Norway Post’s operating profits improved by 29 per cent in the first half of 2012 due to costsavings and despite tough competition in logistics and a continuing decline in mail.
The postal group’s EBIT before non-recurring items and write-downs rose by 29 per cent to NOK381 million (€52 million) while revenues were flat at NOK 11.36 billion (€1.5 billion). However,reported EBIT, including restructuring provisions for converting 149 post offices in agencies,dropped to just NOK 37 million from NOK 243 million last year.
“Reorganisation and efficiency enhancement characterise Norway Post’s operations and arestrengthening our competitiveness. This work will continue unabated and we will also keep ongrowing in the logistics sector,” CEO Dag Mejdell declared yesterday.
Norway Post’s Mail division, covering letters, other mail and small parcels, had flat revenuesof NOK 5.2 billion from January to June 2012 and its operating profit dropped to NOK 94 million,which was NOK 261 million lower than the same period in 2011 as a result of restructuringprovisions. The company set aside NOK 324 million to restructure 149 of the remaining 179 postoffices into ‘Post In Shops’ agencies.
Addressed mail volumes declined by 6 per cent over the six months while unaddressed advertisedmail grew by 4.6 per cent. Moreover, Bring Citymail Sweden increased volumes in the first half-yearand has restructured to improve profitability.
“The mailbox has a place in the future, but it will get new content. We see growth opportunitiesparticularly for items purchased online and delivered by post. We will move important documentsfrom both public and private senders in the digital mailbox DigiPost,” Mejdell said. Norway Posthas lost about one third of its addressed mail volumes since 2000 and expects two thirds of thevolumes to have disappeared by 2018.
The Logistics division, covering parcels, express and freight transportation, also had flatrevenues of NOK 7 billion but it reduced half-year operating losses to NOK 7 million from NOK 41million last year.
Profits were affected by strong competition and a slide towards low-priced products in theparcel business, while profitability improved in both the goods and temperature-controlledoperations. Cost savings also helped profitability. About 38 per cent of revenues were generatedoutside Norway.
Parcel volumes fell by 4.4 per cent in the first half of 2012, with growth in cross-borderparcel volumes but lower domestic volumes. Tougher competition in the B2C market with theaccompanying price pressures, as well as a slide towards services with lower margins in the parcelbusiness and increased transport costs had a negative effect, Norway Post noted in its half-yearreport.
The company introduced faster delivery times for the Service Parcel, its main product for onlineshopping, in the second quarter of 2012 so that these parcels will be delivered to most customersthe day after being sent within Southern Norway.
Freight volumes grew slightly compared with the same period last year. In Norway, the thermotransport business area improved profitability from last year as a result of measures taken. InApril, Bring Cargo acquired Fredrikstad Transport & Spedisjon AS, with turnover of NOK 72million in 2011, to strengthen its position in cross-border transport within the Nordic area.
Measures that were implemented in order to exploit economies of scale and ensure betterprofitability in future will continue in 2012. The improvement programme includes increasedsynergies between the production of mail, parcels and goods and higher load ratios for warehousing,the company said.
