Norway Post this week reported strong quarterly profit growth thanks to its ongoing ‘Spinnaker’efficiency programme and confirmed its intention to increase its focus on e-commerce and on Sweden,
where it announced the purchase of the logistics company Ekdahls Åkeri.Thanks to “extensive improvement programmes”, Posten Norge’s operating profit beforenon-recurring items and write-downs of NOK 719 million was 21% higher than at the end of the thirdquarter last year. The group’s operating revenues came to NOK 16.8 billion, which is 0.5% less thanat the end of Q3 2011.
The drop in revenues reflected the continuing volume decline of addressed mail, which fell by7.5 % compared with last year, while newspaper volumes declined by 9.8 % compared with the sameperiod last year. In contrast, the company’s Bring Citymail volumes in Sweden were higher in thefirst nine months of 2012 than in the corresponding period in 2011, partly as a result of newcustomer contracts.
Within the company’s ‘Logistics’ business unit, despite strong competition in the parcels marketand a slide towards services with lower margins, cost-reducing measures and positive revenue trendsin most of the other logistics areas contributed to an improvement in EBIT before depreciation andnon-recurring items compared with last year.
At the end of the third quarter, total parcel volumes were 4.6% lower compared with thecorresponding period last year. Domestic volumes fell, but growth in e-commerce contributed toincreased cross-border parcel volumes compared with last year. Year to date at the end of thirdquarter, volumes for freight and ‘thermo’ transport were at the same levels as last year.
The group said its efficiency programme, ‘Spinnaker’, which was launched in 2008, had resultedin an accumulated positive effect of NOK 2.7 billion by the end of the third quarter of 2012, andsaid new improvement programmes are being implemented in order to ensure the group’s futureprofitability.
CEO Dag Mejdell commented: “The results show we have managed to become more efficient andimprove our operations. Now we are preparing the organisation for new growth in the parcels andlogistics segments and increasing our focus on the e-commerce market.”
He stressed that e-commerce was an important growth area for Posten and its Swedish brand Bring,and said the group’s new e-commerce division, which has been in place since 1 October, would enableNorway Post to focus strongly on developing its services for online shops and shoppers. Thisdivision aims to develop e-commerce services and new concepts “and will be responsible for thelargest Nordic online-shopping players”, the company said.
“E-commerce is growing at a rate of 15% annually in the Nordic region,” said Mejdell. “Almosteveryone shops online and good distribution solutions are important for online shops. Norway Post’snationwide distribution network gives us the means to win this market.”
He said Bring had won important new parcels customers recently, including sports equipment andclothing retailer XXL, which he said had chosen Bring as its carrier for its large e-commerceoperations.
Underlining the group’s ambitions in Sweden, Posten Norge announced that it was acquiringEkdahls Åkeri, a logistics company in southern Sweden that has groupage, part-load and full-loadoperations and annual revenues of around SEK 640 million. “This acquisition is part of the Group’sstrategic focus on Sweden and strengthens our domestic transport position,” said Mejdell.
In terms of future outlook, the decline in letter volumes remains a major challenge for thegroup. “There are continuous efforts to improve profitability and to adapt to the declining volume,and the changing of 149 post offices to ‘Post in Shops’ is an important part of this,” the companysaid.
As part of organisational changes that took effect from 1 October, the group’s ‘Logistics’segment is now organised by country in two divisions, Logistikk Norge and Logistikk Norden, “inorder to increase the benefits from economies of scale in the national value chains”.
These changes took place at the same time as the establishment of the separate division fore-commerce, in order to capture a stronger position in this rapidly growing market. In the Nordicregion, 86% of consumers shop online and 50% of consumers shop outside their home country.
“Growth in e-commerce means that postal companies must be customer-friendly and competitiveacross national borders,” the group said. “The new division for e-commerce will ensure effectivesolutions for customers through effective use of the logistics network, both across borders andbetween the other divisions.”
