PostNord today unveiled a sharp drop in profits in the second quarter of 2012 due to a large chargefor restructuring costs but underlying results also declined due to lower mail volumes.
The Swedish-Danish postal group had a 2 per cent revenue drop to SEK 9.5 billion in the April– June 2012 quarter and made an operating loss of SEK 179 million compared to last year’s SEK 211million profit. This was largely due to restructuring charges of more than SEK 300 million. Thegroup made a net loss of SEK 151 million compared to last year’s SEK 154 million profit.
Over the January to June half-year, revenues declined one per cent to SEK 19.5 billion,operating profit fell to SEK 114 million from SEK 631 million and net profit was just SEK 59million compared to last year’s SEK 498 million.
CEO Lars Idermark said: “PostNord’s net sales were down 2 percent during the second quarterof 2012, chiefly due to the anticipated and continued high level of substitution to digitalalternatives to mail. The development was positively affected by acquisitions made in line withgroup strategy.
“Our group is going through a major conversion phase during 2012 and 2013, aimed at securingfuture profitability for the mail businesses and developing the logistics business. We arecurrently making major rationalizations and investments in many areas of the business. Secondquarter operating profits were therefore charged with significant restructuring costs, totalingover SEK 300m.”
PostNord said the group’s operating margin before restructuring costs and non-recurring itemswas nearly 4 per cent for the first half of 2012, despite a challenging market marked bymacroeconomic uncertainty and substitution.
The group’s Mail division suffered a five per cent revenue decline to SEK 5.7 billion in Q2as mail volumes fell seven per cent and made an operating loss of SEK 120 million. Post Danmarkaccounted for virtually the entire loss due to an 11 per cent volume fall while Posten Swedennearly broke even despite a five per cent volume decline.
Idermark said the decline in mail volumes in each market “was in line with expectations” andstressed that the trend “confirms the need for continued cost reductions to secure profitability”.
The Logistics division increased revenues by nine per cent to SEK 3.2 billion due mostly tothe acquisition of Green Cargo Logistics and other smaller acquisitions. But the business droppedinto the red with a SEK 41 million operating loss as operating costs increased by 10 per cent.
Idermark commented: “Within the logistics business we continue to implement our strategy tocreate end-to-end solutions and cross-border capacity and to grow with profitability. The group’slogistics business in Norway is growing steadily and the Swedish business is also developing well.Our parcel volumes are increasing, however we continue to be challenged by tough competition inDenmark. In other areas of the logistics business, we have strengthened our position withinthird-party logistics with the completed acquisition of one of the Nordic region’s largestthird-party logistics operators.”
For 2012 as a whole, PostNord expects mail volumes in Sweden to decline about five per centand about 12 per cent in Denmark but it predicts growth in the Nordic logistics market.
