Norway Post slightly increased its operating revenues by 1.2% to NOK 6,932 million (€780.1 million)in the first quarter of 2009 due to last year’s acquisitions and expansion in Sweden and Denmark.
However, mail and product volumes were negatively impacted by the economic downturn.Group earnings before non-recurring items came to NOK 90 million (€10.13 million), up fromNOK 74 million in the first quarter of 2008 mainly thanks to the Easter effect as the Easterholidays were in April this year leaving more workdays in March.
The mail revenues fell dramatically by 14% to NOK 3,216 million (€361.92 million), with mailadvertising decreasing by 25%. The number of customers using the post office network declined by 7%driving mail volumes further down. In addition, physical mail was affected structurally bytechnological developments involving a transition to electronic solutions such as e-mail,e-invoices and online banking. In order to compensate for declining volumes, Norway Postimplemented Spinnaker, a profitability programme, in 2008. It had a positive effect in the firstquarter this year.
“The Mail Segment is facing both short- and long-term challenges. In the short term, we areadapting our capacity and operational system to the lower demand in the market. In the long term,we must continue to restructure our operations in order to meet new customer needs with competitiveoffers and profitable operations,” said Norway Post CEO Dag Mejdell.
The logistics revenues rose by 2.3% to NOK 3,188 million (€358.77 million). The divisionachieved earnings of only NOK 59 million (€6.64 million), down from NOK 115 million in thecorresponding period last year. Total parcel volumes grew by 6% to 8.6 million shipments comparedwith the same period in 2008, mainly as a result of the purchase of the remaining shares (50%) inPNL in the third quarter of 2008 and the Easter effect. However, the economic downturn resulted inlower volumes within several business areas, particularly groupage/part load and express services.International operations recorded the greatest fall in volumes as a result of reduced demand fromexisting customers while domestic volumes also decreased, especially for B2B parcels.
“Mail and logistics are cyclically sensitive operations and the international economicdownturn is becoming directly apparent in lower volumes and numbers of assignments,” Mejdell added.
In its revised national budget, the government has proposed granting NOK 518 million aspayment for unprofitable postal and banking services. This covers the delivery obligations thatNorway Post has to carry out according to its licence but which do not make a profit for thecompany, the company said in a statement.
The outlook for market development in 2009 is rather uncertain as a result of the financialcrisis and the economic downturn that began at the end of last year. The group expects itsoperations to be negatively impacted in 2009 along with a continuous decline in volumes andincreased competition consequently affecting the profitability.
Along with the Spinnaker profitability programme, additional measures are being put in placeto adapt costs to a falling level of activity in the market, particularly in the Mail and Logisticssegments, Norway Post stated in its Quarterly Report.
To boost the company’s operations, the new South-East Norway terminal at Robsrud in Lørenskogwill be completed at the end of 2009 and put into operation early in 2010. The high-technologicalfacility with integrated production will include, among other things, the use of geothermal coolingand heating.
As for e-commerce, online shopping is expected to continue growing and stimulating the parcelbusiness. The logistics segment, however, will be highly affected by the economic downturn and avolume drop in B2B parcel products while competition becomes fiercer. The Group expects that the ITsegment will also be affected with pressure on profitability and prices in 2009-2010.
