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Österreichische Post AG closes financial year 2002 with a profit

Pressemeldung from 5/16/2003

Increases in sales volume in Branch Network and Info-Mail divisions, decrease in Letters and Parcels.
Payroll costs under € 1billion for the first time

Österreichische Post AG has closed the financial year 2002 with a profit. Profit from ordinary activities amounts to € 19 million (2001: € 47 million), with earnings before interest and taxes (EBIT) of € 11 million (2001: € 23 million) and an operating performance of € 1,545 million (2001: € 1,576 million).
As compared to last year, Österreichische Post AG‘s turnover was almost the same at € 1,484 million. In 2001, turnover amounted to €1,505 million.

Payroll costs cut to below € 1 billion mark for the first time
It was possible to further reduce expenditure for personnel, which, at € 993 million, is below the € 1 billion mark for the first time since the foundation of Österreichische Post AG. In 2001, payroll costs still amounted to € 1,022 million. All in all, the head count was reduced by 1,152 full-time equivalents, which results in an average total of 28,974 full-time equivalents for 2002.

Quality improvement and cost reduction programs to counteract continuing weakness of economy
“Österreichische Post AG was not spared the effects of the weak economy and also suffered additionally from a structural change in the market caused by cost cutting measures as well as by a growing tendency to use alternative means of communication”, said Österreichische Post AG CEO Anton Wais at the press conference held today, Friday 16 May 2003, in Vienna on the occasion of the publication of Österreichische Post AG’s financial statement.
In 2003, the main focus will be on quality and further cost reductions, according to Wais:
“We have our costs under control and will continue our cost-cutting activities in the current financial year. We will implement a quality improvement campaign in order to consolidate our position on the declining, but highly competitive postal services market, “ Wais added.
As cases in point, Wais mentioned higher speed and increased reliability in transport and delivery services, more friendliness, competence and service at post offices, as well as improved know-how and optimized support and advice for business customers.
On medium-term plans for the period up to 2006, Wais said that while the company’s survival had been ensured, there was no way for Österreichische Post AG to achieve an additional increase in result and value on its own accord. 

New organization structure to enable flexible response to market changes
2002 was a year of large-scale internal restructuring for Österreichische Post AG. In the year under review, the previous organization structure was replaced with a divisional organization comprised of the Letter, Info-Mail, Branch Network, Courier.Express.Parcel, and Media Services divisions, supported by central functions and service departments. The new organization structure allows a greater degree of flexibility and a more fine-tuned adjustment to market requirements.

Letter division
With € 710.7 million (2001: € 726.4 million) the Letter division accounts for the largest share in total sales volume. The weakness of the economy had a negative impact on letter volumes carried, above all in the business customer segment. As far as the international letter business was concerned, however, results were better than last year.
In 2002, Österreichische Post AG pressed ahead with the ongoing restructuring of its postal delivery services. To make distribution services more flexible and efficient, postal deliveries are scheduled to be distributed from 450 to 500 delivery centers by 2004. By the end of 2002, as many as 219 delivery centers were already fully operational.
2002 also witnessed the implementation of one of the largest infrastructure projects in Austria, the Vienna Letter Center. After some growing pains at the start of full-fledged operations in September 2002, the Letter Center now processes as many as four million items a day without problems.

Info-Mail division
In spite of the economic downturn and the accompanying general decline in advertising spending, the Info-Mail division was able to achieve a slight increase in sales volume (€ 341.1 million as compared to € 340.6 million in 2001).
The Info-Mail division, which also suffered from the effects of the negative overall development of the economy, was able to balance these effects by stepping up sales in the Info.Post (non-addressed advertising items) segment. With a market share of about 63%, Österreichische Post AG holds the leading position in the completely liberalized non-addressed advertising items market.
In 2002, Österreichische Post AG acquired 75% minus one share in advertising distributor feibra.
Customers thus not only have Info.Post, with delivery to delivery boxes or mail boxes, at their disposal, but can also rely on the feibra distribution channel to have non-addressed advertisement delivered to the doorstep.

Branch Network division
Sales figures in the Branch Network division grew by eight percent from € 163.1 million in 2001 to € 175.4 million in 2002. The reduction in the number of branch offices from previously 2,300 to 1,669 was implemented as scheduled in 2002. The expected savings potentials were achieved, and with the help of sales drives as well as training measures it was possible to increase sales figures in spite of a concentration of locations.
In 2002, the “Bitte recht freundlich” (friendly service) campaign provided training for all branch office managers and deputies. The quality of service is now being monitored by an external institution by means of test visits and calls in all branch offices. The new types of branch offices,, Post-Box and Post-Partner, which were presented for the first time in 2001, met with customer approval and were further developed and extended in the course of 2002. At the end of 2002, a total of 17, 5 Post-Box, and 120 Post-Partner outlets were operational.


Courier.Express.Parcel division
In 2002, the Courier.Express.Parcel (CEP) division’s sales volume amounted to € 158.0 million (2001: € 164.9 million). The weakness of the economy also had impacts on the sales figures in the Courier.Express.Parcel (CEP) division, especially in mail order business. However, the fourth quarter of 2002 brought a distinctive improvement of the sales situation as well as an increase as compared to the same period in 2001.
In 2002, Yellologistics, the Österreichische Post AG subsidiary founded the year before in Slovenia, was able to establish its position on its home market. Subsidiaries Slovak Parcel Service and In Time (Slovakia) also managed to record increases in sales figures in 2002. Further options for entering markets in Eastern and Southern Europe are being explored in the Czech Republic, Hungary and Croatia.

Media Services division
In the past financial year, the Media Services division contributed € 89.9 million (2001:€ 99.0million) to Österreichische Post AG’s overall sales volume.
The decline suffered by the Media Services division is attributable to the cessation of payments for services in the public economic interest in 2002. A comparison of sales volumes with last year’s figures adjusted by the loss of these payments indicates a six-percent increase in sales volume. Excellent results for the fourth quarter (with a large volume of items sent in the run-up to the last Austrian parliamentary elections) were responsible for this positive development. Österreichische Post AG’s Media Service division delivered about 4,600 titles (newspapers, sponsoring mail, and advertisements) in 2002.

1st quarter 2003
For the 1st quarter of 2003, profit from ordinary activities amounts to € 7 million (2002: € 15 million), with earnings before interest and taxes (EBIT) of € 7 million (2002: € 14 million) and an operating performance of € 380 million (2002: € 391 million). For the period from January to March 2003, sales revenues amounted to € 368 million, as compared to € 381 million for the same period in 2002.
Payroll costs were reduced by 4 percent during the 1st quarter of 2003, now amounting to € 242 million as compared to € 252 million for the 1st quarter of 2002.
Rudolf Jettmar, member of the board in charge of finances, does not expect a rapid trend reversal: “The results of the first quarter as well as the developments on the European postal services markets indicate clearly that we will have to persist with our cost reduction program in the current financial year.”

For more information please contact:

Österreichische Post AG
Company communication
Press section/ PR
Michael Homola
Tel.: +43 (1) 515 51 - 32010
Vienna, 16 May 2003

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