It is fair to conclude that Portugal’s privatised Post Office, CTT, is performing poorly but that there are signs of life.The business once was a money-making machine, contributing to the Treasury year after year, but now it has been sold and the share price and profits have collapsed in tandem.
CTT posted profits of €5.4 million in the first three months of the year, down 48.2% from the €10.3 million it made during the same period a year earlier.
This result was way below the most pessimistic analysts’ forecast. CaixaBI expected a profit of €10.2 million for the quarter.
The company’s directors explained that this poor result is due to non-recurring expenses. Without these, the profits would have decreased by only 27.4% - hardly reassuring to shareholders
Francisco Lacerda, the head of CTT, explained that the decrease in recurring earnings was due to the fact that the first quarter of 2018 contained two fewer working days than the first three months of last year. The next excuse was that a April 1st postage price increase had not had time to bolster profits.
Despite this fall in profitability, today’s CTT statement read that "the operational transformation plan is surpassing initial projections, having already contributed positively to the structure of expenses.”
As for expenses, CTT has failed to get to grips with staffing levels as, despite highly publicised lay-offs of 179 staff, the company ended the quarter employing 32 more workers than a year ago.
The company statement also reported that the restructuring plan has saved €11.7 million from recurring expenses against a year-end target of €13.8 million.
Banco CTT saw an increase in revenue of 28.8% to €5 million and closed the quarter with 300,000 customers and 255,000 deposit accounts.
Banco CTT saw an increase in revenue of 28.8% to €5 million and closed the quarter with 300,000 customers and 255,000 deposit accounts.
Banco CTT now has customer deposits of €665 million and has lent its customers nearly €114 million.
If the shareholders stick to the current management and its rescue plan, trading should stabilise and expenditure reduce.
