Itella, the Finnish postal group, generated strong growth in sales buta heavy drop in operating profit for the first half of 2008 mainly due to the sharp increase inlabour expenses and rising fuel costs.
Over the first half-year, Itella increased its consolidated net salesby 8.5% to €923.5 million while its consolidated operating profit fell down 33.1% year-on-year to€43.9 million. This represented a 4.8% operating margin.
In the April-June second quarter, Itella’s consolidated net sales grewby 13.9% to € 413 million. Consolidated operating profit for the period, however, heavily droppedby 46.2% to €10.6 million, which was a 2.3% profit margin.
Itella Logistics, which covers the parcel and freight transportactivities, recorded a net sales increase of 17.4% to € 360.7 million between January and June withcompany acquisitions during the previous and the current yearaccounting for 8.2% of the total sales. But the unit’s operating profit dramatically dropped to€5.3 million from € 15.8 million one year earlier. The decrease was due to higher production costs,investments in service warehousing operations in Russia, and the decrease in road traffic volumesover the last few months, especially in the Baltic region and Denmark.
Jukka Alho, President and CEO of Itella commented on the results: “The economic downtrend did not affect the demand for Itella services in Finland, butroad freight volumes in Denmark and the Baltic region turned down. Demand for logistics servicesremained strong in Russia.”
“The increases in volume and prices could not compensate for the sharpincreases in fuel and salary costs, leading to a reduced profit. However, the profit performancemet expectations. The tight situation caused by increased costs is expected to continue during thesecond half”, he added.
