PostNord today underlined its logistics growth ambitions as well as mail profitability improvementplans as it unveiled better 2011 results ahead of a possible IPO.
Outlining its new 2015 strategy, the Swedish-Danish group, which has already bought diverseregional transport companies in the Nordic region over the past few years, said the company wouldbe repositioned. Key aims were to increase the group’s value through growth, improved profitabilityand more efficient use of capital, while it would prepare the way for shareholders, the Swedish andDanish states, to consider a possible IPO.
CEO Lars Idermark declared: “We will implement major changes and make significant investmentsin production and infrastructure in the mail business to improve flexibility, efficiency andprofitability. We will expand our logistics operation profitably – organically and throughpotential acquisitions – to further broaden our offer and take the position as Nordic marketleader.
“The changes that will be needed to adapt the operations to market trends will impact manypeople. They will also set us on a new and exciting path that we will travel along with ourcustomers, and will open up new structures and business opportunities. The changes also improve ourpotential for growth and profitability and better enable us to deliver continued high levels ofservice and quality in accordance with the requirements under which we operate.
PostNord closed 2011 with net sales of SEK 39.5 billion, down 5 per cent. But its operatingprofit (EBIT) improved by 14 per cent to SEK 1.57 billion and net profit increased by 19 per centto SEK 1,225m from SEK 1,031m. The operating margin (EBIT) improved slightly to 4.0 per cent.
In Q4, 2011, net sales dropped back 3 per cent to SEK 10.5 billion. The operating profit(EBIT) soared to SEK 645 million from the previous year’s SEK 132 million. Similarly, the netprofit jumped to SEK 441 million from SEK 61 million. The Q4 operating margin (EBIT) was 6.1 (1.2)per cent.
PostNord’s logistics business increased revenues slightly to SEK 12.45 billion last year.Sales rose in Norway, were flat in Sweden and lower in Denmark. Thanks to cost reductions, theoperating profit doubled to SEK 269 million, and the margin doubled to 2 per cent.
The two postal services in Sweden and Denmark saw contrasting fortunes. In Demark, mailprofits dropped to SEK 355 million while revenues were 14 per cent lower due to the weak economy.The Swedish business managed to increase profits slightly to SEK 890 million despite a 2 per centrevenue decline.
PostNord described its results as “satisfactory” given the market situation. The overallperformance was strongly marked by domestic economic trends in the Nordic countries and by ongoingstructural changes for mail operations with falling mail volumes. The sharp decline in mail volumescontinued during the fourth quarter in Denmark, while the decrease in volumes has not yet been asdramatic in Sweden. Due to the growing number of available forms of communication and theprevalence of digitalization, PostNord expects mail volumes to continue their sharp decline incoming years, in both Denmark and Sweden.
The company continued to adjust costs and streamline business activities. Despite improvedresults, underlying profitability is under pressure and there is a great need to restructureoperations in the next few years, it explained. An SEK 1 billion administrative cost reductionprogramme was launched last autumn. Implementation of the strategy means that the operating profitwill be burdened with significant non-recurring restructuring costs in 2012 and 2013, the companywarned.
Looking ahead, PostNord said it expected addressed mail volumes to drop about 5 per cent inSweden and 12 per cent in Denmark this year but the logistics market should grow.
