PostNord today unveiled a further strengthening of its expanding logistics business, a new €100million cost savings programme and top management changes along with lower half-year profits.
The Swedish-Danish postal group said the accelerating decline in mail volumes together with theuncertain global economic conditions made changes to the management structure necessary. It willalso aim to reduce administrative costs by approximately SEK 1 billion (€109 million) by 2013.
Executive Vice President Göran Sällqvist and CFO Bo Friberg are leaving their positions atPostNord, and the search for a new CFO and a head of a new Corporate Strategy group function hasstarted. Johanna Allert will join group management as head of the newly established Shared Servicesunit, which will include production development, environment/TQM, fleet management, real estate,procurement, shared services accounting and HR.
PostNord said it is in “a new conversion phase”. Two years after the merger of Post Danmark andPosten and the establishment of the new group, “we will take the next step to strengthen ourefficiency, competitiveness and profitability. With an unstable global economy and structuralmarket changes that, essentially, impact demand for our services, we need to make comprehensivechanges to further reduce costs”, it stated. The group also wants to step up its servicedevelopment, intensify marketing efforts and leverage growth opportunities in the logisticsarea.
The company also announced today that it is acquiring the remaining outstanding shares inlogistics company Transportgruppen. Post Danmark has held 51 percent of the shares in the Danishpallet and mixed cargo operator since 2007. In 2010, Transportgruppen, already consolidated withinthe PostNord Logistics division, had sales in excess of DKK 230 million (€31 million), with 800employees and 600 trucks.
“The acquisition means that we are strengthening our position in the market for pallet and mixedcargo both in Denmark and in the Nordics. As sole owner of Transportgruppen, we will be able todevelop and manage the company faster and create competitive customer solutions, among other thingsthrough closer cooperation between Transportgruppen and other PostNord business areas,” explainedCarsten Dalbo, head of PostNord’s business area Logistics in Denmark. “The transaction is fullyaligned with PostNord’s strategy to develop and strengthen our market position through partnershipsand acquisitions, and strengthens our position as a leading player within logistics services to,from and within the Nordics.”
The full takeover of Transportgruppen is the latest in a string of acquisitions made by PostNordin the Nordic logistics market. Earlier this year, it acquired Norwegian Eek Transport, among theten largest suppliers of transportation and logistics services in Norway, and Nils HanssonLogistics in Sweden.
Meanwhile, Post Nord has released its half-year results today, showing a continued downturn forthe overall mail business and a better logistics performance. The group’s H1 revenues fell 7% toSEK 19,743 million (€2.15 billion) and operating profit (EBIT) dropped 20% to SEK 631 million(€68.6 billion). Net profit was 18% lower at SEK 498 million (€54 million) and the operating margindropped 0.5 percentage points to 3.2%.
In Q2, the group saw revenues decline 5% (-2% excluding currency changes) to SEK 9,711 million.Operating profit (EBIT) fell 19% to SEK 211 million, which was -12% excluding structural andcurrency changes, and the operating margin weakened to 2.2% from 2.5% in the same period last year.Net profits were lower at SEK 154 million.
CEO Lars Idermark commented: “PostNord’s development during the second quarter of 2011 isgenerally in line with the previous quarter. However, quarterly results were characterised by thechallenging situation with a dramatic drop in volumes in Denmark and a more stable trend inSweden.”
Post Danmark saw Q2 operating profits slump 88% to just SEK 21 million with revenues down 14% atSEK 2,309 million. Over the half-year, its revenues declined 18% to SEK 4,715 million and EBITdropped 83% to SEK 78 million. The sharp downturn was caused by an accelerated drop in mail volumes(-14% in Q2) due to the weak economy and digital competition, as well as reduced volumes forunaddressed direct mail.
Posten (Sweden) performed better despite lower volumes, however, holding the Q2 revenue drop to1% to revenues of SEK 3,770 million. Half-year revenues were down 2% at SEK 7,656 million. Thebusiness improved its Q2 profits by 26% to SEK 150 million and H1 profits by 3% to SEK 430million.
The Logistics division achieved a good turnaround in the first half of 2011. Revenues were 3%lower at SEK 5,993 million in the half-year and 2% lower at SEK 2,956 million. But this was purelydue to currency effects and the division had underlying growth of 2% for both periods. Above all,it returned to profit with H1 EBIT of SEK 73 million compared to the previous year’s SEK 22 millionloss. In Q2, it made an operating profit of SEK 23 million compared to an SEK 20 million loss lastyear.
Logistics growth was driven by operations in Sweden and Norway while revenues fell in Denmark,reflecting the economic trends in these countries. The group’s parcel volumes fell during thesecond quarter due to heavy competition in the Danish market. PostNord Logistics took an importantstep by launching the industry’s first pan-Nordic parcel service (the MyPack B2C service) andpallet service. Corporate customers are now able to send parcels and pallets within the entireNordic region as if they were sending an item domestically.
