Swedish-Danish postal operator Posten Norden increased its operating profits in its second yeardespite declining volumes and thanks to cost adjustments but recorded a year-on-year revenue
drop.The company, which was created with the merger of Sweden’s Posten and Post Danmark in July 2009, unveiled a 7% fall in revenues to SEK 41,669 million (€4,734 million). However, the operatingprofit improved by 28% to SEK 1,375 million (€156.24 million) last year, excluding structural andcurrency changes.
During the fourth quarter of 2010, Posten Norden recorded continued improvement in its operatingprofit which went up 44% excluding structural and currency changes. Pre-tax earnings fell 45% toSEK 1,348 million (€153.17 million) and net earnings declined even more by 57% to SEK 1,031 million(€117.15 million) excluding participations in the earnings of and capital gains from the sale ofbpost (formerly De Post-La Poste) in July 2009.
CEO Lars Nordström declared: “Our efforts to adjust costs have been successful and have servedto streamline production and administration as well as capture synergy effects from the mergeraccording to plan. We can confirm that we have accomplished an essentially successful Nordic mergerwhile warding off the recession and successfully adapting operations to changed market conditions. “
“We operate on a market where competition is fierce and where substitution drives down lettervolumes. The communication and logistics businesses are both impacted by pressure on prices. Yetthere was an economic recovery in 2010, particularly in Sweden and Norway, and demand for ourservices strengthened in these countries. Meanwhile, the economy in Denmark remains weak,” headded.
2010 saw an economic recovery in the Nordic region, though the degree of recovery varied betweencountries. Recovery was strong in Sweden and Norway, but less so in Denmark and a number of othercountries that are important to the group. There was also a recovery in the demand for PostenNorden’s services.
Revenues at Mail Sweden, operating under the Posten brand, declined 2% to SEK 15,554 million(€1,767 million). Its reported operating profit rose by over 100% but excluding structural andcurrency change it equalled 4%. The economic upswing had a clear impact on Meddelande Sverige, andvolumes were up for non-priority letters and direct mail. Earnings remained negative withinbusiness area Information Logistics despite comprehensive cost reductions, but were an improvementover last year.
Low economic activity and widespread substitution in Denmark resulted in reduced sales for MailDenmark (“Post Danmark”) with revenues dropping 17% to SEK 10,882 million (€1,236 million) on areported basis but excluding currency and other effects they fell 7%. Its reported operating profitrose 44% to SEK 641 million (€72.83 million) appreciably strengthened by significant costadjustments.
Posten Logistics, covering the group’s parcel, express and logistics services, reported a 2%revenue drop to SEK 12,423 million (€1,412 million), but an increase of 2% excluding structural andcurrency changes. The operating profit increased by over 100% to SEK 139 million (€15.79 million)compared to the SEK 158 million (€17.95 million) deficit during the previous year thanks to theeconomic upswing and a rise in e-commerce despite price pressure and overcapacity. Successfulefficiency measures also contributed to Logistics’s return to profitability.
During 2010 and early 2011, new postal legislation came into effect in both Denmark and Sweden. “ The new Danish law is an important milestone and entails deregulation of the Danish postal marketand securing universal service obligations,” the company said in a statement. However, the newSwedish Postal Services Act does not provide the group with the same opportunities as the Danishlaw does in terms of meeting service needs and countering price changes in the market.
“The group has decided to invest in a new terminal structure in central and northern Sweden,which will make us more competitive, reduce our environmental impact and improve our ability tomeet the universal service obligation in Sweden,” Nordström explained.
Looking ahead, 2011 is expected to be characterised by continued uncertainty about the stabilityin the eurozone but also by growth in Nordic countries along with fierce competition andovercapacity, the group predicted.
Posten Norden intends to meet this development with new business initiatives and continued costadjustments with operations being further streamlined. “Production capacity will be adapted togreater volume variations and the cost base will be made more flexible. Efforts to securepreviously identified and new synergies will continue,” the company added.
“Posten Norden shall be the first choice among customers for sending and shipping items to, fromor within the Nordic region. The prerequisites for achieving this were further bolstered in 2010through increased customer satisfaction and profitability,” Nordström concluded.
