Swedish postal operator Posten and Post Danmark each saw their Q1 results hit by the worldwideeconomic downturn as they gear up for their impending merger over the coming months.
Posten’s net revenues dropped 2% to SEK 7,601 million (€712 million) in the first threemonths of 2009 and its operating profit slumped by 43% to SEK 394 million (€36.9 million). Its Q1net profit was down by 48% at SEK 278 million (€26 million).
President and CEO, Lars G Nordström, said: “This is not unexpected considering the prevailingeconomic climate. The sharp economic deceleration has led to reduced demand for Posten’sdistribution solutions, primarily in the logistics and messaging operations.” The group haslaunched a SEK 1 billion cost reduction programme, and reduced the average number of employees bynearly 2,000 to 29,346 in the first quarter.
Mail revenues dropped 4% to SEK 4,103 million and operating earnings declined 29% to SEK 342million, leaving the operating margin down 2.7 percentage points at 8%. Competition from NorwayPost subsidiary CityMail increased and mail volumes dropped 3%. The average number of mailemployees was reduced by 7%, or 1,428 persons, to 19,975.
Posten Logistics increased reported revenues by 8% to SEK 2,561 million due to consolidationeffects from Tollpost Globe which it acquired last year. But underlying revenues dropped 2%, withthe greatest impact in Sweden and Norway. The parcels business increased revenues 14% to SEK 1,778million, largely due to Tollpost, despite a 3% volume decline. Other logistics revenues declined 3%to SEK 783 million. The logistics business saw its operating profits drop 24% to SEK 99 million,representing a 3.4% operating margin.
The logistics market currently has overcapacity in relation to demand, resulting in strongpressure on prices, Posten pointed out. The logistics division is adjusting costs, and reducedemployee numbers by 357, excluding the effects of the Tollpost acquisition.
Meanwhile, Post Danmark has reported a 7% drop in Q1 revenues to DKK 2,941 million (€395million). Its operating profit dropped 63% to DKK 136 million (€18.2 million) and the net profitwas down by 52% to DKK 177 million (€23.8 million). Results were impacted by lower volumes andpressure on prices. It, too, has embarked on a major cost reduction programme.
“Post Danmark is strongly affected by the economic crisis. The volume of letters and parcelsis falling at a pace we have never experienced before, which – in the first quarter – led to amassive drop of DKK 234 million in the company’s operating profit,” said CEO Helge Israelsen. “Theactivities we are now starting are completely necessary for enabling Post Danmark to retain areasonable, financial basis – a basis which is the precondition for our ability to continue toperform the tasks we are required to solve for Danish society. Despite our initiatives, there willstill be considerable uncertainty about the company’s financial development in the time ahead,” headded.
Following EU Commission approval for the two companies’ merger on April 21, a new parentholding company is now expected to be created around May 1, 2009. This will be headed by Posten CEOLars G Nordström. Sweden will own about 60% in the new holding company and Denmark the remaining40% but voting rights will be split 50-50. Under the merger plans, the logistics operations will becombined into a single business unit. The national postal operations will be run through separate,nationally-based subsidiary companies.
“We are well-prepared from both sides to establish an organisation that can quickly bringhome the strategic advantages of this historic merger and create the most competitive Nordicalternative for all customers in need of communication and logistics solutions to, from and withinthe Nordic region,” Nordström commented.
