Worsening market conditions led to a drop in second-quarter and first-half profits at Finnishpost and logistics group Itella, the company reported yesterday.
Itella Group’s net sales grew by 4.6% in the April-June period to €495.1 million, although thegrowth was due to the integration of VR Transpoint’s groupage logistics business into ItellaLogistics. Net sales in Itella Mail Communications remained at the same level as the previous year– €283.2 million – while the net sales of Itella Logistics grew 15% to €217.3 million. Netsales of Itella Information declined by around 1.5% to €66.8 million, although when accounting forItella Information’s sale of its printing services business in Germany in 2012, its net salesincreased by 6%.
But the group’s second-quarter operating profit before non-recurring items decreased sharply,dropping almost 60% to €2.4 million, or 0.5% of net sales. The operating result beforenon-recurring items in Itella Mail Communications decreased around 20% to €8.5 million, while thelosses of Itella Logistics worsened further, increasing more than 80% to €3.3 million. However,Itella Information’s second-quarter operating profit before non-recurring items improved by 80% to€4.5 million.
President and CEO Heikki Malinen said the overall market situation and consumer confidence had “declined clearly as summer approached”. He added: “In Itella’s business, the weaker marketsituation was particularly visible in road freight, the handling of goods and postal deliveryvolumes. The speed of growth slowed down, particularly with regard to the consumer segment.”
He said the group had, nonetheless, been successful in winning some significant new customeraccounts during the review period, although the weaker market situation was also evident as lowertransaction volumes in the business of Itella Information.
Meanwhile, he said electronic substitution continued to present Itella with a great challenge “this decade”, as letter and magazine volumes, in particular, continued to decline at an increasingspeed. “Itella is preparing for this change by adjusting its capacity to future demand,” hesaid.
“To enable future growth, Itella has established a new eCommerce unit, the objective of which isto allocate more resources and expertise in measures aiming to increase our market share in thelogistics of online commerce. We are also continuing our investments in the development of parceldeliveries.”
In April, the company launched a €100 million performance-improvement programme for 2013-2014.As part of this programme, the group sold Itella Bank, increased the efficiency of its groupadministration, began the outsourcing of ICT operations, and started giving increased prominence tosourcing, said Malinen.
“Improving the result of Itella Logistics, which has suffered from declining profits for quitesome time now, is one of our key priorities,” he added. “Enabling profitable growth in the futurerequires us to carry out significant changes in the entire logistics organisation and deliverychain. Positive developments include the growth of business and improved profitability inRussia.”
He anticipated Itella’s net sales this year to show growth in comparison to last year, while theoperating result without non-recurring items is expected to remain at the level of 2012. “Theoperating result for the entire year is expected to be impacted by substantial non-recurringexpenses,” he added.
