Norway Post has kicked off 2012 with improved revenues and profits during the first quarterthanks to volume growth and acquisitions of new companies in its logistics segment.
In the January-March first quarter, the Norwegian postal group increased earnings beforenon-recurring items and write-downs for continued operations by 15.9% to NOK 271 million (€35.8million) due to extensive efficiency improvement measures in the mail segment. Reported EBIT alsoincreased to NOK 305 million (€40.3 million), up from NOK 245 million (€31.3 million) during thesame period last year. Group revenues rose by 1.4% to NOK 5,802 (€767.4 million) boosted bylogistics operations.
In the mail business, revenues dropped to NOK 2,706 million in the first quarter, down from NOK2,710 million during the previous year. The volumes of addressed mail fell by 4.2% with A-mailshowing the greatest decline. The division’s operating profit also dropped to NOK 421 million fromNOK 423 million last year. The result was negatively affected by the continuing fall in volume foraddressed mail as well as salary- and price-growth. However, volume growth for unaddressed mailadvertising, price increases and cost-reduction measures have contributed to maintain earnings,Norway Post explained.
Norway Post’s digital postal system called Digipost that was launched last year provides adigital alternative to the physical mailbox. It now counts more than 200,000 registered users andaround 50 contracted companies sending mail through the digital box. At the same time, theNorwegian government is considering whether the public sector should develop its own digitalmailbox when all public mail is to be transferred from physical mailboxes to a digital mailbox. “Weknow that people like things to be simple and to gather all their mail in one mailbox – both on thegarden fence and online. Norway Post is striving to ensure that the public sector chooses Digipostto send digital mail in the future in the same way as Norway Post has sent physical mail for 365years,” Norway Post CEO Dag Mejdell stressed.
In the logistics business, Norway Post improved its revenues by 2.2% to NOK 3,558 million in thefirst quarter positively affected by acquisitions carried out in 2011. Total parcel volumes fell by1.8 % compared with the same period last year while cross-border parcel volumes showed increasinggrowth at the same time as domestic volumes have fallen compared with last year. Cargo volumes havegrown. The division’s operating profit (EBITDA) increased slightly to NOK 110 million, up from NOK107 million last year. EBIT dropped to NOK 39 million from NOK 48 million last year. Profits wereaffected by strong competition and a slide towards lower-priced products in the parcelbusiness.
Operating revenues of the company’s logistics business outside Norway totalled NOK 1,344 millionduring the first quarter of 2012 which represents 37.8% of the total operating revenues for thesegment and was on approximately the same level as last year. The business areas thermo-transportand the warehousing operation showed improved profitability compared with last year as a result ofthe efficiency measures which were implemented. Efficiency measures implemented in order to exploiteconomies of scale and ensure improved profitability in future will continue in 2012, the postaloperator said. The improvement programme includes increased synergies between the production ofmail, parcels and cargo.
In April this year, Bring Cargo Østfold acquired the company Fredrikstad Transport &Spedisjon AS to strengthen the Group’s position in cross-border transport to and from the Nordicregion. The company has around 50 employees and had a turnover of NOK 80 million in 2011.
“Norway Post’s strategy is to strengthen and develop its mail operations with services that areadapted to new customer needs. New companies outside the traditional mail sector are intended tohelp improve the Group’s range of services and market positions and, over time, make a positivecontribution to the results,” Mejdell explained.
In April this year, the Norwegian government presented a White Paper on Norway Post which is tobe discussed by parliament before the summer. The government states that Norway Post has succeededin implementing major re-organisation measures over time and allows for the possibility that it cancontinue to re-organise and develop the group.
Looking ahead, Norway Post said: “There is uncertainty regarding development in theinternational economy, and both the Nordic region and Europe face major challenges. An economicupswing is not expected before 2014. Nevertheless, there are positive signs that allow the group toexpect cautious growth in 2012. The main challenges are to adapt costs to falling volumes in theMail segment, strengthen market position and profitability in the logistics segment and balance animprovement in operations with continued growth and acquisitions. The group will continue to have amajor focus on improving profitability and completing efficiency programmes in all parts of itsbusiness.”
