Norway Post shook off a drop in its mail business with strong logistics growth in the first halfof 2011 but its profits declined as costs increased.
The group said today it increased revenues by a moderate 1.9% to NOK 11.3 billion (€1.46billion) but its operating profit before non-recurring items and write-downs dropped by 26% to NOK296 million (€38.1 million), down from NOK 400 million last year. Net profits were NOK 106 million(€13.7 millin), down from the previous year’s NOK 591 million profit which had included highpositive one-off effects.
“So far, we’ve been very successful in reducing Norway Post’s costs, but have not quite managedto maintain our earnings due to the growth in salaries and costs during the first half-year,” saidDag Mejdell, the CEO of Norway Post.
The logistics business, which now generates 57% of group revenues, increased revenues by 5.6% toNOK 6,973 million in the first half-year. But the division’s operating profits dropped 38% to NOK173 million due to higher operating costs, investment costs and write-downs.
A key growth driver was e-commerce which generated a 4.7% rise in parcel volumes due to onlineshopping. Growth was strongest in cross-border parcels and domestic volumes in Sweden and Denmark. “ Parcels are an important growth area for Norway Post and an area we are focusing on in both Norwayand the Nordic market,” Mejdell said.
In contrast, mail volumes continued to fall with an 8.7% decline in addressed letters in thefirst six months of the year. Price increases and changes in the product mix partly compensated forthe lower volume, however, leaving revenues down 3.3% at NOK 5.3 billion. Mail results were buoyedon ongoing cost reductions, and operating profits (EBITDA) improved 2.3% to NOK 588 million.
The overnight delivery quality of A-mail improved by 4.2 percentage points to 86% during thefirst half-year. The main reason was that overnight delivery quality last year was affected by thestart-up of the new South-East Norway sorting terminal at Lørenskog, outside Oslo.
Meanwhile, Norway Post launched a digital mailbox – Digipost – during the first half-year justin order to offer electronic mail services. Digipost already has just over 150 000 users, and moreand more customers that send out mail are now signing a contract. ”We’ve managed to recruit manyDigipost users. Now we’re making greater efforts to increase our number of senders – i.e. companiesthat want to start using Digipost to send mail to their customers,” Mejdell said.
Norway Post also said it is testing 20 electric cars at present and plans to invest in replacing1,300 vehicles with alternative types by the end of 2015. Under its environmental activities, thegroup is moving transportation from air to ground and from road to rail, making road transport moreefficient in order to reduce overall CO2 emissions by 30%.
