Finland’s Posti has been hit by an ‘illegal’ strike this week as it announced “satisfactory” third quarter results.
The postal and logistics union PAU launched industrial action after the expiry of a collective agreement at the end of October and in a dispute over the use of contract workers.
Posti said today that mail delivery is getting back to normal in the areas where illegal industrial action has caused delays in mail sorting and delivery and the backlog accumulated during the illegal industrial action will be cleared during the rest of the week. For the present, new illegal industrial action is only underway in some deliveries in Espoo, Kuopio, and Turku, which will cause delays in mail delivery in the Espoo, Kuopio, and Turku regions.
The company emphasised that it is prepared to use temporary and supplementary workforce as well as subcontracting in potential disruptions in order to secure the services promised to its customers. With the help of temporary and supplementary workforce, Posti aims to minimize disruptions to services during the ban on overtime set for the members of the Finnish Post and Logistics Union PAU and the illegal industrial action measures.
Jarmo Ainasoja, Director of Posti's Control Center, said: “It is our hope that our personnel would prefer to choose to work over demonstrating. The competitive situation in our industry is tough and we don't want to endanger services and lose customers. We would like to apologize for the delay in mail delivery caused by the industrial action of PAU and for any harm caused by such delay.”
In the July – September quarter, Posti’s sales dropped by 14% to €373 million, with an underlying fall of 7.5% but the operating loss was reduced to €2.2 million from €7.4 million in the same period last year. Postal Services revenues dropped 4.2% to €162 million and operating profits were slightly lower at €6.4 million.
Parcel & Logistics Services suffered a sharp 21% drop in revenues to €137 million, although this was only a 4.2% fall on a like-for-like basis, excluding the international freight business which has been sold off. Parcel volumes increased by 2.5% to 7.8 million but logistics revenues declined. But there was a €4.3 million operating profit compared to the previous year’s €10.7 million due to the freight business disposal.
Commenting on the nine-month figures, Heikki Malinen, President and CEO, said: "Posti Group Corporation's operating result in July-September improved to €9.6 million from €6.8 million in the corresponding period last year. The improved result is a fairly good achievement under the circumstances, as the group's net sales continued to decline and the market situation remained very difficult.
“The most significant factor behind the better result is the improved result of the Parcel and Logistics Services business group. The operating result before non-recurring items returned to profitable territory in July-September and through the first three quarters of the year in spite of the decline in net sales. This gives us confidence that we are moving in the right direction.
"We have made determined efforts in the logistics business to improve the efficiency of our loss-making operations. As part of these efficiency improvement measures, the Group has divested its international freight business and scaled back its network of terminals in Finland. The business group's result was also affected favourably by the increased demand for parcel services.
“With regard to logistics, we can now say that all of the major restructuring measures have been completed. Logistics will remain a core business for Posti, and one of the objectives of our new strategy is to seek synergies and new growth in local logistics, food logistics and warehouse logistics services.”
He added: “We are continuing to implement efficiency improvement measures throughout the Group under the €75 million program that is currently underway. Efficiency improvement measures are necessary for compensating for the decline in net sales. In postal services, the operating result showed a seasonal decline in July-September. Cost adaptation measures have not been sufficient to compensate for the loss of net sales resulting from the decline in volume.”
Addressing the issue of the collective agreement, Malinen said: “As competition in the postal services market increases and new players enter the industry, we must maintain Posti's competitiveness and cost-effectiveness as a service provider. Our current collective agreement is too inflexible to respond to the new needs that today's customers expect us to satisfy with regard to the services we provide. The new collective agreement must facilitate greater flexibility in shift planning to allow us to better react to changes in customer demand, avoid delivery disruptions, and develop new service business.
In spite of the entry of new delivery service providers in the postal industry, our greatest challenge remains the trend of digitization, which will move letters, invoices and publications to the online realm at a tremendous rate in the coming years. The new strategy we announced in the summer is Posti's roadmap for operating in a digital Finland. Rather than simply adapting to these changes, Posti aims to actively take advantage of digitization in its services, production operations and operating methods."
One recent move was the opening of a new e-commerce hub at Lieto, near Turku, last month to cope with an expected annual 4-5% rise in parcel volumes in the next five years. Together with the centre in Vantaa, this facility will handle import parcels, with the two centres having joint capacity for up to 300,000 parcels a day.
