Itella’s result weakened by declining delivery volumes
ITELLA CORPORATION INTERIM REPORT OCTOBER 30, 2013, AT 9:00 A.M. (EET)
Itella Corporation Interim Report January–September 2013
July–September 2013
- Itella Group’s net sales grew by 2.6 percent in July–September, totaling EUR 457.0 (445.6) million. Net sales in Itella Mail Communications declined to EUR 257.0 (264.4) million. However, net sales increased to EUR 210.1 (188.1) million in Itella Logistics and to EUR 61.3 (60.3) million in Itella Information.
- Operating result before non-recurring items decreased, amounting to EUR 8.0 (11.7) million, or 1.7 (2.6) percent of net sales. Operating result before non-recurring items in Itella Mail Communications declined to EUR 2.5 (12.5) million. Operating result before non-recurring items improved to EUR 0.2 (-2.9) million in Itella Logistics, and increased to EUR 7.2 (5.7) million in Itella Information.
- The operating result for the third quarter was impaired by non-recurring items totaling EUR 11.1 (0.0) million.
- The operating result for the period showed a loss of EUR -3.1 (11.7) million, or -0.7 (2.6) percent of net sales.
- Itella Information sold its printing business in Poland to PostNord. Itella sold its subsidiary Logia Software to the company’s management.
January–September 2013
- Itella Group’s net sales grew by 3.1 percent, totaling EUR 1,448.0 (1,404.1) million in January–September. The growth was due to the integration of VR Transpoint’s groupage logistics business into Itella Logistics.
- Net sales in Itella Mail Communications declined to EUR 832.7 (843.8) million, increased to EUR 632.6 (558.7) million in Itella Logistics and decreased to EUR 198.0 (202.5) million in Itella Information. Itella Information’s comparable net sales grew by 4.5 percent.
- Operating result decreased, totaling EUR 24.1 (40.4) million, or 1.7 (2.9) percent of net sales, before non-recurring items. Operating result before non-recurring items in Itella Mail Communications declined to EUR 32.4 (48.5) million and to EUR -12.2 (-6.4) million in Itella Logistics. In Itella Information, the operating result before non-recurring items improved to EUR 18.1 (11.5) million.
- The operating result declined year-on-year and amounted to EUR -2.4 (29.9) million, representing -0.2 (2.1) percent of net sales. The operating result was impaired by non-recurring items totaling EUR 26.5 (10.5) million.
- Cash flow from operating activities was EUR 9.8 (55.8) million and capital expenditure amounted to EUR 28.5 (52.0) million.
- In April, Itella announced the start of a EUR 100 million performance improvement program for 2013–2014. As part of the performance improvement program, Itella started cooperation negotiations in centralized and decentralized group functions and signed an extensive partnership agreement with IBM, according to which some of Itella’s ICT operations were outsourced to IBM as of June 1, 2013. In addition, Itella sold Itella Bank to the Savings Banks on April 18, 2013.
| Itella key figures | 7-9/2013 | 7-9/2012 | 1-9/2013 | 1-9/2012 | 2012 |
| Net sales, MEUR | 457.0 | 445.6 | 1,448.0 | 1,404.1 | 1,946.7 |
| Operating result (non-IFRS), MEUR*) | 8.0 | 11.7 | 24.1 | 40.4 | 53.2 |
| Operating result (non-IFRS), %*) | 1.7 | 2.7 | 1.7 | 2.9 | 2.7 |
| Operating result, MEUR | -3.1 | 11.9 | -2.4 | 29.9 | 39.0 |
| Operating result, % | -0.7 | 2.7 | -0.2 | 2.1 | 2.0 |
| Result before taxes, MEUR | -5.2 | 10.3 | -12.0 | 23.8 | 30.8 |
| Result for the financial period, MEUR | -3.7 | 4.9 | -9.9 | 9.1 | 14.1 |
| Return on equity, %, 12 months | -0.7 | 2.3 | 2.1 | ||
| Return on invested capital (12 months), % | 1.1 | 5.8 | 4.7 | ||
| Equity ratio, % | 47.6 | 48.0 | 46.2 | ||
| Gearing, % | 30.3 | 22.3 | 23.5 | ||
| Gross capital expenditure, MEUR | 19.6 | 41.3 | 64.8 | 134.7 | |
| Employees on average | 27,669 | 27,391 | 27,460 | ||
| Dividends, MEUR | - | - | - | - | 6.8 |
| *) Non-IFRS = excluding non-recurring items |
President and CEO Heikki Malinen:
”The structural transformation in the postal industry is beginning to have an increasingly significant impact on Itella’s business. The delivery volume of traditional letters declined by 5 percent in January-September, while newspaper delivery volume fell by 6 percent and magazines by 7 percent. In addition to the decline in volume, the economic recession had a negative effect on the Group’s result.
The positive development of Itella Information’s result continued. In Itella Logistics, the operating result improved compared to the previous quarters and the operative result of Russian operations, which are included in the Itella Logistics business group, were quite satisfactory.
According to the new vision published today, Itella will refocus its business and seek further growth and profitability in rapidly growing e-commerce and the Russian market. The delivery volume for parcels and goods is rising substantially as e-commerce grows, while electronic communications threaten to halve the delivery volumes of traditional letters, newspapers and magazines by 2020. Itella’s new vision is “Your first choice for postal, logistics and e-commerce services” and its mission statement is “Our main mission is to manage the flow of commerce and everyday life”.
We also see growth potential in Russia, which, going forward, will be Itella’s second primary market alongside Finland. Our aim is to double our net sales in Russia by 2020. From January 1, 2014 onwards, the Russian operations will be organized into a separate business group and its resources will be strengthened.
Maintaining effective mail delivery operations while achieving growth and making new investments requires an improvement in profitability. Faced with the accelerating decline in delivery volumes, we must take action to ensure our continued profitability. The EUR 100 million performance improvement program initiated in spring 2013 is intended to support this objective by achieving savings in sourcing costs and eliminating unprofitable operations.
As part of Itella’s new strategy, Itella Information will be renamed OpusCapita and operate as a subgroup of Itella Group. The restructuring supports OpusCapita’s aim of achieving strong growth and boosting its market position in Europe.
We anticipate Itella's net sales for 2013 to show growth in comparison to the previous year. The full-year operating result before non-recurring items is expected to be decrease than in 2012. The operating result for the full year is expected to be impacted by substantial non-recurring items."
APPENDICES
Itella’s full Interim Report (PDF)
FURTHER INFORMATION
President and CEO Heikki Malinen and CFO Sari Helander,
tel. +358 20 452 3366 (MediaDesk)
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
www.itella.com/financials
FINANCIAL CALENDAR IN 2014:
Financial Statements Bulletin 2013 to be published on February 14, 2014
PHOTOGRAPHS AND LOGOS
www.itella.com/media
Itella is your first choice for postal, logistics and e-commerce services. We manage the flow of commerce and everyday life in 11 countries. Net sales in 2012 amounted to EUR 1,947 million. The number of staff is approximately 27,500. We deliver corporate services under the Itella brand, while the Posti brand is used for services targeted at consumers in Finland. www.itella.com