profitable growth drivers. The mail business will also provide eco-designed and eco-transported services. Its financial goal for 2015 is to remain profitable and fund its investments out of cash flow.
The parcels-express business is projecting an increase in volumes, as e-commerce grows and the economic climate in France and Europe steadily improves. Despite stiffer competition, the parcels-express business aims to maintain a high operating margin and become the European leader, in terms of market share and profitability, in the fast delivery of light goods, which is - and will remain - the group’s core area of excellence.
La Banque Postale will capitalise on its positioning as a retail bank upholding the values of customer service at a local level. Between now and 2015, it is looking to benefit from the expansion of its range of products and services for individuals and business customers, while maintaining the robust sales growth it has generated since its launch. The cost-to income ratio may be reduced by around 15 points through a stabilisation of expenses and continued development, mainly on the back of growth in new activities.
For its Retail brand, La Poste is planning to roll out its design concept for post office reception and service areas, putting an end to single queues. For standard counter transactions, the increased use of alternative on-site (machines) and off-site (telephone and internet) resources will make it possible to focus post office activities on advising customers. These changes will bring about a huge improvement in the quality of service provided to customers, lead to the development of value-added activities that help meet their needs and expand La Poste’s three main businesses, reducing their costs and making them more competitive. The aim is to reduce the overall cost of the post office network between now and 2015.
In view of all these sector trends, La Poste group’s financial targets will be achieved over three phases:
- The transition phase (2010-2011), during which the group’s operating margin will reflect a drop in operating profit of the mail business, a gradual widening of margins in the parcels business and a steady improvement in the bank’s performances. The aim will be to slow and then stop the decline in earnings that has taken place over the last two years.
- In 2012, the group will begin a period of recovery and should return to the earnings levels generated prior to the economic crisis and sharp decline in mail volumes, albeit with markedly different contributions from the group’s individual businesses.
- At the end of the plan, the group should enter a period of faster growth. Once the profitability of the mail business has stabilised, the earnings generated by the parcels-express business through its European network, together with the bank’s realisation of its considerable growth potential, should result in an operating margin of around 8%.
A growth strategy made possible by the capital increase
Over the 2010-2015 period, the investment required for the implementation of the modernisation and development plan is estimated at almost €9 billion, before the impact of any new rules applicable to financial activities.
In particular, this investment covers:
- completion of programmes already under way in the mail and parcels businesses
- refurbish and secure the post offices network and upgrading of IT systems in the various businesses, especially La Banque Postale
- identification of the acquisitions needed to become a leading player in light goods logistics in Europe
- innovation and growth plan for new segments of the mail business
- strengthening of the bank’s equity in response to regulatory requirements
Given the current level of debt, the investment programme will be dependent on cash flows generated by the group and the capital increase approved by the French government and Caisse des Dépôts et Consignations.
The strategy is entirely consistent with the report of the Ailleret Committee and the announcement by the French president, in December 2008, of a capital increase to take place in 2010, made possible by the change in La Poste’s status.
LA POSTE GROUP PRESS CONTACT
Virginie Gueidier
Tel: +33 (0)1 55 44 22 41
Fax: +33 (0)1 55 44 22 62
virginie.gueidier@laposte.fr
