PostNord has reported a modest second quarter revenue increase to a backdrop of e-commerce growth and falling mail volumes, along with a return to profit thanks to a property sale.
The Nordic postal group lifted sales by 2% in the April–June period to SEK 9,666 million, rising to 3% when acquisitions, divestments and currency effects are excluded.
It turned operating losses of SEK 30 million in the same quarter last year into a SEK 503 million gain. The net profit totalled SEK 390 million compared to a SEK 76 million loss.
Over the first half-year, revenues were down by 1% to SEK 19,699 million (-2% like-for-like) while operating profits increased to SEK 345 million against the SEK 76 million posted in the second quarter of 2014. The net profit reached SEK 593 million compared to SEK 24 million a year earlier.
The profit improvement incorporates a capital gain of SEK 500 million from the sale of a property in central Copenhagen at the end of June.
Commenting on the Q2 results, PostNord's President & Group CEO, Håkan Ericsson, noted that e-commerce had displayed strong growth in contrast to mail volumes which continued to fall, especially in Denmark. Implemented restructuring programmes had improved profit, he added.
“During the quarter, PostNord signed several major contracts in the area of parcel distribution, both in B2B and B2C, as well as a significant contract with the COOP chain of cooperative association supermarkets in Denmark regarding the distribution of direct mail. About a third of the new agreements that we enter into are in the e-commerce segment, which is continuing to grow strongly, and B2C parcel volumes rose by 17% during the quarter,” Ericsson said.
During the quarter PostNord expanded its strategic co-operation with the international network DPDgroup which comprised a powerful B2C strategy. Other highlights of the quarter saw PostNord enter into an agreement to acquire Finnish company Uudenmaan Pikakuljetus Oy (UPK), reinforcing PostNord Finland’s position in logistics solutions.
In the wake of continued digitization, mail volumes continued to decline, especially in Denmark. In total, mail volumes declined by 9% in the quarter, of which 15% in Denmark and 7% in Sweden.
“It is vital that amendments to the postal regulations should be based on the continually changing needs of customers so that a universal postal service can be maintained in the long term under reasonable economic conditions,” Ericsson underlined.
In late April, the Court of Justice of the European Union announced its verdict that postal services not covered by individually negotiated agreements are to be VAT-exempt. PostNord is now awaiting ongoing amendments to Swedish VAT legislation. This may entail an increase in costs for PostNord due to a reduced right to deductions for input VAT.
“With rapidly declining mail volumes we face major challenges, but we are concurrently strengthening our position as a leading logistics operator. Continuous efficiency improvements and adaptations are, however, essential to secure long-term profitability. With a great focus on customers we will deliver on our promises,” Ericsson concluded.
