Annual report 2006 - International Post Corporation/media/documents/public/annual-reports/member... · Administrative assistant, Wabern Annual Report Chairman’s foreword 6 ... groups,

Annual Report 2006

Id like Swiss Post to stay the way it is.

StephanieEhret Teacher,Riehen

The competition is forcing Swiss Post to change too.

RetoBrndli Managingdirector,Dietikon

DAnnualReport|Contents

I want to buy stamps and not jelly beans at the post office.

DianaTschui Administrativeassistant,Wabern

Annual ReportChairmansforeword 6InterviewwiththeChiefExecutiveOfficer 8Service-oriented:AnefficientSwissPostforastrongSwitzerland. 12 Group 12 Mail 18 FinancialServices 20 LogisticsServices 22 PassengerTransport 24 International 26 PostOfficeNetwork 28 Philately 30 GHPandMailSource 32 Serviceunits 34

Innovative:Evengreaterprofessionalismthroughinnovation. 36Prudent:Genuineinnovationthatprotectsexistingassets. 42Considerate:Keepinganeyeonexistinginfrastructurewhileundergoingchange. 48Responsible:Weareamodelofresponsibility. 56Exemplary:Theleadershouldsetanexample. 62BoardofDirectorsandExecutiveManagement 68

Corporate Governance 73

Financial Report 81

GRIindex 157

Contents

Verantwortungsbewusst

Swiss Post the backbone of the basic service generates value and acts in a socially responsible manner.

Our visionOurvisionpointsthewayforwardforus.WewanttocontinueprovidinganoutstandingbasicpostalserviceforSwitzerlandspeopleanditseconomy.Wewanttocontinuedevelopingsuccessfullyasacompanyandliveuptooursocialresponsibility,bothasanemployerandtowardssociety.

Our long-term actionOurvisionandourcorevaluesofentrepreneurial,credibleandco-operativeconstitutethebasisforourlong-termaction.We are service-oriented and innovativeandourfinancialsuccessdependsonthis.Wetrytouseessentialresourcesprudentlyandconsiderately.Asthesecond-largestemployerinSwitzerlandandasanautonomousinstitutionunderpubliclaw,weactinanexemplaryandresponsiblemanner.

Our non-postal brand- name articles contribute towards financing the post office network.

KarlKernHeadofPostOffices&Sales,Berne

3AnnualReport|Vision

F

areasandfourbusinessunits,whichinturnincludeunitsoftheirownandpossiblyoneormoresubsidiaries.GHPandMailSourceconstitutetheNewBusinesssegment.WeoperateunderthecoreSwissPostbrandwithourflagshipbrandsPostMail,Post-Logistics,PostFinanceandPostBus.

Managementandserviceunitscarryoutkeytasks.Theproductmanagement,logisticsandproduction,e-business,informationmanagementandsalescross-cuttingactivi-tiesarecoordinatedbyspecialistcommit-tees.

businessincludesletters,promotionalmail-ings,newspapertransport,parcels,expressitems,courierservices,retailfinancialserv-ices,road-relatedpassengertransportandgoodslogistics.Inaddition,weareexpand-ingourpost-relatedelectronicservicesbothinSwitzerlandandabroad,buildingupourdistributionservicesinSwitzerlandandinneighbouringcountriesandaregrowinginprofitablenichesintheinternationallettersmarketandinpassengertransport.

ThehighestorganofgovernanceistheBoardofDirectors.TheExecutiveManage-mentisresponsibleforoperationalmanage-ment.SwissPostcomprisesfourbusiness

Swiss Post is the second-biggest em-ployer in Switzerland. We provide the public and the business community with postal, payment and passenger transport services. We ensure a basic postal service ( 1, 2, 3, 4, 5), increase the companys value and operate a socially responsible human resources policy. The Federal Council sets out strategic objectives for Swiss Post for four years at a time. ( 6)

Number oneSwissPostishighlyprofitableandthenum-beroneinitsdomesticmarketandininter-nationalbusinesswithSwitzerland.Ourcore

Swiss Post in brief.

Functional organization

Product Management

Sales

Information Management

E-Business

Logistics & Production

Finance

Human Resources

General Secretariat

Strategic Account Management

Group Corporate Development

Corporate Communication

Corporate Security

Internal Auditing*

Management Unit

Service Units

Real Estate

Service House

Corporate Purchasing

Finance, Insurance Management

Information TechnologyMai

l

Log

isti

cs S

ervi

ces

Fin

anci

al S

ervi

ces

Pass

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er T

ran

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Business areaSpecialist committees Business units

Inte

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ion

al

Post

Offi

ce N

etw

ork

Phila

tely

New

Bu

sin

ess

Product Management

Sales

Information Management

E-Business

Logistics & Production

Finance

Human Resources

General Secretariat

Strategic Account Management

Group Corporate Development

Corporate Communication

Corporate Security

Internal Auditing*

Management Unit

Service Units

Real Estate

Service House

Corporate Purchasing

Finance, Insurance Management

Information Technology

Mai

l

Log

isti

cs S

ervi

ces

Fin

anci

al S

ervi

ces

Pass

eng

er T

ran

spo

rt

Business areaSpecialist committees Business units

Inte

rnat

ion

al

Post

Offi

ce N

etw

ork

Phila

tely

New

Bu

sin

ess

* reportingdirectlytotheChairmanoftheBoardofDirectors

4 AnnualReport|SwissPostinbrief

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

MailPostMaildelivers15millionletterseachday:fromgreetingscardsthroughloveletterstobusinesscorrespondence,directmarketinglettersandnewspapers.Post-Mailoperatesinthefollowingmarketsegments:privatecustomers,businessmail(invoices,accountstatements),directmarketing,basicmail(dailymail,espe-ciallyforpublicauthorities)andprintme-dia.85%ofrevenueisgeneratedbybusinesscustomers.PostMailprovidesaroundonehundreddifferentservicesforitscustomers.

Logistics servicesPostLogisticsistheleadinglogisticspro-viderinSwitzerland.Businesscustomersbenefitfromarangeofservicesavailablefromasinglesourceandcustomizedadviceforshippingparcels,expressandcourieritems,aswellasthetransportofgoodsandwarehouselogistics.PostLogis-ticsalsoofferstailor-madeservicesforindividualcustomersorspecificcustomergroups,suchasimport,customsclear-anceandlocaldistributionthroughoutSwitzerland,operatingasparepartswarehouse,returnshandlingandnight-timedelivery.PostLogisticsguaranteesanationwidebasicserviceforparcels.

Financial servicesPayments,investments,retirementprovi-sionandfinancing:PostFinanceisaretailfinancialinstitutionwithacomprehensiverangeofproductsandservices.Withamarketshareofaround60percent,itistheundisputedleaderintheSwisspay-mentsmarketand,withyellownet,aleaderine-financeservices.PostFinanceisareliablepartnerforprivatecustomerswithlowtoaverageincomeandassetsaswellasforSMEs;italsoworkswithlargecompanies,publicentities,cantons,theConfederationandsocialinsurancecompanies.PostFinanceaimstoprovidethemallwithanexcellentservice.

Passenger TransportPostBusSwitzerlandAG,awhollyownedsubsidiaryofSwissPost,hasanetworkcovering12.268kilometresandcarriesover106millionpassengersayear,mak-ingitthenumberoneproviderofregionalpublictransportinSwitzerland.OutsideSwitzerland,PostBusoperatesscheduledservicesinFranceandthePrincipalityofLiechtenstein.1.994vehiclesareontheroaddaily,carryingcommuters,travellingtouristroutesorprovidingadial-a-rideservice.PostBusisareliableandefficientpartnerformunicipalitiesandcantonsofferingscheduledservicesandcompre-hensivetransportmanagementrangingfromvehiclemaintenancetomarketing.

Post Office NetworkWitharound2,500postofficesthrough-outSwitzerland,PostOffices&Salesof-fersauniquebasicservicethroughoutthecountry:Switzerlandhasoneofthedens-estnetworksintheworldintermsofaccesspoints.Abroadrangeofbrand-namearticles,bothpostalandnon-post-al,fromstampstostationerytomobilephones,areonsaleattheseoutlets,cateringforbothprivatecustomersandcorporateclients.

InternationalSwissPostInternationalofferscustomersinSwitzerlandandabroadanattrac-tivebulkmailingserviceforletters,print-edmatterandsmallconsignments.SPIisrepresentedworldwidewithsubsidiaries,distributionpartnersandjointventuresin13Europeancountries,theUSAandfourcountriesinAsia.Welloverhalfofits1,000orsoemployeesarebasedinSwit-zerland.SPIworkstogetherwithexpe-riencedspecialistsaroundtheworld.Wehavejoinedforceswithpartnersintheareaofcustomsclearance,parcelpost,courierandexpressservicestoensurethatourcustomershavespeedyaccesstoatrulyglobaldistributionnetwork.

PhilatelyThePhilatelyunitissuesaround40newstampseachyear.Atatimewhenelec-tronicservicesarepushingoutphysicallettersandstamps,theunitissupportingitsexistingbusinesswithtopicalandpopularissuessuchastheAlinghistampwhileattemptingtowincollectorsabroadtoo.Givenitscurrentcustomerbaseandsupportedbythehighculturalvalueplacedonstamps,theunitisbuildingupasecondpillarbyofferingamail-orderbusinesswithhigh-qualityproducts.

GHPTheGerman-basedGHPGroup,witharound2800employees,operatesinsevencountriesandwasacquiredbySwissPostin2006.AsoneofthebiggestEuro-peanprovidersofdialoguemarketingandcustomermanagementservices,itroundsouttheSwissPostrange.

MailSourceMailSourceoffersin-housepostalservicesforcompanies,scanning,archivingandreceptionservicesinSwitzerland,theUK,Germany,Italy,Liechtenstein,FranceandtheUSA.MailSourcewasestablishedin2000asasubsidiaryofSwissPostandisthecompanysfastest-growingunit.

Readmoreonlinewww.swisspost.ch/ar2006links1) PostalAct2) PostalOrdinance3) PostalOrganizationAct4) OverviewofSwissPostsuniversalservices5) SwissPostsbasicservice,termsanddefinitions6) TheFederalCouncilsstrategicobjectivesfor

SwissPost2006200999)Figuresforthe2006AnnualReport

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

Swiss Post key figures

Service-oriented 2006 2005Result

Operating income CF million 7 895 7 499

of which: generated abroad1 % of operating income 17.6 14.5

of which: reserved services % of operating income 25.7 31.9

Operating result CF million 823 805

As a share of operating income % 10.4 10.7

of which: generated abroad1 % of operating result 8.0 4.7

Group profit for the year CF million 837 811

Added value2 CF million 4 735 4 716

Employees

Employees at Swiss Post Group (excluding trainees) Full-time equivalents 42 178 41 073

of which: abroad Full-time equivalents 3 379 1 347

Financing

Total assets CF million 55 600 50 130

of which: customer deposits CF million 48 364 43 630

Equity CF million 1 605 922

Investments

Investments CF million 540 347

of which: other tangible fixed assets, intangible assets CF million 195 176

of which: operating property CF million 310 153

of which: investments CF million 35 18

Ratio of self-financed investments % 100 100

Value generation

Cash flow from operating activities CF million 3 247 3 603

Post Value Added (PVA) CF million 532 532

Innovative 2006 2005PostMail Share of new products as a %3 1.32 0.99

Swiss Post International Share of new products as a %3 3.43 2.90

PostFinance Share of new products as a %3 4.40 2.88

Logistics services Share of new products as a %3 2.58 2.75

PostBus Share of new products as a %3 0.00 0.00

Post Office Network Share of new products as a %3 3.61 1.10

Prudent 2006 2005Employees (Swiss Post Group) Full-time equivalents 42 178 41 073

Employees (Swiss Post) Full-time equivalents 35 326 37 033

Trainees at Swiss Post Group in Switzerland Persons 1 429 1 465

New trainees Persons 566 512

Total departure rate at Swiss Post As a % of average headcount 10.9 8.3

Fluctuation rate (voluntary departures) at Swiss Post As a % of average headcount 3.5 3.6

Employee satisfaction Index 67 67

Motivation/willingness to perform Index 70

Monetary brand value of Swiss Post CF million 535 479

2005 2004

Energy consumption Primary energy total year 4 716 832 4 684 751

of which: electricity Primary energy total year 2 001 319 2 081 949

of which: heat Primary energy total year 597 880 517 211

of which: fuel Primary energy total year 2 117 632 2 085 591

of which: energy from renewable sources % 8.9 9.2

Paper Millions of A4 sheets 108.2 91.9

1 Definition of abroad in accordance with secondary segmentation in the Financial Report.2 Added value = operating result + staff costs + depreciation income from sale of property, plant and

equipment, intangible assets and investments3 Share of net sales from newly launched products (in the past four years) in terms of net sales for the unit4 In accordance with the CEC, the employment relationship continues for two years. For employment

contracts in accordance with the Swiss Code of Obligations, the employment relationship is discontinued after six months. The figures are therefore not comparable with other companies.

5 Excl. Executive Management6 Excl. CEO7 Swiss Post Group in Switzerland, excl. Members of Exec. Mgmt.8 18 years, excl. trainees9 Average remuneration paid to Members of Executive Management in relation to average employee salary

Considerate 2006 2005Individual consultations by job centre Number 1 362 1 337

Job centre seminars Participants 1 497 1 762

Notice given by employer for economic reasons Number 68 161

Occupational accidents at Swiss Post Number per 100 FTEs 6.1 6.5

Non-occupational accidents at Swiss Post Number per 100 FTEs 16.3 16.2

Costs generated by accidents at Swiss Post CHF million 79.0 84.8

Days lost due to illness and accidents Absentee days per employee4 11.5 12.0

Days lost due to illness and accidents Days per year 394 105 432 160

2005 2004

Total environmental impact Env. impact points (millions) 299 203 306 125

Total climate-related burden t CO2 equivalent 281 249 280 472

Climate-related burden of goods transports t CO2 equivalent 53 634 55 451

of which: rail t CO2 equivalent 6 034 7 851

of which: road t CO2 equivalent 47 600 47 600

Climate-related burden of passenger transports t CO2 equivalent 122 165 119 700

Climate-related burden of journeys to work t CO2 equivalent 46 809 49 259

Responsible 2006 2005Jobs in Switzerland Swiss Post employees per 1000 employees 12.9 13.6

Jobs in marginal areas Swiss Post employees per 1000 employees 13.4 14.0

Employees aged 50 59 % 25.0 24.0

Employees aged 60 and over % 4.1 3.8

Average age of staff Years 42.7 42.3

Degree of employment 90 % or higher (full-time), total % 56.0 56.9

Degree of employment 90 % or higher (full-time), men % 85.4 85.6

Degree of employment 90 % or higher (full-time), women % 26.5 27.3

Degree of employment under 90 % (part-time), management % 8.5 7.9

Degree of employment under 90 % (part-time), management, men % 5.3 4.9

Degree of employment under 90 % (part-time), management, women % 30.5 29.9

Sports sponsorship CHF million 9.7 9.6

Cultural sponsorship CHF million 3.6 5.1

Social commitments/donations/gifts CHF million 3.4 3.1

Donations to political parties CHF million 0 0

Exemplary 2006 2005Employment in accordance with Swiss Post CEC FTEs as a % 80.6 86.6

Men % 50.1 50.8

Women % 49.9 49.2

Proportion of women in senior management posts5 % 9.1 9.3

Average remuneration to Members of Executive Management6 CHF per year 444 187 426 498

Average salary (employees)7 CHF per year 75 127 73 593

Minimum salary Swiss Post CEC8 CHF per year 41 006 40 400

Salary bandwidth9 Factor 5.9 5.8

Cover of Swiss Post pension fund in accordance with occupational benefit plan % 103.9 101.1

Added value generated2 CHF million 4 735 4 716

Of which paid to: employees CHF million 3 711 3 704

Of which paid to: creditors CHF million 11 9

Of which paid to: public sector CHF million 2 4

Of which paid to: owner CHF million 0 0

Of which paid to: company CHF million 1 011 999

Of which for: transfer to Swiss Post pension fund CHF million 350 350

Of which for: building up equity CHF million 487 461

Of which for: depreciation CHF million 257 252

Of which: other CHF million 83 64

Additional key figures are set out in the table of figures. ( 99)

5 Annual Report | key figures

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

Geschftsbericht20066 AnnualReport|Chairmansforeword

tinuetodevelopthebasicserviceandadaptitinlinewithcustomerbehaviour.Wewillremainaprogressiveandsociallyresponsibleemployer,eveninthefaceofincreasingcompetition.SwissPostwantstoincreasethevalueofthecompanythroughallitsbusinessactivities.Itwantstoremainthemarketleaderinitscorebusinessanddevelopprofitablyinnew,relatedmarkets,intheinterestsofitscustomersandtogetherwithmotivatedstaffandstrongpartners.Thisissummedupinourvisionstatement:SwissPostguaranteeingabasicservicegeneratesvalueandactsinasociallyresponsiblemanner.

SwissPostliveduptoitsvisionin2006.Overthepastyearweserved3.1millionhouseholdsinSwitzerlandonatleastfivedaysaweek,deliveringletters,parcelsandnewspapers.9outof10ofthecoun-trysinhabitantscanreachtheirnearestpostofficeorobtainpostalservicesforprivatecustomersandSMEseitheronfootorbypublictransportwithin20minutesonaverage.Independentstudiesconfirmthatthequalityofourbasicpostalserviceisexcellent.Thisisalsobackedupbythehighlevelofcustomersatisfaction,whichroseagainslightlyin2006.

StaffatSwissPostenjoyexcellentemploy-mentconditions,accordingtoanation-widecomparison.Asin2005,employeesatisfactioncametoagood67outof100indexpoints.Motivationwasmeasuredforthefirsttimeand,at70points,isanindicationofjusthowkeenouremployeesaretoperform.

Competitive in the marketInanenvironmentshapedbyfar-reachingchangeandfiercecompetition,wegener-atedsalesof7,895millionfrancs.Ofthis,themonopolybusinessaccountedfor1,834millionfrancsor23.2percentofsales,whilethelionssharewasgeneratedinfreecompetitioninthepostalmarket.SwissPostlifteditssalesto837millionfrancs.Thestrongeconomictrendaswellasourwillingnesstobeinnovativeandprovideefficientservicescontributedtothisresult.

Wethusincreasedtheequitybaseby1,605million,bringingitto683millionfrancs.However,inthisrespectSwissPostisstillbelowthelevelscustomaryfortheindustry.Ifweareallowedtogoonaccu-mulatingourprofit,itwilltakeuntil2009toincreaseequitytothelevelrequiredforoperatingpurposesandcreatetheobliga-

AntonMenthChairman

Dear Sir or MadamForthefirsttimeyouarebeingpresentedwithanannualreportthatcontainsacomprehensiveoverviewofourvaluesandkeyprinciples.ItincludesinformationaboutsustainabilityatSwissPostaswellastheenvironmentalandsocialaffairsreports,whichwerepreviouslypublishedseparately.Inadditiontoourusualreviewofbusinessyouwillalsobeabletoreadaboutinnovativeprojects,ourprudenthandlingofresources,ourendeavourstotakeoursurroundingsintoconsiderationasmuchaspossible,ourmanagementphilosophyandourresponsibilitytosociety.

Theonlyconstantintodayssocietyischange.IfSwissPostwantstobesuccess-fulandsafeguarditsfuture,itmustanti-cipateeconomic,technologicalandpoliti-caltrendsandgearitsactionsaccordingly.Itisimportanttousthatouremployeesandourpartnersandofcourseourcus-tomersknowwhereSwissPostishead-edintheyearstocome.

Wethereforedevelopedourvisionfur-therin2006.Itpointsthewaytowardthefutureandshowsuswherewewouldliketobeafewyearsfromnow.Wewillcon-

If Swiss Post wants to be successful and safeguard its future, it must anticipate economic, technological and political trends and gear its actions accordingly.

7Verantwortungsbewusst

tionsexpectedofusasanemployertoensurethelong-termpensionfundben-efits.Over900millionfrancswerechannelledintotheSwissPostpensionfundbetween2005and2007asfinanc-inggenerallyandspecificallyforthechangefromadefinedbenefittoade-finedcontributionscheme.

TheacquisitionoftheGerman-basedGHPGroupasthebiggesttakeoverSwissPosthasevercompletedcontributedtoourstrategicdevelopment.GHPisagroupofcompaniesactiveinthefieldsofcomprehensivedialoguemarketingandcustomermanagement.Bydevelopingrelatedservices,SwissPostaimstocoun-terthedecliningletterandparcelvolumesandtocreatesynergiesforitsSwissandinternationalbusiness.

Swiss Post today and tomorrowDeregulationofpostalmarketsisproceed-ingapaceworldwide.InSwitzerlandinter-nationallogisticscompaniescompetewithSwissPostintheareaofparcelsandlet-tersweighingover100gramswherethemonopolyhasbeenabolishedoverthelastfewyears.UnlikeSwissPost,ourcom-petitorsarenotobligedtoprovideacostlynationwidebasicserviceand,becausetheyarenotboundbythePublicOfficialsAct,theycanadapttheirwagecostsandemploymentconditionsflexibly,inlinewiththerespectivesegmentsandgeo-graphicregions.SwissPostmustusethetimestillremainingtoprepareforthederegulatedmarketandtobecomemorecompetitive.

Onthetechnologicalfront,e-substitutionisdeveloping.Physicallettersarebeingreplacedtoanincreasingextentbymod-

ernelectronicformsofcommunicationsuchase-mailandtextmessages(SMS).Thelettervolumedeclinedby1.8percentoverthepastyear.Asthebasicserviceisfinancedinpartfromrevenuegeneratedbythelettersmonopoly,thistrendmustbemonitoredveryclosely.Moreover,customersareusingactualpostofficeslessandlessoften,whichisforcingustoadaptourpostofficenetworkandalsotoensurethatwehavesufficientaccesspoints.

ThisisthebackdropagainstwhichthereformofpostallegislationinitiatedbytheFederalCouncilinMay2006,willbeim-plemented( 7).ForSwissPostitisimpor-tanttoprovideanup-to-date,high-qualitybasicservice( 6)infuturetoo.Thecru-cialaspectwillbethescopeitwilltake,asenvisagedbypoliticiansandinhabitants,andhowitwillbefinanced.Ifwewanttoretainabasicserviceontodaysscale,theresidualmonopolyisthemostefficientfinancingoption.

However,shouldthepostalmarketbecompletelyderegulated,SwissPostwillcampaigntoensurefairconditionsforallmarketplayers.Thismeans,aboveall,adaptingthebasicservicemandatetoacompetitivelevel.TomakeSwissPostmorecompetitiveinthosemarketsthathavealreadybeenderegulated,itiscallingfortheabolitionofthePublicOfficialsActandtheneedtohaveemployeesboundbytheSwissCodeofObligationsandforachangeinthelegalstatusofSwissPosttobringitintolinewiththeshiftincondi-tionssincethepreviouspostalreformin1998.However,theemployeesshouldnotbeforcedtobearthebruntofderegula-tion.Instead,SwissPostadvocatesstand-ardizingemploymentconditionsthrough-outtheentireindustry.IfPostFinanceistodevelopfurtherandcontinuemakingasubstantialcontributiontoSwissPostsresults,itwillneedthepossibilityofengag-inginthelendingbusiness.

ThanksOnbehalfoftheBoardofDirectorsandExecutiveManagementIwouldliketothankallourcustomersfortheirloyalty.Particularthanksareduetoouremploy-eesfortheirdedicationandmotivation.Theresultstheyproducedonadailybasisareamongthebestataninternationallevel,despitethedifficultoperatingenvi-ronment.

IwouldespeciallyliketothankRoccoCat-taneo,whoisleavingtheBoardofDirec-torsaftereightyears.NicolaThibaudeauandRolfRitschardwereelectedasnewmembersoftheBoard.WeweredeeplysaddenedtolearnthatRolfRitscharddiedunexpectedlyatthebeginningof2007.

Finally,IwouldalsoliketothankKarlKern,whoretiredastheHeadofthePostOfficeNetworkandasMemberofExecu-tiveManagementattheendof2006.Thepostofficenetworkwasmodernizedunderhisleadership,between2000and2006.IwouldliketowishhissuccessorPatrickSalamineverysuccess.

Readmoreonlinewww.swisspost.ch/ar2006links6) TheFederalCouncilsstrategicobjectivesfor

SwissPost200620097) SwissPostbeforereformofpostallegislation

7AnnualReport|Chairmansforeword

We will remain a progressive and socially responsible employer, even in the face of increasing competition.


Geschftsbericht20068 AnnualReport|Interview

Mr Gygi, Swiss Post is facing major changes. Where do you feel this proc-ess of change the most in terms of operations? Ofcoursewerealizethatwearefacingcompetition.Wearelosingmarketsharesinourlogisticsservicesandourmarginsaredwindling.Ontheotherhand,thelettersvolumehascontinuedtodecline,partlyasaresultofelectroniccommunication.In2006,SwissPostprocessed1.8percentfeweraddressedand1percentfewerunaddressedletters.Customerbehaviourhasalsochanged;inotherwords,ourdensepostofficenetworkisnotbeingusedtothesameextentasinthepast.Since2000,42percentfewerlettersand42percentfewerparcelswerehandedinatpostoffices,andthevolumeofinpaymentswasdownby14percent.Tomeetthesechallengesweareattemptingtoboostproductivityandpromoteinnovation

inallunitssothatwecanofferourcustomerspracticalservices.

Where was this process of change felt the most last year?Firstandforemost,probablywiththeYmago( 8)project.Thisinvolvesthein-ternalredistributionoftasksamongthepostofficesinadditiontotheagencymodel,knownasthepostofficeinthevillageshop.WithYmagowewillbeabletomakethenetworkmorecustom-er-friendlyandalsomoreefficient.Thisisaprocessofoptimizationthatisneces-saryforoperationalpurposesbutwhichisalsocontroversialbecauseitaffectsthesalarystructure,amongotherthings.Ihavenoticedthatunderstandingoftheneedforchangehasgrown,bothwithinthecompanyandamongthepublic.

Unfortunately,implementationofthelegalmergerofPostParcels,ExpressPost

Our uppermost goal is still to provide an excellent basic service for all of Switzerland.

UlrichGygi,ChiefExecutiveOfficer

Interview:AndreasSturm,MarcelSuter



AGandourgoodslogisticswasnotpos-sible.TheFederalOfficeforJusticede-niedpermissiontooutsourcetheuniver-salservicesfromPostParcels.However,thesethreeunitswilloperateinthemar-ketasasinglecompanywithasingleofferingfromasinglesource.

Bycontrast,weweregivenpermissiontoimplementoutsourcinginconnectionwithPostBus.Asapubliccompany,theunitwillbeabletoactmoreflexiblyinfu-tureandwillfinditeasiertoworkcloselytogetherwithotherpublictransportpro-viders.Ialsohopethatresourcescanbemanagedleanly.

Swiss Post is reporting a profit of 837 million francs for the year under re-view. Many people view this as a con-tradiction to the salary and job cuts resulting from Ymago.Letmesayfirstofallthatweareproudofthisresult;itisappropriateforacompanyofoursizeandbearscompari-sonininternationalterms.However,profitandasimultaneousreductioninheadcountdonotconstituteacontra-diction.SwissPostisbeingincreasinglyexposedtocompetition,andtechnologyismakingmanualworkredundant.Fightingthistrendwouldposeathreat

toourveryexistence.Itmakesmoresensetoseeknewbusinessopportuni-tiesandtocreatejobsthere.Wearedoingthisallthetime.ForinstanceatPostFinance,within-housepostalserv-icesforlargecustomers,documentmanagement,directmarketingandoth-erservices.Wecandealactivelywiththeongoingprocessofchangeandwiththefutureinmindonlyifwearefinanciallyfit.ThisistheonlywayforustoimplementprojectssuchasYmagoinasociallyresponsiblemannerandtofinancethenecessarystructuraladjust-mentsandinvestments.Finally,ourre-sultwillservetosecurethefutureofjobsatSwissPost.Andbesides,onlyacommerciallysuccessfulcompanyat-tractspotentialemployeesandcustom-ers.

Why isnt Swiss Post cutting prices if its profit figure is this good?Pricesinthecompetitivebusinessaresha-pedbythemarketandareinaconstantstateofflux.ThemonopolypricesareapprovedbytheFederalDepartmentofEnvironment,Transport,Energy,andCommunications.Thequalitythatourcustomerswantandappreciatecomesataprice.Inaninternationalcomparisonweareinthelowestthird.( 9)

Theowneralsowantsustobuildupanindustry-standardlevelofequity.Ourtargetisthreebillionfrancs.Atthesametimewehadtoensureasolidbasisforourpensionfund,intheinterestsofbothouremployeesandthetax-payers.Ourgoodresultshavenowprovidedthenecessaryfunding.Furtherfundswillbeneededfortheswitchtoadefinedcon-tributionscheme.Finally,wehavetofinanceourinvestmentsfromresourceswegenerateourselves.Oncewehavereachedthesegoalsandcansustainthem,theConfederationcanlookfor-wardtoreceivingsomeoftheprofit.TheFederalCouncilhasthelastwordonprofitappropriation.

PostFinance again made a major contri-bution to profit. Swiss Post is seeking a banking licence and would thus com-pete directly with the banks, in particu-lar the cantonal banks. But does Swit-zerland really need another bank?PostFinancecurrentlyhas2.31millioncustomers,manyofwhomaresmallcus-tomersandsmallandmedium-sizeden-terprises.WehandleagoodportionofallthepaymenttransactionsinSwitzer-land.Wewanttobeabletoofferthesecustomerstheentirerangeoffinancialservicesatattractiveandfairconditions.

9AnnualReport|Interview


Geschftsbericht2006

generatepostalitems.NewstrategicoptionsareopeningupforSwissPostInternationalandMailSourceintermsofdeliverytoendcustomersandinthefieldofdocumentmanagement.Sophis-ticatedGHPservicessuchasintegrated,card-basedcustomerloyaltyprogrammescanbeadaptedtoSwissneeds.GHPisthemarketleaderinGermanyforhealthinsurancecards.Thiswillcreatesyner-giesforthefutureSwisshealthcard.

Thesethreeunitsemployalmost3,400peopleandcontributearound17.6per-centtoGroupsales,andthetrendisontheincrease.

Lets stay in the international arena: what is Swiss Posts stance, as a com-pany owned by the Confederation, on the obligations entered into by Switzerland under the Kyoto Protocol on climate protection?AtSwissPostwehaveadoptedtheobli-gationsandtargetsoftheKyotoProto-col.Inthiswaywealsoacknowledgethatclimatechangewillmeananeedforusasacompanytotakespecificaction.Weare,forinstance,alsooptimizingourtransportsystemtobringitintolinewithecologicalrequirements.Although,foreconomicreasons,wecurrentlyhandleaslightlyhigherportionofourgoodstransportbyroad,theoverallresultintermsofenergyandtheclimateisbetter

10 AnnualReport|Interview

InthecurrentsituationweareallowedtosellmortgagesonlyincooperationwithUBSandhavetosharethemarginswithit.Naturallythislimitsourroomtomanoeuvre.Wearepreparedtoentertheretailmarketunderthesamecondi-tionsasourcompetitors.Forthisweneedtheappropriatelegalbasis.( 7)

Swiss Post is calling for employment contracts to be subject to the Swiss Code of Obligations and is also out-sourcing more and more of its service from the parent company to public companies. Does this mean the end of the social partnership?Thisbringsustothetopicofequalcon-ditionsforallmarketplayers.Weareinfavourofcollectiveemploymentcon-tractsforcertainsectors(industryCECs)onthebasisoftheSwissCodeofObli-gations( 10),aswebelievethatcom-petitionshouldbebasednotonsalariesbutonthequalityofservices.SwissPostoperatesinseveralsectorsopentocom-petition.ToensurethateveryonehasthesameopportunitieswemustbringabouttheseCECsinthemediumterm.Ofcoursewestandbehindtheprincipleofsocialpartnership.

Swiss Post is a traditional Swiss insti-tution that is now expanding abroad on the profit it generates with its mo-nopoly business. Why?

Firstofall:Ofthesumwhichyoucalltheprofitfromthemonopolybusiness,whichis837millionfrancs,wegeneratethelionsshareindirectcompetition.Lessthanonethirdisgeneratedbymonopolybusiness,andthisisusedtofinancethebasicservice.

Andnowtoyourquestion:inSwitzer-landwearefacingdecliningmailvol-umes.Onemajorreasonforthisissubstitutionoflettersandotherpostalitemswithelectronicformsofcommuni-cation.InordertocountertheselostearningswearelookingbeyondSwitzer-landsbordersandwanttogrowabroadinpost-relatednichemarkets.( 6)

Essentially,oursubsidiariesoperateinthreeareasabroad.SwissPostInterna-tional(SPI)focusesoncross-bordertraf-ficinthebusinesscustomersegment.SPIsbusinessisgearedprimarilytosafe-guardingthedomesticmarket.Therap-idlygrowingMailSourceGroupofferssuccessfulin-housepostalservicesforcompanies.MailSourcealsogeneratesbusinessfortheotherunitsofSwissPost.ThethirdunitisGHPGroup,inwhichweacquiredatwo-thirdsstakein2006.Itoperatesinthegrowingmarketforcustomerloyaltyprogrammesanddialoguemarketing.WithGHPweaimtoglobalizeourbusinessevenfurtheranddevelopactivitiesthatwillultimately

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links


withmulti-modaltransport.Theidealmixofroadandrail-basedtransport,combinedwithintelligenttransportplan-ningandtheuseofstate-of-the-artvehi-cles,isthekeytosuccess.Wehaveal-readyachievedagoodpartoftheenergyandclimategoals( 11,12)wesetfor2010.WeareconfidentthatwewillreachtheobjectivesoftheKyotoProtocol.

However,wealsocomplywithinterna-tionalstandardsandagreementsintermsofsocialaccountability.Since2006,allsuppliershavehadtocomplyinwritingwithourcomprehensiveso-cialandethicscode( 13).Inthiswaywewanttoensurethatcompetitionamongsuppliersisbasedonthequalityoftheserviceandnotonworkingcon-ditionsorlowenvironmentalstand-ards.

The Postal Act is being revised. What are your messages for the legislator?OuruppermostgoalinrevisingthePost-alActistogoonprovidinganexcellentbasicserviceforthewholeofSwitzer-land.However,wealsowanttoremainasociallyresponsibleemployerandensureourfurtherdevelopmentonthebasisofourownresources,i.e.befinanciallyindependent.ThismeansthattheremustbefairrulesforSwissPosttoo.( 7)Wearethereforesupportingtheresidual

monopolyforletters.Thisisthebestwaytofinanceourbasicservice.Ifthepostalmarketshouldneverthelessbederegu-lated,theremustfirstbeclarityastothescopeandfinancingofthebasicservice.Here,thequestionis:Whatacceptanceanddistributionnetworkwouldacom-panyoperateandhowwoulditorganizedeliveryifitdidnothavetofulfilabasicservicemandate?Itwouldbuildupsev-eralhundredpostoffices,andnot2.500.Anditwouldnotoffersuchafrequentdeliveryserviceinmoresparselypopu-latedregions.Thisdifferencebetweenourcurrentpostalnetworkandonethatmakessenseinoperationaltermsac-countsfortheadditionalcostsofthebasicservice.Todaywecancoverthesecostswiththelettersmonopoly.Ifparlia-mentlowersthemonopolylimitfurtherorifthemarketisfullyliberalized,fi-nancingofthebasicserviceorofotherpoliticalrequirementsimposedbytheFederalCouncilwouldnolongerbeen-sured,andnewruleswouldhavetobedrawnup.

WhereverSwissPostfacescompetition,thesame,fairoperatingconditionswouldhavetoapplytoallmarketplayersagain,theconceptofalevelplayingfield.Wewouldliketobeabletoem-ployourstaffunderthetermsoftheSwissCodeofObligationsjustasourcompetitorsdo.Toensurethatourem-

I have noticed that understanding of the need for change has grown, both within the company and among the public.

11AnnualReport|Interview

ployeesdonotsufferfromcompetition,weareinfavourofcollectiveemploy-mentcontractsfortheentireindustry.

Readmoreonlinewww.swisspost.ch/ar2006links6) TheFederalCouncilsstrategicobjectivesfor

SwissPost200620097) SwissPostbeforereformofpostallegislation8) Postofficenetwork:theonlyconstantischange9) SwissPostandattractiveletterprices10) PublicOfficialsAct11)SwissPostsenvironmentalobjectives12)Climatechangeandpoliticalinitiatives13)Socialandethicscode

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

Geschftsbericht200612 AnnualReport|Service-oriented|Group

Swiss Post meets the publics high expectations in terms of its basic ser-vice and fulfils its service mandate to a high standard. In 2006, it was able to maintain or improve on the cus-tomer satisfaction levels in all busi-ness units. By increasing our competi-tiveness we have created the ideal platform from which to defend our position in a hotly contested environ-ment. We are: continuing our policy of ensuring broader-based contribu-tions to the result, increasing the company value as requested by the Federal Council, providing support for economic development in all parts of the country, and offering our employ-ees good prospects.

Inthe2006businessyear,SwissPostgen-eratedGroupprofitof837millionfrancs,whichis26millionfrancsmorethaninthepreviousyear.Comparedwith2005,operatingincomeroseby396millionfrancsto7,895millionfrancs.Ofthis,197millionfrancsareattributabletoacquisitions.Wewereagainabletoincreasethevalueofthecompanyasawholeby1,605millionfrancs(2005:532millionfrancs).Thankstothepositiveresult,SwissPostsequityincreasedto1,605millionfrancsbutthisisstillnotinlinewiththeindustry.AllbusinessareasandunitsagaincontributedtoGroupprofit.

Service-oriented |Group

I want to hand in my letters and parcels

at our post office in St Antnien.

AndreasLuckSmallbusinessowner,Ascharina

An efficient Swiss Post for a strong Switzerland.

Why does the cost of mailing a letter include paying for structures that are used by only a few people?

ChristianBtikofer Attorney,Gossau(SG)

Developments in the economic environmentThegoodresultwasachievedinagratify-ingeconomicenvironment:thestrongexpansionintheglobaleconomycontin-uedinthesecondhalfof2006.AlthoughthesustainedupswingintheUSAlostmomentum,growthintheEUpickedup.TheeconomicupturncontinuedinJapanandinmostothercountriesinAsia,inparticularinChina.Thistrendoccurredagainstabackdropofsharplyfluctuatingoilprices.

InSwitzerland,economicgrowthwasbalancedandbroadlybased.Thesitua-tiononthelabourmarketcontinuedtoimprove,withthebrightermoodboost-ingjobsecurityandconsumerconfi-dence.In2006,theprovisionalGDPgrowthratewas2.7percent.

Demandforlogisticsandfinancialservicesdependsonthegeneraleconomictrendaswellasontherelatedinterestratetrend.Retailtradebenefitedfromthefavourablemacro-economicconditions.Thetransportandlogisticsindustryprof-itedfromthepositiveimpetusofforeigntradeandtheupbeatconsumermood,andthetelecomssectorwasagainoneofthegrowthengines.Thesetrendsbene-fitedthefinancialandlogisticssectorsofSwissPostinparticular.

Volumes/trafficThedowntrendinmailvolumesfordo-mesticandinternationalletterscontin-ued.The2005resultswerenotmatchedthisyear,especiallyinthefieldofnon-prioritysingleitems(BMail),owingtoashifttowardslessexpensivebulkmailingsandtheongoingoptimizationinthemail-ingofaccountstatementsinthefinan-cialsector.Ontheotherhand,theoverallvolumeofparcelswasinlinewiththepreviousyearslevel,andthenumberofSwiss-Expressitemswashigher.Thein-flowofnewmoneyatPostFinancewasagainpositive.Thenumberofpassengerswasslightlyhigher,thankstothefavour-abletrendincommissionedservices.Buoyedbythesoundeconomicenviron-ment(tourism,exports),internationalletterpostincreasedyearonyear.1

Our success strategyInordertoensuresustainablesuccessandsafeguardourcorebusinessinthelongterm,wemeantoincreaseourcompeti-tivenessevenfurther.Wethereforeintendtoimproveandexpandourservicesintheexistingmarkets.Thefocuswillbeonindustrysolutionssuchasrepairsandhospitallogistics,innovativeservicesforpaymentsanddigitalsignatures,aswellasintensifiedadvisoryservicessuchasthevideoconsultingservicefromPostFinance.Byadjustingthepostofficenetworktocustomerbehaviour,expandingtherange

AnnualReport|Service-oriented|Group 13

Geschftsbericht2006

ofPostFinanceservicesandproductsonofferatpostofficesandsettingupourownPostFinancebranchesaswellasex-pandingoursalesplatformsontheInter-net,wewanttocoordinateourdistribu-tionchannelsmoreeffectivelywithoneanother.

Bysteadilyadaptingstructuresandproc-esses,dividingin-housetasksamongpostoffices,usingstate-of-the-arttechnologyandadoptingaleanapproachtocostmanagementwewillcontinuetoboostproductivity.Maintainingadialoguewiththosearoundus,wearecommittedtofurtherdevelopingtheregulatorycondi-tionsunderwhichweoperate,inordertosafeguardourentrepreneurialscopeandreachandtoensurefairrulesofthegameforallmarketplayers.Industry-specificemploymentconditionsandcon-tractssubjecttotheSwissCodeofObli-gationsareakeyaspectifwearetoenjoyalevelplayingfieldandsucceedinthefiercelycompetitivemarket.

Weaimtocompensatethedeclineinourcorepostalbusiness:byprofitablegrowthininternationalnichemarkets,byinternalpostalservicesforcompaniesandinsti-tutionsandbytakingoverbusinessproc-

In future, Swiss Post should deliver mail throughout the week at a standard price to places like St Antnien.

SilviaBrembilla Mayorofmunicipality,StAntnien

essesinthevaluechainsofthirdparties(incl.orderplatforms,fulfilment,invoic-ing).Thiswillprovideuswithgrowthinourpost-relatedmarketsandenableustoreduceourdependencyonbothourcorebusinessandthedomesticmarket.Inthelongterm,PostFinanceshouldbegrantedabankinglicenceandthusbeabletoexpandtherangeofitsfinancialservices.

Inordertomakeuseofthispotentialforsuccess,wewanttomaintainahighlevelofmotivationandwillingnesstoper-formamongourstaff.Bypursuingthisstrate-gicdirection,wewillbeabletoimple-mentourvisionofanefficientandsociallyresponsibleSwissPost.

Important stepsInimplementingourvisionandstrategyweachievedthefollowingimportantmilestonesin2006:

WebeganbuildingthetwolettercentresinEclpensandHrkingenaspartoftheREMA(ReengineeringMailProcess-ing)project.TheZurich-MulligencentrehasbeenundergoingrefurbishmentsinceFebruary2005.Thethreelettercentreswillbeamongthemostmodernintheworld.Zurich-Mulligenwillcommence

operationsinsummer2007,andHrkin-genandEclpenswillbecomeoperationalinthesummerandautumnof2008re-spectively.Inadditiontothethreenewlettercentres,therewillbesixsub-centresinSwitzerlandforletterprocessingandtwolocationsforvideocodingandre-turnsprocessing(ChurandSion).REMAwillenableustosave170millionfrancsinletter-processingoperatingcostseachyear.SwissPostwillinvestoveronebillionfrancsintheentireproject.

On14January2007,PostFinancetookovertheprocessing of payments forGlarnerKantonalbank.Thisisanimpor-tantstepalongthewaytobecomingaleadingproviderofpaymentsprocessingforotherfinancialinstitutions.Post-Financehasnowbeenprocessingslip-basedpaymenttransactionsonbehalfofUBSsinceautumn2005.

ThePostBusunitofSwissPostwastrans-ferredtoPostBus Switzerland AG on1July2006.TheFederalOfficeforJusticehadpreviouslylookedintotheproject,beforeissuinganexpertopinionthatdeemedittobelegallypermissible.ThesubsequentagreementaffiliatingPostBusstafftothecollectiveemploymentcon-

14 AnnualReport|Service-oriented|Group

tractforsubsidiariesofSwissPostguaran-teesthemgoodworkingconditionsinthefuturetoo.Atthesametime,bytransfer-ringPostBustothepubliccompany,wearecreatingthebasisforPostBusSwitzer-landAGtogearitsactivitiesmorecloselytotheneedsofthemarketandthusremainthenumberoneproviderofroad-basedpublicpassengertransport.

Intheautumn,theBoardofDirectorsgavethego-aheadtoimplementtheYmagoproject.SwissPostwillconductaninternalreorganizationofitspostof-ficesin2007.( 8)Bytheendof2008weaimtosetup200newagencies.Thesemeasureswillhelpusrespondevenfasterandbettertocustomerbehaviourandmakeournetworkmoreefficient.Followingcompletionoftheprojectbytheendof2008,SwissPostexpectstoimproveitsannualresultstothetuneofsomewhatmorethan50millionfrancs.Ymagoisexpectedtoresultinbetween400and500jobsbeingcutoverthecourseoftwoyears.WedonotanticipatethatYmagowillleadtodismissals,inlinewithpreviousreorganizations.

InDecember2006,SwissPostsignedanagreementonthefutureoftheSwiss

Post pension fund withtheCommuni-cationsandtransfairunions.Inparticular,itsetsoutthetransitionfromadefinedbenefittoadefinedcontributionplan.SwissPostiscommittedtofinancingthepensionfundwithintheboundsofthefinanciallypossibleandwithinthecon-finesoftheFederalCouncilsdecisionsregardingappropriationofprofit.AstheConfederationhadnotfullyfinancedtheSwissPostpensionfundwhenitwases-tablishedon1January2002,thiscoursewastheonetaken.Aroundonebillionfrancswillbechannelledintothepensionfundfromprofit.

Themonopoly limit ( 4,5)forletterswasloweredto100gramson1April.Afurthersectionofourcorepostalbusi-nessisthusopentocompetition.Thanksnotleasttoourhighqualityandthegoodprice-performanceratio,theimpactonourbusinesshassofarbeenslight.Theresidualmonopolyinthelettersmar-ketremains,inouropinion,themostefficientwayoffundingthebasicservice.Furtherderegulationstepswillcallintoquestionthepresentqualityofsupplyandthecurrentlevelofserviceandshouldbedelayeduntilthepoliticalau-thoritieshaveclarifiedthefuturescope

Sending a letter from Gossau (Canton St Gallen) to St Antnien costs more than the franked amount.

PeterMrner PostMailcontroller,Berne

ofthebasicserviceandhowitwillbefunded.

TheacquisitionoftheGerman-basedGHP Group willstrengthenourpositioninthefuture-proofmarketsforcustomerloyaltyprogrammesanddialoguemarket-ing.GHPwillcontinuetooperateunderitsownname.

OurMailSourcesubsidiaryacquiredsev-eralcompaniesintheUSA,FranceandSwitzerlandandthusexpandeditsnewbusinesstoincludeinternalpostalserv-ices,scanningandarchivingforcompa-nies.

Group resultsIn2006,wesuccessfullyimplementedourstrategy:Groupprofitin2006of837millionfrancswas3.2percentor26mil-lionfrancshigherthanthepreviousyearsresultof811millionfrancs.Allseg-mentscontributedtothepositiveresult,albeittovaryingdegrees.Wewereagainabletoincreasethevalueofthecompanyasawholeby532millionfrancs(2005:532millionfrancs).

Operatingincomecameto7,895millionfrancs(2005:7,499millionfrancs).The

15AnnualReport|Service-oriented|Group


maincontributorstothegrowthinoper-atingincomewiththirdpartiesweretheFinancialServices,International,Other(primarilyRealEstate)andNewBusinessessegments.Thefurtherincreaseincus-tomerdepositshadapositiveimpactonincomefromfinancialservices.OperatingincomeintheMailandPostOfficeNet-worksegments,bycontrast,hasfallen.Theeffectofacquisitionsonoperatingincomeamountedto197millionfrancs.

Operatingexpensesof7,072millionfrancswereup378millionfrancsor5.7%onthepreviousyear.Half(190millionfrancs)isattributabletoacquisitions.Asaresultofloweremployeebenefitexpense,staffcostsincreasedbyjust7millionfrancsdespitetheacquisitions.Theloweremployeebenefitobligationsarearesultofdeposits(350millionfrancs)madetothepensionfundfrom2005profit.Resalemerchandiseandserviceexpensesandexpensesforfinancialserviceswereup269millionfrancscomparedwith2005.Writedownschangedonlyslightly,up5millionfrancsonthepreviousyearto257millionfrancs.Theinvestments

forthenewlettercentresaspartoftheREMAprojectwillleadtohigherwrite-downsinfuture.

Thecarryingamountofproperty,plantandequipmentwasup317millionfrancscomparedwiththeprioryear,owing,amongotherthings,toinvestmentsinREMA.Theincreaseinprovisions(exclud-ingemployeebenefits)of24millionfrancsisduemainlytotheacquisitionoftheGHPGroup.Thanksmainlytoareneweddepositof350millionfrancsintotheemployerscontributionreserveinconnectionwiththeappropriationofprofitin2005,theliabilityforemployeebenefitobligationswasreducedto2,627millionfrancsasat31December2006.

Consolidatedequitycameto1,605mil-lionfrancsasat31December2006,anincreaseof683millionfrancscomparedwiththepreviousyear.Weexpectthenecessaryequityofaroundthreebillionfrancstohavebeenaccumulatedby2009.

Investmentsinproperty,plantandequip-ment,intangibleassetsandparticipationsamountedto540millionfrancsandwerehigherthanin2005(347millionfrancs).Investmentsinparticipationscameto35millionfrancs.Asin2005,theinvestmentvolumewasfinancedentirelyoutoffundsgeneratedbySwissPostitself.InvestmentactivitywasfocusedontheconstructionandequipmentoftheREMAcentresaswellasonstreamliningandoptimizationprojects.

OutlookTechnologicaldevelopmentsandchang-ingcustomerbehaviourwillcontinuetoresultinincreasedsubstitutionanddeclin-inglettervolumesinfuture.Newtech-nologieswillcontributetoefficiencyincreasesandprocessoptimization,e.g.insorting.Customerbehaviourandtech-nologicaldevelopmentsareopeningupnewpotentialfordevelopinginnova-tiveandservice-orientedservices,e.g.inthefieldofdirectmail.Theemergenceofvaluechainsinmanysectorsisincreas-inglyleadingtobusinessactivitiessuchasscanning,archiving,printingandthe

16 AnnualReport|Service-oriented|Group

Key figures Swiss Post Group 2006 2005Result

Operatingincome CHFmillion 7895 7499

Ofwhich:generatedabroad1 CHFmillion 1391 1089

%ofoperatingincome 17.6 14.5

Ofwhich:reservedservices CHFmillion 2028 2395

%ofoperatingincome 25.7 31.9

Operatingresult CHFmillion 823 805

Asashareofoperatingincome % 10.4 10.7 Ofwhich:generatedabroad1 CHFmillion 66.5 38.0

%ofoperatingresult 8.0 4.7

Groupprofitfortheyear CHFmillion 837 811

Addedvalue2 CHFmillion 4735 4716

Employees

EmployeesatSwissPostGroup(excludingtrainees) Full-timeequivalents 42178 41073

Ofwhich:abroad Full-timeequivalents 3379 1347

managementofinternalpostalservicesbeingoutsourced.ThisresultsinnewbusinessopportunitiesforSwissPost.Bycontrast,electronicsubstitutionandchangingcustomerbehaviour,declininguseofpostofficesandafailuretocoverthecostsofoperatinganationwidepostofficenetworkhaveallhadanegativeimpactonthedevelopmentofSwissPost.

TheSwissNationalBankispredictingaslowdownineconomicmomentumfor2007.Almostallthecomponentsonthedemandsidewillcontinuetogrowbutatamoremodestpace.Consumerspendingwillbenefitfromtherobusttrendindis-posableincomes.SwissPostwillcontinuetoprofitfromthefavourableeconomictrend.

Theexpectedpositiveeconomictrendandgrowthinimports,exports,willing-nesstoinvestandGDP,coupledwithlowrealinterestrateswillboostourbusinessinthefinancialandlogisticssectorinpar-ticular.Thestrongestgrowthisexpectedinthetelecommunicationsandfinancialsectors.Agrowingnumberofscheduled

serviceswillprobablybeputouttotenderinthepassengertransportsector.Asre-gardsfinancialservices,competitioninthemortgagemarketremainsveryactive.PostFinancewantstogrowintermsofcustomerdepositsinparticular.Cross-bordercompetitionwillalsocontinuetoincrease,whichwillhaveasignificantimpactontheLogisticsbusinessareaandtheInternationalbusinessunit.

SwissPostwillprobablyincreaseitscom-panyvalueagainin2007andthusmeettheFederalCouncilstarget( 6).Giventheincreasinglyfiercecompetitionandsustainedimpactofsubstitution,todayshealthyprofitfigureshouldnotdeterusfromcontinuingtopursueourstrategy.Inordertoimplementitsuccessfullywewilltakeallthenecessarystepsontheincomeandexpenditurefront.

1 Detailsonvolumetrendscanbeseeninthesectionontherespectiveunit.

Readmoreonlinewww.swisspost.ch/ar2006links4) OverviewofSwissPostsuniversalservices5) SwissPostsbasicservice,termsanddefinitions6) TheFederalCouncilsstrategicobjectivesfor

SwissPost200620098) Postofficenetwork:theonlyconstantischange99)Figuresforthe2006AnnualReport

17AnnualReport|Service-oriented|Group

Key figures Swiss Post Group 2006 2005Financing

Totalassets CHFmillion 55600 50130

Ofwhich:customerdeposits CHFmillion 48364 43630

Equity CHFmillion 1605 922

Investments

Investments CHFmillion 540 347

Ofwhich:othertangiblefixedassets,intangibleassets CHFmillion 195 176

Ofwhich:operatingproperty CHFmillion 310 153

Ofwhich:investments CHFmillion 35 18

Ratioofself-financedinvestments % 100 100

Value generation

Cashflowfromoperatingactivities CHFmillion 3247 3603

PostValueAdded(PVA) CHFmillion 532 532

1 DefinitionofabroadinaccordancewithsecondarysegmentationintheFinancialReport.2 Addedvalue=operatingresult+staffcosts+depreciationincomefromsaleofproperty,plantandequipment,intangibleassetsandinvestments

Additionalkeyfiguresaresetoutinthetableoffigures.( 99)

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Geschftsbericht200618 AnnualReport|Service-oriented|Mail

trendforlettervolumeswasmoreorlessinlinewiththatofGDP.Ifthisdevelop-menthadcontinued,therewouldbefarmoreletterstodaythantherewerefiveyearsago.However,thelettervolumedeclinedsubstantiallyoverthisperiod.Thisphenomenonisduebothtothemergerandeliminationofpostalitemsandtoe-substitution,wherephysicalmailisbeingpushedoutbyelectronicmeansofcommunicationsuchase-mailandtextmessages(SMS).

On1April2006,themarketforlettersweighingmorethan100gramswasopeneduptocompetition.( 4,5)Sincethen,afurther350millionfrancsofSwissPoststurnoverhasbeensubjecttocom-petition.TheeffectsofthisliberalizationontheMailbusinessareawerehardlyfeltin2006.

In2006,Mailgeneratedoperatingincomeof3,083millionfrancsandanoperatingresultof239millionfrancs.Thiscorrespondstoanincreaseof9.6percent.

ThemainchallengefacingtheMailbusi-nessareaistobefitforthemarket.Toachievethis,itispursuingfourmainstrategicdirections:safeguardingexistingrevenues,generatingnewrevenues,cuttingcostsandshapingchangeingoodtimetogetherwithitsemployeesandcustomers.

Inordertosafeguarditsexistingreve-nues,PostMailisputtingitsfaithincus-tomerloyalty,offeringthebestvalueformoney( 9),providingaservicefromasinglesourceandcustomer-orientedser-vices.PostMailstillstandsforimpeccable

Fewer letters, higher productivity.

Service-oriented | Mail

As in previous years, letter volumes declined again in 2006. PostMail is responding to this challenge with high quality and customer-oriented services, but especially with the reor-ganization of its letter processing operations (REMA project). The new letter centres will increase PostMails productivity. The range of services will remain unchanged, but custom-ers will benefit from optimized qual-ity in letter processing. So far, the liberalization of the market for letters weighing over 100 grams has had hardly any visible effect.

Lettervolumesarestilldeclining.WhereasSwissPosthandled2.98billionlettersin1995,thefigurestoodat2.87billionin2000andhaddroppedto2.76billionbytheendof2006.Bythelate1990s,the

Key figures Mail 2006 2005Result


Ofwhich:reservedservices % 59.5 68.3


Quantities

Addressedletters Millionsofitemssent 2762 28131

Ofwhich:priorityitems Millionsofitemssent 742 7511

Ofwhich:non-priorityindividualitems Millionsofitemssent 806 9191

Ofwhich:non-prioritybulkitems Millionsofitemssent 1178 11031

Unaddressedmailings Millionsofitemssent 1159 12111

Newspapers Millionsofitemssent 1196 12011

Employees

Headcount Full-timeequivalents 15183 15364

1 Previousyearsfiguresadjusted



quality.98percentofallAMailand98.3percentofallBMaillettersreachedtheirdestinationontime.PostMailthereforeonceagainrankedamongtheleadersintermsofpunctualityinaninternationalcomparison.

In2006,PostMailinstalledthefirst100new,state-of-the-art,standardizedpost-boxes.Thenewmodelistoreplacethe13differenttypescurrentlyinexistence,andwilloffergreatersecurityaswellasfeaturingalargeinformationwindow.Postboxlocationswillbereviewedto-getherwiththemunicipalities.PostMailattemptstoensurethatpostboxesaresituatedatwell-frequented,well-litandsafelocations.Allnewmodelswillbeinstalledby2010.

PostMailcontinueditsBigthingsbeginwithalettercampaign,whichincludedTVadvertising,adsintheSundaypapersandbusinessmedia,ascentedletterforMothersDayandanationalcompetitionforcreativeletterideas.Thegoalwastoincreasetheemotionalvalueofactualphysicalletters.

Innovative servicesPostMailaimstogeneratenewrevenuesbyexpandingitsexistingservicesanddevelopingnewandinnovativeservicesthatwillbenefitcustomers.In2006,theseincludedtheDeliveringdogfoodcampaign,wherepostalcarriersdis-tributedsamplesofPedigreedogfoodtointeresteddogowners.Touroperator

HotelplanusedtheOnTimeMailserviceguaranteeingexact-daydeliveryofpro-motionalmailingstoreachcustomersonaspecifiedSaturday,thusincreasingitsbookingsbyalmost50percent.

PostMailprovedinnovativeinthefieldsofdigitalprintingandelectronicstampstoo,withitsWebStampproduct.Further-more,SwissPostreceivedofficialrec-ognitionasaproviderofcertificationservices.Itcanthusnowofferitscustom-ersaregisteredelectronicletterservice,knownasIncaMail.2

REMA set to commence operationsPostMailismodernizingitsletterprocess-ingoperationswiththelarge-scaleREMA(ReengineeringMailProcessing)project.In2006,groundwasbrokenforthelettercentresinHrkingenandEclpens.Re-furbishmentworkswereconcludedinZurich-Mlligen,andthelettercentrewillgointooperationinsummer2007.Theemployeesaffectedbyjobcutsasare-sultofREMAwillbeassistedintheirsearchforanewposition.SwissPostaimstofindasolutionforallemployees.

Shaping changeIntermsofdelivery,nationwidecam-paignswereconductedin2006toconveythevaluesofthemissionstatementtopostalcarriersinalightheartedwayandtoshowwhatacloselycoordinatedteamcanachieve,eveninunusualsituations.PostMailconcludeditsdeliveryservicegroup-buildingprojectin2006.Through-

outSwitzerland,6.100postalcarrierscarryouttheirdailyworkin700groups.

Outlook2007willbetheyearofREMA:SwissPostwillbeginoperatingtheworldsmostmodernsortingcentreinZurich-Mlligen.Thesub-centreinGossauandthevideocodingandreturnsprocessingcentreinChurwillalsobeinaugurated.

PostMailwillintroducethenewworkingtimemodelfortheMove-itdeliveryser-vice.Infuture,theactualnumberofhoursworkedwillbeenteredusingascannerandcreditedtothepostalcarriersannualworktimeaccounts.

2 Formoreondigitalprinting,WebStampandIncaMail,seetheInnova-tivechapter,page36.

Readmoreonlinewww.swisspost.ch/ar2006links4) OverviewofSwissPostsuniversalservices5) SwissPostsbasicservice,termsanddefinitions9) SwissPostandattractiveletterprices99)Figuresforthe2006AnnualReport

19 AnnualReport|Service-oriented|Mail

Key figures Mail 2006 2005Quality

CompliancewithAMaildeliverytimes %ofitems 98.0 97.7

CompliancewithBMaildeliverytimes %ofitems 98.3 98.2

Customersatisfaction:businesscustomers,parentcompany Index 76 74

Market share

Addresseditemsweightingover100g2 %

2 Thelettersmarketwasonlyderegulatedforitemsweighingover100gon1April2006,whichiswhynomarketshareisgivenfor2005.Nomeasurementshavebeenmadeyetfor2006.

Additionalkeyfiguresaresetoutinthetableoffigures( 99)

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

Geschftsbericht2006

Aiming to be among the leaders in SwitzerlandPostFinanceaimstobecomeoneofthetopthreeretailfinancialinstitutionsinSwitzerlandforcustomerdepositsandprimarybankingtransactionsthroughsustainablegrowthandwithanindustry-standardreturn.Itseekstoachievethisthroughitsstrengthsinthefieldsofpay-mentsandsavingsandthroughthegreattrustplacedinitbyitscustomers,whoseneedsarelargelymetwiththeseservices.Customerfocusisakeysuccessfactor.Allcustomersincludingsmallcustomersaretobeprovidedwithanexcellent,round-the-clockservice.

Furthermore,PostFinancedecidedtocon-vertits28consultingcentresinSwitzer-landslargertownsandcitiesintoinde-pendentPostFinancebranchesandtoopenafurtherninebranchesby2009.Infuture,itwillalsobepossibletomakecashinpaymentsatthesebranches.PostFinancewilloperateindependentlyatseveralhun-dredpostofficesandoffercustomersad-

viceoverthephoneoron-screen.4Mobileconsultantswillvisitprivatecustomersathomeuponrequest,whilespecializedcon-sultantswillcaterforsmallenterprises,offeringthemall-roundsolutionsfortheirbusinessandprivateneeds.

Simple payment solutionsMobileCommercePaymentisanewser-viceenablingpeopletomakepaymentsviatheInternetusingtheirmobilephone.Theserviceisbasedonyellowpay,thepaymentssolutionfromPostFinanceforonlineshops,andisintendedforpro-viderswhowanttooffertheircustomerstheoptionofmakingmobile,cashlesspayments.PostFinancewillbeofferingasolutionthatallowstheusertopaywithaPostcardoranyoftheusualcreditcards.Beginninginsummer2007,customerswillalsobeabletouseamorecost-ef-ficientmethodviatheirYellowAccounttopayforSMSorMMSservicesinsteadofaddingthemtotheirtelephonebill.

Easy to reach, clear advice, surpassing support.

Service-oriented | FinancialServices

20 AnnualReport|Service-oriented|FinancialServices

PostFinance relies on its strengths in the fields of payments and savings, aims to be accessible to all its custom-ers and sets itself apart by offering an outstanding service. To bring it even closer to its customers, it is ex-panding its distribution network. PostFinance consulting centres are being transformed into independent branches that will also handle cash in-payments. Mobile consultants can, if requested, visit customers at home.

Lastyear,thesituationonthefinancialmarketwascharacterizedbylowerreturnsonthemoneyandcapitalmarkets.Despitethesetrends,PostFinancecontinuedtogrow.Inflowofnewdepositscameto2.548millionfrancs,whilecustomerde-positsroseto40.6billionfrancs.136newjobswerecreatedatPostFinancein2006(infull-timeequivalents).Mortgagevolumeroseto1,819millionfrancs.Theoperatingprofitamountedto245millionfrancs,withhigherstaffcostsandcustomerinter-estratesexertinganegativeimpact.3

Key figures Financial Services 2006 2005Result


Operatingprofit CHFmillion 245 312

Quantities

Influxofnewmoney CHFmillion 2548 2065

Numberofcustomeraccounts Thousands 3154 3008

Averagebalanceofcustomerdeposits CHFmillion 40604 38169

Numberoftransactions million 803 801

yellownet Customers 760585 671728

Fundvolume CHFmillion 1560 1524

Volumeofloanstobusinesscustomers CHFmillion 2649 2106

Volumeofmortgagesforprivatecustomers CHFmillion 1819 1440


PostFinanceisthefirstfinancialinstitu-tioninSwitzerlandtoofferitscustomerstheoptionoforderingtravelpaymentmethodsontheInternet.SinceJuly2006theyhavebeenabletorequestthere-loadableTravelCashcard,travellerschequesandcashinover80foreigncur-renciesonyellownet.EverythirdpaymentfromSwitzerlandtoanothercountryisnowhandledbyPostFi-nance.Ofthese,90percentaredestinedfortheEU.PostFinancelaunchedGiroInternationalPlusaproductthatmakeshandlingpaymentstotheEUaseasyasdomestictransactions.Byofferingthiscost-efficientservice,PostFinanceisantici-patingtheestablishmentofauniformEuropeanpaymentarea.

Practical PostcardIn2006,PostFinancelaunchedthePost-cardTicket,which,inadditiontoalltheusualPostcardfunctions,alsooffersaccesstonumerousevents.Customerscanbookticketsonlineatattractiveratesandloadthemdirectlyontotheircard,andascanneradmitsthemtotheactualevent.FansofBernesSCBicehockeyclubcanobtainaPostcardTicketintheclubcolours.Theycanbenefitfromanexclusivebonusprogrammeandenjoyotherattractionsrelatingtotheclub.PostFinanceislookingintotheoptionofofferingthePostcardTicketincoopera-tionwithothericehockeyclubs.

PostFinancecustomerscanusethePost-cardtowithdrawcashwithnochargesatCustomerServicecountersoratthecashregistersof600Migrosstores.

Third-party servicesWithovertwomillionPostcardsusedatmorethan90.000retailPOS,PostFinanceisarealspecialistinhandlingcashlesspayments.ThisknowledgeandexperiencewillnowalsobenefitthirdpartiessuchastheSwissTravelFund(Reka).On1JuneitlaunchedtheRekaCard,whichcanbeusedtosettletransactionsattheelectron-icterminalsofRekapartners(suchastransportcompaniesandhotels).Inaddi-tiontodataprocessing,PostFinancealsohandlesallcustomerservicefunctions.

PostFinanceisalsoareliablepartnerforhandlingpaymentorders.Afterithadtakenoverslip-basedpaymenttransac-tionsforUBSin2005,theGlarnerKan-tonalbankalsoentrustedPostFinancewithitspaymentprocessingtasksasofJanuary2007.

20,000 joined in the celebrationsCarlKoechlin,aNationalCouncillorrep-resentingBasel,foundedtheprecursortoPostFinancethepostalchequeservice

in1906.PostFinancecelebratedthisanniversaryinApril2006at25differentconsultingcentres,inthecompanyof20.000guests.100peopleeachwon1.000francsasacontributiontotheirownpersonalcelebrations.

OutlookIn2007,PostFinancewillrecruitandtrainstaffforitsnetworkexpansionandwillalsolookforlocationsatwhichtosetupitsnewbranches.Itwillmoveoneofitstwocomputercentres,moreofitsITdepartmentandpartofitsslipprocessingfunctionstoZofingen.Beginninginautumn2007,itwillmoveintothenewbuilding,andthecomputercentrewillcommenceoperationsin2008.

3 SeetheincomestatementandbalancesheetofPostFinanceonpage154.

4 SeealsotheInnovativechapter,page36.

Readmoreonlinewww.swisspost.ch/ar2006links99) Figuresforthe2006AnnualReport

21 AnnualReport|Service-oriented|FinancialServices

Key figures Financial Services 2006 2005Employees


Quality

Exact-dayprocessingofpaymentslipsatpostoffices % 99.9 99.7

Exact-dayprocessingofpaymentslipsfrompaymentorders % 100.0 98.2

Customersatisfaction:businesscustomers Index 82 81

Customersatisfaction:privatecustomers Index 84 84

Market share

Lendingbusiness % 7.81 7.34



Geschftsbericht2006

OnthePostlogistics6website,businesscustomerscanfindallpassword-protect-edapplicationsgroupedtogetheronasingleplatform:ItincludesPrint&Sendforshippingmanagement,theeasyparcelsserviceforpaperlessmailing,andTrack&TraceBusinessforfollowingtheprogressofshipmentsindetail.Theon-linefreightcalculatorfromPostLogisticssimplifiesthepricecalculationprocessfortransportinggoodsonpallets.BeginninginJanuary2007,PostLogisticsandSIFTBERTISpAwillofferforwardingservicesbetweenSwitzerlandtoItaly,inbothdi-rections,atapreferentialconsignmentzonerate.

Improved productivityThereorganizationofPostLogisticsintoasinglecompanyhasgreatlyimprovedprocesses.PostLogisticsmovedintonewdistributionbasesinLandquart,BaarandWdenswil.ThereareplanstobuildanewlogisticscentreinDaillens,closeto

PostLogistics is set to become a single company: united in its corporate iden-tity and organization, and acting as a single point of contact for customers. It is thus positioning itself as the lead-ing provider of logistics services in Switzerland.

TheSwisslogisticsmarketwascharacter-izedbyfiercercompetitionintheparcelssegmentin2006,withexistingcustomersincreasinglytryingouttheservicesofferedbycompetitors.Logisticsprovidersarefacingpressureoncosts,fallingmarginsandtheglobalizationofsupplyanddemand.Swisscustomerscontinuetodemandhighquality.

PostLogisticsispositioningitselfastheleadinglogisticsserviceproviderontheSwissmarket.Itservesasapartnerforcustomerslookingtoshipparcels,expressandcourieritems,aswellasforgoodstransportandwarehouselogistics.Inad-dition,innovativesolutionstailoredtospecificcustomergroupsareofferedasanall-roundlogisticspackage.

Simplified structureLastyear,PostLogisticscontinuedonitswaytobecomingasinglecompany.Itslegalstructuresweresimplified:SetzGtertransportAGwasrenamedPostLo-gisticsAGon1January2006,andParcel-LogisticsAGwasintegratedintotheparentcompany.However,inApril,theFederalOfficeforJusticedeniedper-missiontotransferPostParcelstoPostLo-gisticsAG.( 4,5)ExpressPostAGwasintegratedintoPostLogisticsAGon1January2007,andSwissPostNETAGwasrenamedPostLogisticsInnightAG.Post-Logisticshasbeenoperatingunderaflag-shipbrandsince2006.

Higher salesIn2006,theLogisticsbusinessareagen-eratedoperatingincomeof1,4billionfrancsandanoperatingresultof87mil-lionfrancs.Saleswereslightlyhigher,thankstotheexpansionofcustomerandindustrysolutions.Thenumberofparcelscarriedfellby0.3percent,whilethenumberofSwiss-Expressitemswasupby5.5percent.

New servicesPostLogisticsexpandeditsofferinglastyeartoo.Forinstance,PickPostaserviceforpeoplewhocannottakedeliveryoftheirparcelsathomewasexpandedsignificantly.5Withitsspecialdeliveryservicefordebtenforcementdocuments,PostLogisticsoffersdebtcollectionauthor-itiesaservicethatsignificantlyincreasestheirdeliveryrates.Bytheendof2006,elevencantons,districtsandcitieswererelyingonthisservice.Otherswillfollowin2007.

One company for all logistics needs.

Service-oriented | Logisticsservices

22 AnnualReport|Service-oriented|Logisticsservices

Key figures Logistics services 2006 2005Result



Quantities

Parcels Millionsofitemssent 104 105

Expressitems Millionsofitemssent 4.4 4.2

Courieritems NetsalesinCHFm 42 39

Smallconsignments NetsalesinCHFm 103 116

Warehouselogistics NetsalesinCHFm 63 36

InnightExpress NetsalesinCHFm 19 17

Employees




theparcelcentre.PostLogisticsisthuscreatinganidealbasisfromwhichtorein-forceitsoperationsinwesternSwitzer-land.Theuseofdouble-deckertruckswasintroducedtoreducedieselcon-sumption,increasecapacityandmakecost-savings.

Strategic alliancesMobilitySolutionsAG,thefleetmanagerofSwissPost,enteredintoastrategicalliancewiththeMobilityCarSharingSwitzerlandcooperative,whichwillopti-mizeuseofbothvehiclefleets.Thecoop-erationwithDeutscheBahninfleetandmobilitymanagementforroad-basedvehicleswascontinuedaspartofajointventure.

SecurePost AG SecurePostAGconsolidateditspositioninSwitzerlandandisnowoneoftheleadingprovidersinthemarketforsecu-ritytransports.Furthercustomerswere

acquiredinthebankingandretailseg-ments.Towardstheendoftheyear,SecurePostAGalsobeganoperatingitsnewdistributioncentre(includingtheheadoffice).Thisnewlocationwillbethebasisforfuturegrowth.

yellowworld AGTheyellowworldAGsubsidiarycontinuedtoexpanditsleadingpositionasapro-viderofe-billingande-logisticsservicesintheSwissmarket.Forinstance,theeasybillingsolutionoperatedonbehalfoftheSwissFederalRailwaysfortheBo-nusPasswasexpandedtoincludepublictransportintheZuricharea.TheFederalOfficeforJusticeisusingtheadminpayonlinedebtcollectionservice,whichwasdevelopedbyyellowworldspecificallyfortheneedsofpublicauthorities.

OutlookIn2007,PostLogisticswillcontinuetopursueitsadoptedstrategyandpositionitselfinthemarketastheleadingpro-videroflogisticsservicesinSwitzerland.

5 SeealsotheInnovativechapter,page36.6 www.postlogistics.ch/mypostlogistics

Readmoreonlinewww.swisspost.ch/ar2006links4) OverviewofSwissPostsuniversalservices5) SwissPostsbasicservice,termsanddefinitions99)Figuresforthe2006AnnualReport

23 AnnualReport|Service-oriented|Logisticsservices

Key figures Logistics services 2006 2005Quality

DeliverytimesfordomesticPostPacPriorityparcels %ofitems 97.3 97.3

DeliverytimesfordomesticPostPacEconomyparcels %ofitems 97.6 97.7

Customersatisfaction:PostParcelsbusinesscustomers Index 80 79

Customersatisfaction:ExpressPostbusinesscustomers Index 78 75

Market share

Parcels % 74 74


http:// www.postlogistics.ch/mypostlogisticshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

Geschftsbericht2006

strengthsofSwisspublictransporttoagreaterextentabroadandtotakeoverthemanagementandoperationofsched-uledroutesandnetworksthere.

Operating resultPostBusgeneratedoperatingincomeof579millionfrancsintheyearunderre-view(2005:559millionfrancs)andoper-atingresultof28millionfrancs(2005:29millionfrancs).TheriseinincomewasdueprimarilytobusinessinFrance,high-ertransportrevenues,highercompensa-tioninaccordancewiththeRailwaysActandtoadditionalincomefrommanage-mentandengineeringservices.However,therewerealsosomenegativeeffects,suchascompensationcutsresultingfrompressuretosaveinthepublicsector.Thenumberofpassengersandkilometrestravelledrosebyalmost1percent.

Routes in SwitzerlandIntheKandertalandWorbregions,the16routesputouttotenderin2006wereallacquiredbyPostBus.PostBusSwitzer-landAGthusprovedthatitcancompetesuccessfully.Bycontrast,itdidnotwinthe17linesputouttotenderintheSar-

PostBus has reacted to increased com-petition in the road-based public transport sector by setting up as a public limited company. This move allows it to compete and address the needs of its customers more flexibly and efficiently.

TheformerPostbusservicerunbySwissPostwastransformedintoapubliclimitedcompanyunderprivatelawinthe100thyearofitsexistence.TheFederalOfficeforJusticeconfirmedthelegalviabilityofoutsourcingthebusinessfromtheparentcompany,( 4,5)andagreementwasreachedinadvancewiththetradeunionsregardingaffiliationtothesubsidiariesCEC( 14),thusguaranteeingemployeesworkingconditionsthatremainbetterthanaverageinanindustrycomparison.PostBusSwitzerlandAGwasabletocom-menceoperationsonscheduleatthebeginningofJuly.

Thankstoitsnewlegalstatus,PostBusSwitzerlandcanfunctionmoreflexiblyinthemarket,makingiteasierforittoenterintoallianceswithotherpublictransportprovidersandallowingittopresentin-

dustry-standardhiringconditions.Over-all,PostBusSwitzerlandcannowpositionitselfclearlyasapublictransportcom-pany.

Competitioninroad-basedpublictrans-portisgrowing:thecantonsandtheConfederationareincreasinglyputtingroutesthatPostBusSwitzerlandhasoper-ated,insomecasesfordecades,outtotender.Thecrucialfactorforawinningbidisacost-efficientservice.

PostBusSwitzerlandaimstomaintainitsleadingmarketpositioninitscorebusi-nessofregionalpassengertransportbybecomingmorecompetitive.Inaddition,itssystemmanagementfunctions,suchasserviceplanning,managementtasksandprojectmanagementaspartofatariffassociation,willbeexpanded.Throughtheseservices,PostBuswillbeabletoof-feritscustomersaddedvalueandanchoritselfmorefirmlyinthemarket.Localtransportintownsandspecialtransportfacilities(e.g.trainreplacementbusserv-ices,schoolbusroutes)andtheleisureandtourbusinesswillalsobeexpanded.Moreover,PostBusaimstomarketthe

Postbuses now operate in the Kandertal too.

Service-oriented | PassengerTransport

24 AnnualReport|Service-oriented|PassengerTransport

Key figures Passenger Transport 2006 2005Result


Ofwhich:generatedabroad % 4.8 3.2


Ofwhich:generatedabroad % 3.3 3.2

Quantities

Numberofpassengers Millionsofpersons 106 105

Vehicle-kilometres Millionsofkm 95 94

Vehicles1 Number 1989 2029

PostBusnetwork km 12268 10450

Employees


1 excl.abroad



ganserlandregion.However,afterne-gotiationswiththecompetitionandtheCantonofStGallen,PostBuswillcon-tinuetooperatesixoftheseroutes.

Routes abroadInFrance,theFrenchsubsidiaryCarPostalFranceSARLcommencedoperationofthenewurbannetworkinHaguenau(Alsace)withroutescovering86kilometres,fourscheduledservices,anon-callbusserviceandschoolbusroutes.Sincelastyear,CarPostalhasalsooperatedthebusnet-workinBourg-en-Bresseand14neigh-bouringmunicipalitiesintheRhne-Alpesregion.

Increasing productivity and qualityIncreasingproductivityiskeyintermsofboostingcompetitiveness.Toachievethis,aprojectteamatPostBusconductedin-terviews,workshopsandindividualanaly-sesinwhichitexaminedvehicles,staffdeployment,tools/methodsandsub-con-tractors.Aspartofanationwideproject,specificmeasureswillnowbedefinedandimplemented.

In2006,PostBusconcludedanadvanta-geousagreementwithmanufacturersconcerningthelifecyclecostsofavehi-cle.Thegoalwastodeterminethecumu-lativecostsoveravehiclesusefullifeandthustogivethemanufactureragreaterroleintheresponsibilityforitsmainte-nance.Atthesametime,itisexpectedthatcostsfortheactualoperationofthebuseswillbelower.

PostBusmeasuredthequalityofitsser-vicesusingtestcustomers.Thissystemhadpreviouslybeentestedoveratwo-yearperiodandnowreplacedtheevaluationbyin-houseinspectors.Passengersandtheirneedsarethefocusofthestudy.

Criteriasuchasreliability,drivers,passen-gercomfort,onboardinformation,salesanddealingwithcustomerconcernswereamongthetopicssurveyed.

Followingthereorganizationin2005andthereductionofaround50full-timeadministrativepositions,plustheredistri-butionoftasksthatsameyear,greatimportancewasattachedtodevelopingthecorporateculturein2006.KeytoPostBussabilitytoperformistheideathateconomiesofscaleandtheknow-howthatisavailablethroughoutSwitzer-landshouldbeputtothebestpossibleuse.

Anniversary of an image-driverPostBusSwitzerlandcelebratedits100thanniversaryinthepresenceofMoritzLeuenberger,PresidentoftheSwissCon-federation,andnumerousrepresentativesfromthepoliticalandbusinesscommuni-tiesatanationaleventinAarberg.WhatbeganasthefirstPostbusservicebe-tweenBerneandDetligenin1906hasdevelopedovertimetobecomeanation-

altransportcompany,animage-driverforSwissPostandasymbolofthereliabilityandqualityforwhichSwitzerlandstands.CelebrationswereheldineveryPostBusregionduringtheanniversaryyearasawayofthankingitspassengersandcus-tomersfortheirloyalty.

OutlookCompetitioninthefieldofregionaltrans-portwillcontinuetobeachallengeforPostBusintheyearstocome.Therewillbeacontinuingneedtoboostproductiv-ity.Byexpandingitssystemmanagementandlaunchinganinnovationdrive,Post-Buswillsecurethenecessarycompetitiveadvantages.

Readmoreonlinewww.swisspost.ch/ar2006links4) OverviewofSwissPostsuniversalservices5) SwissPostsbasicservice;termsanddefinitions14)SubsidiariesCEC99)Figuresforthe2006AnnualReport

25 AnnualReport|Service-oriented|PassengerTransport

Key figures Passenger Transport 2006 2005Quality

Customersatisfaction:Leisureanoccasionalpassengers,tourists Index 81 81

Customersatisfaction:commuters Index 73 73

Market share

Regionalpassengertransport(rail/road) % 15 15

Orderbusiness % 45 45

Tourism(road-basedonly) % 4 4

Additionalkeyfiguresaresetoutinthetableoffigures.( 99)

http://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006linkshttp://www.swisspost.ch/ar2006links

Geschftsbericht2006

In 2006, Swiss Post International (SPI) celebrated its tenth anniversary with sales that exceeded one billion francs for the first time. The domestic mar-ket picked up slightly, and there was a disproportionately high increase in international business. This success is based on a targeted expansion policy in profitable niche markets through its own subsidiaries as well as first-class franchise partnerships and alli-ances.

Initsdomesticmarket,SPIsuccessfullydefendeditsleadershipincross-borderdocumentsandgoodsmailingagainstgrowingcompetition.Itwasalsoabletoincreaseitsinternationalmarketshares.ThiswasduetoongoingliberalizationinthekeyEuropeanmarkets,wherenation-alpostalorganizationsarefeelingthepressureonprices,leavingSPIwithbettermarketopportunities.

SPIsoverridingobjectiveistostrengthentheGroupasawholebyachievingprofit-ablegrowthoutsideSwitzerland.Therearefourmainthruststoitsstrategy:intheSwissmarket,SPIwantstoretainitslead-ingpositioninimportandexportthroughnewproducts,thebundlingofinterna-tionalservicesandexcellentquality.Intheinternationalcourier,expressandparcelsmarket(CEP),SPIcooperateswithstrongalliancepartners.Inthecross-borderlettermarket,SPIwantstogrowthroughitsownsubsidiariesinthekeyEuropeancountries,inAsiaandtheUSA,andwithfranchisingpartnershipsincountrieswithagrowingcross-borderlettermarket.ThisbusinessincludeslettersandthecloselyrelatedB2Csmallconsignmentsmarket.TheSwissPostbrandultimatelyservestoopendoorsintheinternationallettermarket,whichischaracterizedbymajordifferences,andwhichisthusbeingbuiltupsystematically.

One of the best in the global letter market.

Service-oriented | International

26 AnnualReport|Service-oriented|International

Key figures International 2006 2005Result


Ofwhich:reservedservices % 15.1 19.2


Quantities (export + import Switzerland)

Exportletters Millionsofitemssent 199.7 191.7

Exportparcels Millionsofitemssent 1.4 1.4

Ofwhich:GLS Millionsofitemssent 0.5 0.5

Exportcourieritems(TNTSwissPostAG) Millionsofitemssent 1.6 1.4

Importletters Millionsofitemssent 230.6 220.4

Importparcels Millionsofitemssent 3.5 3.21

Ofwhich:GLS Millionsofitemssent 0.8 0.7

Importcourier(EMS) Millionsofitemssent 0.3 0.3

1 Previousyearsfiguresadjusted


In2006,SPIgeneratedmostofitssalesinSwitzerland.ItextendedcontractswithallitsmajorcustomersincludingUBSandtheUN.Businessincreasedslightly.Abroad,SPIgainedadditionalmarketshareandthusmadeamajorcontributiontoachievingsalesinexcessofonebillionfrancsforthefirsttime.Growthwaspri-marilyorganic,withacquisitionsaccount-ingforjustonepercent.SPIisoneoftheleadingglobalcompaniesinthecross-borderlettermarket.

SPI in SwitzerlandTosafeguarditsimport/exportbusiness,SwissPostInternationalextendeditscon-tractwiththeinternationalGLSnetworkin2006.Businesscustomersthushaveareliableandinexpensiveroad-basedshippingoptionforparcelsinadditiontothetraditionalpostalchannelandtheTNTSwissPostexpressproduct.EverythirdparcelthatarrivesinorleavesSwitzerlandviaSPIistransportedthroughtheGLSnetwork.In2006,SwissPostGLSfor-warded1.3millionparcelswithatotalweightof8.024tonnes.

TNTSwissPost,ajointventurebetweenSPIandDutch-basedTNT,offersSwisscompaniesinternationalexpressandcourierservicesinover200countries.Comparedwith2005,themostsuccess-fulyeartodate,TNTSwissPostwasabletoincreaseitssalesbyaround20percent.TheURGENTcourierproductforprivateandsmallcustomersgenerated

thehighestsalesgrowth(8%)sinceitslaunch.

TheSAT(SocitdAffretementetdeTransit)subsidiaryisoneoftheleadingprovidersinthefieldofEUcustomsclear-anceastheEUfiscalrepresentativeandsavesitscustomersmultiplecustomsduties.SATbeganusingapaperlesscus-tomsclearanceprocedurein2006.SPIexpandeditsofferingbytakingoverFMVerzollungsAGon1January2007.

SPI abroadGermany,Austria,FranceandItalyarethekeyEuropeanmarketsforSPI.SPIhasitsownsubsidiariesinBelgium,theNether-lands,theUK,theUSAandSweden.Lastyear,SPIacquireditspreviousfranchisingpartnerinAsia.ThenewsubsidiarySPISingaporeoperatesinSingapore,Malay-siaandHongKong.SPIishopingtogainaccesstoChinaviaastronglocaldistribu-tionpartnerinShanghai.primeMailajointventurewiththeGerman-basedHermeslogisticsgrouplifteditssalesasaspecialproviderofheavyandlarge-formatlettersontheGermanmarketto30millionfrancs.Acentrallogisticsplat-formforallEuropeansubsidiarieswascommissionedinDietzenbach,southofFrankfurt,inautumn2006.InItaly,SPIacquiredanotherlargelogisticscustomerthroughitscompanySwissPostPortaaPortaandbeganoperatingoneofthemostup-to-datepackingplantsforofficeandITitems.

A strong brandSPIcloselycombinestheSwissPostbrandwiththeSwissvaluesofpunctuality,reliability,flexibilityandentrepreneurship.Reachyourcustomersevenfaster,morereliably,morepunctuallywithSwissPostInternational:thiswasthemessageusedtoadvertisetheexpertiseandqualityofSPIin78Europeantradejournals.

OutlookIn2007,SPIwillcontinuetopursueitsstrategy,defenditsmarketshareinSwit-zerlandwithinnovativeofferingsandevaluateadditionalopportunitiesabroadforgrowthintheB2Candnationaldo-mesticmarkets.AttheUniversalPostalUnion(UPU)inBerne,SPIleadsthework-inggroupthatiskeentoswitchfromapoliticaltoacost-basedsystemforcalcu-latingterminaldues.

Readmoreonlinewww.swisspost.ch/ar2006links99) Figuresforthe2006AnnualReport

27 AnnualReport|Service-oriented|International

Key figures International 2006 2005Employees


Ofwhich:inSwitzerland Full-timeequivalents 501 456

Quality

Compliancewithdeliverytimesforinternationalletters(import) %ofitems 95.3 95.1

Compliancewithdeliverytimesforinternationalletters(export) %ofitems 92.4 90.3

Customersatisfaction:businesscustomers Index 75 73

Customersatisfaction,letters Index 74 74

Customersatisfaction,parcels Index 75 74

Market share, export to Switzerland

Mail Asa%ofsales 74 621

Parcels Asa%ofsales 58 63

Courier(TNTSwissPostAG) Asa%ofsales 35 30

1 Previousyearsfiguresadjusted Additionalkeyfiguresaresetoutinthetableoffigures.( 99)


Geschftsbericht2006

Fiercercompetition,thesubstitutionofthephysicalletterwithelectronicmeansofcommunicationandgenerallychang-ingcustomerbehaviourresultedindeclin-ingrevenuesfromthebasicpostalservicein2006,whilecustomersdemandsintermsofqualityremainedhigh,orwereevensteppedup.( 4,5)

TheresponsetothistrendistheYmagoproject( 8),onwhichSwissPosthasbeenconductingabroaddialoguewithallstakeholdergroupssince2004.Pos-siblenewsolutionsweretestedin2005-06withcustomersinpilotprojects.Theyshowedthatthepostofficenetworkcouldbemanagedmoreefficientlyandwithagreaterfocusoncustomers.Animprovedagencymodel(thepostofficeinthevillageshopprinciple)offersmoreattractiveopeningtimesandabasicrangeoflettersandparcelsthatcoversalmostalltheservicesthatareindailydemand.Inaddition,thePostcardcanbeusedtomakecashlessinpaymentsandtowithdrawcash.Themodelwaswellre-

ceivedbycustomersinthepilotstudyandproducedapositiveresponseamongagencypartnersandlocalauthorities.Around200agenciesbasedonthenewmodelwillbesetupbytheendof2008.

ThecustomerfocuswillalsobeincreasedwithYmagoatthepostoffices.Specifi-cally,thiswillinvolveaninternalredistri-butionoftasks.Beginninginautumn2007,theplanningandadministrationofsome200postofficeswillbecentralized.Theotherpostofficeswillthenbeabletodevotetheirenergiesevenmoretosalesandtoofferingcustomersadviceatthepostofficecounter.Thiswillnotchangeanythingintherangeofservices.Inthepilotstudies,thenewformofor-ganizationwasratedpositivelybybothcustomersandemployees.Inaddition,thetestpostofficesachievedsignificantlybetterfigures.

Thankstooptimizedprocesses,SwissPostcanboosttheproductivityofitspostof-ficenetwork.Around400jobswillbecut

Others come and go; Swiss Post stays the course.

Service-oriented | PostOfficeNetwork

28 AnnualReport|Service-oriented|PostOfficeNetwork

200 innovative self-service agencies with attractive opening hours and a more efficient distribution of tasks among post offices. Swiss Post is using these measures to gear its post office network more closely to cus-tomer behaviour and improve its profitability, enabling it to continue offering the public a nationwide, high-quality basic service.

In2006,thePostOfficeNetworkunitgeneratedincomeof1,781millionfrancsandpostedaprofitof19millionfrancs.Salsewithotherbrand-namearticlesrosefrom390to405millionfrancs(3.9percent).

42percentfewerletters,42percentfewerparcelsand14percentfewerin-paymentsandallsince2000.Postofficecountersarebeingusedlessandless,whichisresultingintoomanyuncoveredcostsinthepostofficenetwork.Thesecameto412millionfrancsin2006,com-paredwith442millionfrancsin2005.

Key figures Post Office Network 2006 2005Result


Ofwhich:netsalesofotherbrand-namearticles CHFmillion 405 3901


Infrastructurecontribution CHFmillion 412 442

Quantities

Acceptanceofletters Inmillions 1053 1140

Acceptanceofparcels Inmillions 31 32

Acceptanceofinpayments Inmillions 222 230

Employees




overaperiodoftwoyears.SwissPostexpectsthissteptobetakenwithoutanyredundancies.Asof2009,SwissPostlookssettoimproveitsannualresultsbyjustover50millionfrancsthankstoYmago.

Non-postal articles and services

Annual report 2006 - International Post Corporation/media/documents/public/annual-reports/member... · Administrative assistant, Wabern Annual Report Chairman’s foreword 6 ... groups,

Documents