Norway Post has delivered what it describes as 'a good half-year performance' with a moderate increase in turnover.
Growth in parcels as a result of increased online shopping contrasted with a continued decline in letter volumes.
The Group's H1 operating revenues totaled NOK12,407 million (€1,330 million), an increase of 3% on the corresponding period of 2014.
Earnings before non-recurring items and write-downs was MNOK 314 for the first half of 2015, NOK 2 million higher than the previous year.
“The postal and logistics industry is faced with significant challenges. Mail volumes declined as expected by about 6%, while cyclical fluctuations in the oil industry affect the entire economy. However, we have delivered a performance in line with last year, which I’m very pleased about,” says Norway Post's CEO, Dag Mejdell.
The logistics segment's earnings before non-recurring items and write-downs was down NOK47 million on the same period in 2014 to NOK 27 million, primarily due to lower volumes in Norway.
Operating revenues totaled NOK8,190 million, representing organic growth was 4.4 %.
The segment consists of the Logistics Norway, Logistics Nordic and E-Commerce divisions,
"The growth is mainly due to an improvement of revenues in the business area International and the operations in Sweden. Reduced activity in the oil industry had a negative impact on the logistics operations in Norway," the postal utility said.
In 2015 the market has seen an increase in private e-commerce, both domestically and through import, which has resulted in solid growth in the parcel market.
The Group's volume of groupage also increased, but the trend of decreasing prices per tonne continued for freight operations. The challenging market conditions for the logistics operations in Sweden and Denmark remained unchanged, mainly in the freight operations. The Group's combined e-commerce volume showed growth for the first half of the year of 6 % compared to the same period in 2014.
In the mail segment, H1 volumes of addressed letters decreased by 6.4 % which was in line with the decrease over the past 12 months.
The volume from the largest customers in bank and financing increased slightly compared to previous year, while the volume from the public sector decreased by 9%.
"The public sector is focusing considerable resources on the migration to digital solutions and the decrease in volume from this sector is expected to increase over time.
Over the past 12 months, unaddressed mail decreased by 2.8 % and for the first half of the year the decrease in volume was 6.5 %. This decrease was a result of the loss of a large customer and a general decline in the market."
Revenues for the first half of 2015 were slightly down from last year (-1% to NOK 5,078 million), mainly due to the decrease in volumes.
The mail segment's earnings before non-recurring items and write-downs (NOK 435 million) were at the same level as last year as a result of positive effects from cost-reducing measures.
As for legislative changes during the first half-year, on 9 June, the Norwegian Parliament adopted a new Postal Services Act. One important change is that Posten Norge’s remaining monopoly on letters under 50 grams has been terminated. Further, Posten Norge will no longer be required to distribute mail six days a week. The company will continue to restructure operations to meet new user needs and increased competition.
“Our biggest challenge is digitisation, but full competition for postal services will further tighten the requirements. I’m confident that Norway Post will succeed against the competition. We provide world-class postal services, we cover every household and company across the country, and we have 18,000 skilled employees,” Mejdell said.
Its nationwide postal network will continue to be very important in the future for the distribution of mail and an increasing number of parcels resulting from more online shopping. The Group’s total e-commerce volume has increased by 8% during the past year.
“People are shopping more and more online. That means solid growth in parcel volumes for Norway Post,” Mejdell added.
As for the market outlook, the decrease in volume in the mail segment as a result of digitalisation and the uncertain market forecasts for the logistics market due to the decrease in activity in the oil sector in Norway, will have a negative effect on the Group’s revenues and earnings, Norway Post warned.
