Swedish postal operator Posten saw its half-year profits drop due to weakening economic conditions,lower mail volumes and strong competition. But plans to merge with Post Danmark are on schedule
following political approval.The company increased H1 net sales by 4% to SEK 15,595 million (€1,664 million), largely dueto the acquisition and consolidation of Norwegian freight company Tollpost Globe. But operatingearnings declined by 16% to SEK 1,165 million (€124 million) due to a drop in mail profits andhigher transportation costs. This left the operating margin down by 1.8 percentage points at 7.4%.The trend of moderate sales growth and a double-digit profit decline was mirrored in the secondquarter.
Posten Logistics increased half-year sales by 24% to SEK 5,080 million (€542 million) due tothe Tollpost consolidation but also achieved 9% organic growth. Parcels revenues grew 27% to SEK3,398 million (€363 million) on a 2% volume increase while other revenues rose 18%. The division’sprofits improved by 14% to SEK 224 million (€24 million).
Commenting on developments in its logistics business, Posten said in its half-year reportthat the “brisk growth rate” in parcels levelled out during the period. At the same time, theestablishment of the MyPack concept had made it easier for private individuals in Norway to buyfrom companies in Sweden, boosting sales. There was also expansion in parcels from companies inSweden to companies abroad. All product areas in the “other” category – palletized logistics,in-night freight forwarding, express, and third party logistics – reported advances, it noted.
In June this year, Posten Logistics set up a new operating organisation with a sharpergeographic focus. The purpose is to offer a broader and more clearly defined Nordic logisticsservice while improving productivity across all product areas, the company said.
Meanwhile, the mail business suffered a 2% drop in H1 revenues to SEK 8,380 million (€894million) due to lower volumes caused by the economic slowdown, substitution and heightenedcompetition from Norway Post subsidiary CityMail. Operating earnings slumped by 33% to SEK 784million (€84 million), also due to higher transportation costs. The profit margin dropped sharplyby 4.2 percentage points from 13.1% to just 8.9%.
“It is uncertain how much of a slowdown the economy will undergo and how that will affect thevolumes in Posten’s core operations. However, we predict the negative trend in volumes willcontinue, mainly in mail operations as substitution accelerates,” commented CEO Lars Nordström, whoreplaced Erik Olssen at the end of June.
Meanwhile, Posten said that progress is being made on the planned merger with Post Danmark bythe end of this year. On June 18, the Swedish parliament adopted the government’s proposal to mergePosten with Post Danmark, and on June 12 the Danish parliament approved the merger.
“Now, as the final pieces of the merger are put into place, we are working to develop anaction plan. Our goal is to have a well-prepared and primed organisation that is ready to realisethe identified synergies and to seize upon the business benefits created by the merger,” Nordströmsaid.
