13
TH
December 2016
LA POSTE
Accelerating the transformation
La
Poste group, France’s second
-largest public sector employer with over 250,000
employees, operates across a variety of fields (banking, postal services, parcels delivery, mobile
telephony, etc.), including through subsidiaries in France and abroad. La Poste delivers a public
service throughout the country through two major networks: a network of contact points (over
17,000, including 9,149 post offices) and a delivery network (with over 72,000 postmen and women
delivering mail to 39 million letterboxes, six days a week).
La Poste is facing a steady decline in mail volumes, red
ucing its revenue by €500
million
every year.
In addition to this challenge, the company needs to successfully complete its digital
transformation, respond to growth in e-commerce and, for La Banque Postale, cope with low
interest rates.
While La Poste has managed to evolve and has proved resilient, weaknesses and
exogenous risks remain. To endure, it must therefore step up the pace of its transformation.
A company that has evolved
Faced with the rapid recession of its legacy business, La Poste has embarked on far-reaching
changes affecting its legal form, capital structure, business model and service offering. The post office
counter experience has been modernised and waiting times reduced; the number of company-owned post
offices has decreased in favour
of ‘postal contact points’ in partnership with local councils and retailers;
and the workforce has been reduced by not replacing staff when they retire. Although the company now
generates a stable operating profit every year, since 2013 this has been partly reliant on the
competitiveness and employment tax credit, of which La
Poste is the country’s number one recipient.
Persistent weaknesses
These undeniable improvements have not, however, made up for weaknesses partly inherited
from the past. The complexity of labour relations makes finding the right balance between the pace of
change and a satisfactory industrial relations climate a tricky endeavour. The quality of the postal and
parcel service leaves room for improvement, and delays in developing high-performing digital services for
the company’s various audiences will take a long time to make up.
The four components of La
Poste’s public service mandate (universal postal se
rvice, press
transport and distribution, accessibility of banking services and territorial presence, which form part of the
group’s identity, contribute to its business and cover part of its networks’ fixed costs, though the cost they
represent is not fully offset by public funding. In this regard, public funding represents a key issue, equating
to 61% of the group’s operating profit in 2015. The fact that the amount of public funding has been
declining since 2010, sometimes unpredictably, is a handicap for La Poste, as is uncertainty over the
terms under which the group will fulfil its missions in the future.
Ambitions threatened by uncertainty over growth drivers
Since 2010, La Poste has overestimated its ability to equal or surpass the results it achieved
before the financial crisis; for a while, it even underestimated the scale of the decline in mail volumes.
Risk factors now threaten the company’s ability to ach
ieve the targets it has set for the period 2014-2020.
Indeed, the possibility that mail volumes might decline even faster cannot be ruled out, while the
increase in the price of stamps, which has up to now partly offset the decline in volumes, cannot continue
indefinitely. Furthermore, very intense competition in the parcel market is driving down prices and forcing
operators to continuously improve the quality of the services they deliver. In addition, the exceptionally
low level of interest rates is resulting in a significant shortfall for La Banque Postale. Lastly, digital
business is not yet generating a financial return, and the new services offered by postmen and women,
notably aimed at the elderly, are still in the development phase.
A necessary acceleration in reforms
Against this backdrop, La Poste must activate all available levers to secure its financial
equilibrium and speed up its transformation: cutting costs by rationalising its organisational structure;
continuing to cut its workforce and limiting pay growth; and optimising the scope and structure of the two
key networks made up of post offices and distribution.
It is also critical that La Poste modernises its range of commercial services, in particular by
responding more readily to custome
rs’ expectations and offering new
modes of contact with users
(including opening hours and delivery options). The development of ‘partner contact points’ must be
continued in rural areas and resolutely implemented in urban areas. The rollout of digital services must
be accelerated, with a more dynamic and cross-cutting commercial strategy.
Lastly, La Poste must continue to invest in new growth drivers. While consideration may be given
to acquiring external companies, external growth must form part of a coherent business-wide strategy and
remain financially sustainable.
La Poste will not be able to meet challenges of this scale unless the State plays its part, by
reviewing La
Poste’s public service mandate, the content of which was designed and shaped before
the
digital era and must evolve.
Recommendations
The Cour des comptes issues eight recommendations, aimed in particular at updating La
Poste’s
public service mandate, adjusting the structure of the network of postmen and women in line with current
demands, furthering the transformation of low-volume post offices, developing digital business offerings,
improving the management of salary policy by
linking pay growth to the company’s transformation targets,
and formalising the external growth framework.
Read the report
PRESS CONTACT:
Ted Marx
Head of communication
T
+33 (0)1 42 98 55 62
tmarx@ccomptes.fr
Denis Gettliffe
Head of Press Relations
T
+33 (0)1 42 98 55 77
dgettliffe@ccomptes.fr
@Courdescomptes
ccomptes