Norway Post improved its underlying profits in the first quarter of this year thanks toongoing cost savings and has seen a pick-up in its logistics business.
In the January-March first quarter, the Norwegian postal group increased earnings beforenon-recurring items and write-downs for continued operations by four per cent to NOK 233 million(€29.8 million). Reported EBIT dropped slightly to NOK 245 million (€31.3 million). Group revenuesrose by 2.9 per cent to NOK 5,724 million (€731 million) due to higher logistics volumes.
In the mail business, revenues dropped 1.7 per cent to NOK 2,710 million in the first quarterand now account for only 44 per cent of overall group revenues. Letter volumes continued to fall.The volume of addressed mail fell by 9.4 per cent compared to the equivalent period last year, withthe banking/finance, telecoms and insurance sectors, among others, being responsible for most ofthis decline. But the division’s operating profit improved 7.6 per cent to NOK 423 million, whichwas a higher margin of 15.6 per cent. This was largely due to cost savings which offset the revenuedecline.
In order to take part in the electronic development, Norway Post launched a new digitalpostal system, Digipost, in the first quarter. This means that postal recipients now have a digitalmailbox in addition to their physical mailbox. There are over 100,000 registered users so far andseveral large businesses have signed up to use the service to send electronic post. “It is naturaland necessary for Norway Post to take part in electronic developments. With our experience and thetrust that the market has in us, we have the best prerequisites for succeeding with a digitalmailbox,” stressed CEO Dag Mejdell.
The logistics business, which now accounts for 56 per cent of group revenues, saw strongerbusiness in the first quarter and its revenues rose 5.9 per cent to NOK 3,483 million. Parcelvolumes increased by 7.8 per cent, with a high rise for cross-border parcels and stronger B2Bgrowth in Norway.
Freight logistics grew with higher volumes in most activities. “The increased activity in thelogistics market indicates an economic turnaround. We can see that growth started and is strongestin Sweden, but it is now taking place in Norway too,” Mejdell commented.
But the division’s operating profit fell back by 21.3 per cent to NOK 107 million, and themargin worsened to 3.1 per cent from the previous year’s 4.1 per cent. Profits were hit by strongcompetition and increased costs as well as investment costs for parcel expansion activities.
Looking ahead, the group expects higher profits this year and will maintain its Nordic growthstrategy for both mail and logistics. In particular, the company noted that it seems clear thatnon-EU member Norway will not implement the EU’s Third Postal Directive which liberalised theEuropean postal market on January 1 this year.
But Mejdell stressed: “Irrespective of whether or not Norway says no to the EU’s Third PostalDirective, Norway Post must continue to adapt to the declining letter volumes and thus continue toreorganise its operations and adapt its service level.”
