ITELLA CORPORATION STOCK EXCHANGE RELEASE OCTOBER 27, 2010, AT 10:00 A.M.  Itella Interim Report for January–September 2010

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Itella Interim Report for January–September 2010  

January–September 2010  

• The Itella Group recorded net sales of EUR 1,332.7 million in January-September (EUR 1,328.7 million in January–September 2009). International operations accounted for 32% (29%) of net sales. Itella Information and Itella Logistics increased their net sales, while Itella Mail Communication saw its net sales decline.
• Operating profit was EUR 16.5 million (EUR 22.1 million), representing 1.2% (1.7%) of net sales. Financial performance was taxed by the non-recurring items of EUR 15.5 million (EUR 24.8 million). Operating profit decreased in Itella Mail Communication and Itella Information, while Itella Logistics was able to decrease its operating loss considerably.
• Despite the economic upswing, letter volumes failed to return to normal. Meanwhile parcel volumes are showing marked growth after the summer season.
• The Group’s personnel costs decreased by EUR 5.5 million during the period, down by 0.8% year-on-year. Excluding the cost provision for restructuring arrangements, personnel expenses fell by EUR 6.8 million, or 1.1%.
• Itella Mail Communication acquired the Estonian SmartPOST company's self-service parcel business. Itella Corporation acquired a non-controlling interest in Itella Information AS from Norway Post.

• Preparations to renew the legal structure of Finnish operations proceeded as planned: Postal services will transfer to the new subsidiary, Itella Posti Oy, on January 1, 2011.  Similarly, all real estate owned by Itella in Finland will be transferred to a single company, Itella Real Estate Oy, at the turn of the year.

 July–September 2010 

• The Itella Group recorded net sales of EUR 428.1 million in July-September (EUR 412.5 million in July-September 2009).
• Towards the end of the quarter, logistics volumes both in Finland and internationally showed marked growth. Parcel services offered for distance selling also strengthened.
• Operating profit totaled EUR 4.4 million (EUR -5.6 million), representing 1.0% (-1.4%) of net sales.
• In August, Itella was forced to reduce its postage rates.

Jukka Alho, President and CEO:

“The economic upswing affected the demand for Itella’s services relatively late, but there was a very noticeable change in the third quarter. We have seen growth especially in domestic parcel services and in logistics volumes across the board. Our business in Russia is also experiencing similar positive development.

Itella Information has continued to perform consistently.

In Itella Mail Communication, the demand for postal services and profitability continue to face tremendous pressure. Our price level has not followed the general cost trend, partly due to regulatory supervision. We have taken steps to improve profitability, for instance by adjusting the number of personnel, but these measures have proven inadequate.  

The healthy near-term development of postal operations will be determined in the labor market negotiations currently under way, and in the legislative work concerning postal services.”

APPENDICES
Itella’s full Interim Report

FURTHER INFORMATION
Tuija Soanjärvi, CFO, tel. +358 20 45 20907, tuija.soanjarvi@itella.com

DISTRIBUTION
NASDAQ OMX Helsinki
Principal media
www.itella.com/financials

NEXT FINANCIAL DISCLOSURE
A financial statements release for 2010 will be published on Wednesday, February 16, 2011

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Itella Group provides solutions for managing information and product flows. Itella operates in mail communication, information logistics and logistics in northern and central Europe, and in Russia. Net sales in 2009 amounted to EUR 1,820 million. Itella employs approximately 28,000 personnel. Corporate services are delivered under the Itella brand, while the Posti brand is used for services targeted at consumers in Finland. More information is available online at www.itella.com/group.