Norway Post achieved strong growth in its logistics revenues and profits last year but its mailbusiness suffered from falling volumes that led to lower profits.
The group turnover grew by 7% to NOK 28.7 billion (€3.3 billion), with international revenuerising by 20% to represent 26% of the overall revenue.
But Norway Post’s provisional earnings for the year before non-recurring effects, financialitems and taxes dropped to NOK 684 million (€78.2 million), compared to NOK 815 million in 2007.The costs of developing and launching new brands, including the new international brand Bring,debited the 2008 accounts by NOK 221 million. The earnings in 2008 were also influenced by weakerprofitability in the Post segment.
The increased volume of orders and growth in parcels and goods, as well as acquisitions,helped to increase the Logistics segment’s revenues by 8.8% to NOK 13.4 billion (€1.5 billion) in2008. The division’s earnings (EBIT) grew by 46% to NOK 682 million (€78 million). The Logisticssegment is now the largest business area in the Norway Post Group and accounted for 46% of thegroup’s revenues.
“Strong growth in our existing operations, acquisitions and the good increase in our earningsmean that we are strengthening our position as one of the leading logistics players in the Nordicregion,” said Norway Post Group’s CEO Dag Mejdell.
Parcel volumes increased 8% last year, with more international parcels thanks to theacquisition of the remaining 50% in PNL last autumn. Express volumes were lower, especially inSweden and Demark, due to the economic downturn.
In 2008, the Logistics segment, now operating under the Bring brand, acquired Emdal Transport& Spedisjon AS, CombiTrans AB, Nor-Cargo UK, Finnish express delivery company Lähettiryhmä OY,and the remaining 50 per cent of the shares in parcel company Pan Nordic Logistics AB (PNL).
In contrast, the Post segment increased its revenues by 2% to NOK 13.1 billion in 2008. Thissegment is affected by the fall in the volume of letters and banking transactions resulting fromthe transition to electronic solutions. The parent company’s revenues were on a level with those in2007, while the growth took place in the subsidiaries.
The total volume of letters sent in Norway in 2008 was 3.3% lower than in 2007. The declinewas greatest for addressed and unaddressed advertising, which fell by 6.2%. The decline in thevolume of letters, changes to the product mix, provisions for reorganisation costs (NOK 150million) and expansion costs in Sweden led to the Post segment making a loss (EBIT) of NOK 120million, compared to earnings of NOK 90 million in 2007.
”We expect the volume of letters to continue falling in 2009, mainly as a result of a lowerlevel of activity in the economy and more people replacing letters with electronic alternatives,”Mejdell said.
The postal and logistics markets are changing rapidly and are affected by increasingcompetition and a decline in the volumes of letters and banking transactions. The future earningsare expected to be negatively affected by the economic downturn, the group said.
Norway Post is facing the profitability challenges in the Post segment with an extensiveprogramme of measures – Spinnaker. This programme aims to increase revenues and reduce costs by NOK2.3 billion in total in 2012. The profitability challenges facing the Post segment are reinforcedby the fact that the Norwegian government has not granted funds to pay for Norway Post carrying outmandatory, unprofitable postal and banking services.
