Posti Group’s net sales hit by the weak market situation – growth in parcel services

POSTI GROUP CORPORATION INTERIM REPORT, JANUARY–JUNE 2015
JULY 17, 2015 AT 10.00 (EET)

Posti Group Corporation Interim Report Q2/2015

April–June 2015

• The Group’s net sales decreased by 12.0% and amounted to EUR 406.3 (461.9) million in April–June.
• Net sales decreased by 5.3% in Postal Services, by 18.5% in Parcel and Logistics Services and by 27.1% in Itella Russia, and increased by 0.5% in OpusCapita. Measured in local currency, Itella Russia’s net sales decreased by 10.4%.
• The operating result before non-recurring items declined to loss-making territory and amounted to EUR -6.8 (2.9) million, or -1.7% (0.6%) of net sales.
• The operating result before non-recurring items remained largely unchanged at EUR 4.8 (4.7) million in Postal Services and declined to EUR -2.1 (-1.2) million in Parcel and Logistics Services, to EUR -2.0 (-0.1) million in Itella Russia, and to EUR 2.1 (4.7) million in OpusCapita.
• The operating result for the period was improved by non-recurring items in the amount of EUR +34.7 (-5.0) million. The most significant item was a real estate sale, on April 22, 2015, where Posti Group sold and leased back its postal centers in Tampere, Kuopio and Oulu, as well as its warehouse in Tuusula.
• The operating result for the second quarter showed a profit of EUR 27.9 (-2.1) million, or 6.9% (-0.4%) of net sales.
• In June, the Board of Directors of Posti Group approved the company’s strategic goals for 2015–2017.
• On April 30, 2015, Posti Group sold its road freight operations in Sweden, Norway and Denmark, as well as its international freight business in Finland, to the Danish company NTG Nordic Transport Group.
• Posti launched a renewal of its retail network. Going forward, Posti will operate 21 postal outlets of its own, and negotiations began in June concerning transfer of services at 77 outlets to partners.
• On April 30, 2015, OpusCapita acquired the Swedish companies Kredithanterarna and Svenska Fakturaköp.
• Patrik Sallner was appointed CEO of OpusCapita. Sallner will take up his post as CEO on October 5, 2015.

January–June 2015

• The Group’s net sales decreased by 9.6% and amounted to EUR 842.2 (931.9) million in January–June. Mail delivery volumes continued to decline as expected. The Group divested its international freight operations in order to improve profitability. In Finland and Russia, the situation in the logistics market remained weak. The ruble depreciated by 34% compared to the previous year. Parcel services volume grew by 5%.
• Net sales decreased by 3.0% in Postal Services, by 14.5% in Parcel and Logistics Services and by 30.1% in Itella Russia, and increased by 0.5% in OpusCapita. Measured in local currency, Itella Russia’s net sales decreased by 5.9%.
• The operating result before non-recurring items decreased and amounted to EUR 13.7 (20.5) million, or 1.6% (2.2%) of net sales. The operating result before non-recurring items improved to EUR 25.9 (21.5) million in Postal Services and to EUR -1.1 (-2.3) million in Parcel and Logistics Services. The operating result before non-recurring items declined to EUR -2.9 (-2.3) million in Itella Russia and to EUR 6.8 (11.5) million in OpusCapita.
• Non-recurring items recognized during the period totaled EUR +34.7 (-18.3) million.
• The operating result for January–June was EUR 48.4 (2.2) million, or 5.8% (0.2%) of net sales.
• Cash flow from operating activities was EUR 33.3 (43.9) million.
• The name of the company was changed to Posti Group Corporation on January 1, 2015. From January 1, 2015, the names of the business groups are: Postal Services, Parcel and Logistics Services, Itella Russia and OpusCapita. Since the beginning of 2015, Posti Group Corporation’s result is reported on the basis of the new business groups.

Key figures of Posti Group

Heikki Malinen, President and CEO:

“Posti Group faced a very difficult business environment at the start of the year, and the second quarter failed to bring the hoped-for improvement in the market situation. Economic growth in Finland has been non-existent, which has been reflected in a continued decline in the market for logistics services. The development of consumer purchasing power has been subdued and the digitization of communication has reduced mail volumes, particularly with respect to 1st class letters. The development of the Group’s net sales and result was unsatisfactory under difficult circumstances in the second quarter.

However, there were also some positives during the period. In Postal Services and Parcel and Logistics Services, the operating result before non-recurring items for January–June improved year-on-year. Another positive signal was the substantial growth in the volume of parcel services.

The situation in the Group’s Russian operations weakened significantly in the second quarter as a result of the Russian economic crisis and a decrease in consumer purchasing power. After the sharp peak in end consumption at the end of last year, volumes in warehouse logistics decreased during the spring. In our estimate, a recovery in demand may not be seen in 2015.

As part of Posti Group’s strategy, the sale of the Scandinavian road transport business and international freight business in Finland was successfully completed. The net sales of Parcel and Logistics Services decreased as a result of the transaction.

In OpusCapita, which specialises in automation and software services for financial management, cloud services and e-invoicing services saw positive growth. The company is making a strong investment in new growth businesses. Profitability was also eroded by declining volumes in the traditional printing business in all countries of operation. OpusCapita is an important part of Posti Group and subject to positive growth expectations.

Posti Group’s operating result in January–June improved significantly from the corresponding period in 2014 and amounted to EUR 48.4 million. The result includes a non-recurring profit on a transaction concluded by Posti on the sale and leaseback of five properties.

Posti is currently undergoing a significant multi-year structural transformation. Restructuring measures implemented in summer 2015 included rearranging the domestic terminal network and launching the renewal of Posti’s retail network. It will take some time before the impacts of these changes and other restructuring measures are reflected in the result.

In June, we announced our new strategy, with the primary objectives of renewing Posti to make it a customer-oriented first-class service company and pursuing profitable growth in new services. As society becomes increasingly digital and traditional mail delivery diminishes, Posti faces a turning point at which the Finnish Postal Act must be amended to ensure the availability of postal services throughout the country.

We have systematically improved the efficiency of our operations. We are improving the customer experience, productivity and our competitiveness by taking advantage of new technology. The growth of e-commerce and digitization also offer Posti new growth opportunities. We will pursue synergies by focusing on home services, meal deliveries and food logistics, which allow us to leverage Posti’s nationwide distribution network.”

APPENDICES
Posti Group’s Interim Report in full (PDF)

FURTHER INFORMATION
Heikki Malinen, President and CEO, and Sari Helander, CFO
Tel. +358 20 452 3366 (MediaDesk)

DISTRIBUTION
NASDAQ OMX Helsinki
Key media
www.posti.com/financials

FINANCIAL CALENDAR IN 2015
Interim Report Q3/2015, November 2

IMAGES AND LOGOS
www.posti.com/newsroom

Posti Group is your first choice in postal, logistics and e-commerce services. We manage the flow of commerce and everyday life in 11 countries. Our net sales in 2014 amounted to EUR 1,859 million. We employ approximately 23,000 professionals who serve our customers in Finland under the name Posti and in other countries under the name Itella. All our services in Finland are carbon neutral. www.posti.com.

Tags: