MILAN (Reuters) - Poste Italiane (PST.MI) suspended its outlook 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, posted 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 particularly hard hit by the impact of the coronavirus as a rise in parcel revenue did not compensate for a drastic fall in letters 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.
“While 2020 performance has been impacted by lockdown, recent events have accelerated key emerging trends and confirmed our ‘Deliver 2022’ strategic direction,” CEO Matteo Del Fante said in a statement, referring to the company’s five-year strategic plan.
The shares were down 0.5% to 7.7160 euros at 0915 GMT, outperforming Milan blue-chip index, which was down 1.5%.
“The current health emergency will strongly influence the economy and society in the coming months ... as a result it is not possible to make realistic forecasts on the economic and financial evolution of the group during 2020,” Poste said.
The group’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.
He said in insurance it benefited from lower-than-expected costs while its payments business saw both higher revenue and lower costs.
In slides for a presentation to be held later in the day, 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.
A presentation slide showed it had 5.2 billion euros in available liquidity, of which 2.2 billion euros was in cash.
Editing by Jason Neely