MILAN (Reuters) - State-controlled Poste Italiane (PST.MI) said it would miss its targets for the year after reporting a 29% fall in first-quarter operating profit on Wednesday.
The Italian postal service operator, which also has insurance and financial divisions, recorded earnings before interest and taxes (EBIT) of 441 million euros ($478 million), topping an analyst consensus of 407 million euros.
Its mail and parcel business was hit hard by the coronavirus with rising parcel revenue failing to compensate for a sharp fall in letter delivery. It fell to an operating loss of 36 million euros from an operating profit of 148 million a year earlier.
Overall, revenue fell 3% to 2.755 billion euros versus an analysts consensus of 2.712 billion.
“The coronavirus has made (our) original 2020 targets not achievable,” CEO Matteo Del Fante told a conference call with analysts, after the firm said in March it targeted revenue of 11.1 billion euros and an operating profit of 1.8 billion euros.
Shares in Poste were down 2% to 7.60 euros at 1400 GMT, underperforming Milan blue-chip index, which was down 1%.
Del Fante said the company would press on with its five-year strategic plan, called Deliver 2022, that aims to restructure the mail and parcel division and expand digital services.
However the group would review the plan towards the end of this year, he said, adding it was too early to talk about a dividend on 2020 results, although the group confirmed its dividend payment of 0.463 euros per share on 2019 results.
In its strategic plan, Poste had pledged to increase its dividend by 5% every year until 2020.
Many companies have scrapped or cut dividends to preserve cash amid the coronavirus crisis.
In the first quarter, Poste’s digital payment unit, insurance and financial services divisions were more resilient and cushioned the results, analysts said.
“Most of the beat to our estimates at operating and net income level is explained by a stronger-than-expected performance of the financial services,” Gian Luca Ferrari of Mediobanca Securities said in a report.
Insurance benefited from lower-than-expected costs, while its payments business saw both higher revenue and lower costs, he said.
According to a slide presentation, the group pledged to cut costs and indicated some 1.1 billion euros in potential savings to be implemented in the medium to long term.
It said the Solvency II ratio at its insurance division fell to 226% compared with 276% at the end of last year.
The presentation showed Poste had 5.2 billion euros in available liquidity, of which 2.2 billion euros was in cash.
Editing by Jason Neely and Edmund Blair