The decline in profitability of Portugal’s Post Office business continues, with profits down 49.3% to under €10 million for the first nine months of the year compared to the same period in 2017.
CTT boss, Francisco de Lacerda, has been overseeing a major restructuring plan, the cost of which has eaten into profitability. So far, shareholders have allowed him to continue but the lack of return and the erosion of share value leaves him in a precarious position.
The non-recurring costs resulting from the restructuring plan, include €15.8 in pay-offs for workers who agreed to rescind the contracts by mutual agreement.
This hit earnings before interest and taxes, down 22.7% to €45.8 million even though revenues increased in many of CTT’s areas of business.
Turnover increased 1.3% to €524.9 million, mainly due to a 14.7% increase in revenue from handling parcels, which contributed €110 million to the company's revenues.
Letters continue to be the main business of the company, a declining sector that has been instrumental in nearly halving the company’s share value since privatisation.
CTT’s financial services business also has been a disappointment with revenues down 29% to €30.7 million, due to the low uptake of a government borrowing product sold through Post Offices.
The Post Office’s new bank, Banco CTT, has continued to grow it loans business with €55 million in mortgages taken up by customers and 500 new accounts opened daily over the period.
CTT’s largest shareholder is Manuel Carlos de Mello Champalimaud who controls 12.58% via Gestmin SGPS, SA. This blue-blooded businessman has the requisite skills to resolve CTT’s structural problems caused by a decline in people posting letters but so far has backed Lacerda’s restructuring plan despite a collapse in CTT’s share price.
