Finnish postal operator Itella posted an operating profit in the July-September third quarter of2012 with increased revenues in its mail and logistics businesses, thanks to efficiency and
cost-restructuring measures as well as the integration of VR Trainspoint’s groupage logisticsbusiness into Itella Logistics.Itella Group’s net sales fell slightly, by 0.8% to 445.6 million in July-September 2012, butoperating profit before non-recurring items rose to €11.9 million, compared with the €21.5 millionloss during the same period last year. The operating margin improved to 2.7% of net sales.
The mail division, Itella Mail Communications, increased sales by 0.8% to €264.4 million inthe third quarter. The division reported an operating profit of €12.5 million compared to anoperating loss of €6.4 million. Profitability was also boosted by measures aimed to increaseefficiency that were implemented last year, and by reduced personnel expenses as well as bystronger net sales and increased volumes.
Itella Logistics increased revenues by 1.9% to €188.1 million in the third quarter. Theincrease was particularly strong in all Russian operations as well as in contract logistics androad freight in Finland. In September, the overall market situation resulted in falling demand forservices in the Nordic countries, particularly for road freight. All in all, contract logisticsexperienced the strongest growth, while air freight remained on the same level as last year.
Jukka Alho, Itella’s President and CEO, said: “Itella’s business development during thecurrent year has been mainly positive. The areas experiencing the most significant downturnscomprise the traditional letter and publication businesses. Although the company’s profitability isyet to achieve targeted levels, the improvement in comparison to last year is significant. It isnotable that Itella’s solvency has remained on a good, stable level also during times of economicuncertainty.”
He stressed that the measures taken to improve profitability in the mail division helpedcompensate for the volume decline in traditional postal traffic, at least in the short-term. “Thevolumes of e-commerce have continued their positive growth and Itella’s competitiveness is faringincreasingly better,” he added.
Alho also highlighted the growing revenues of Itella Logistics despite the uncertainty ineconomic trends. “At the end of the year, this will furthermore be impacted by the businessacquired from VR.” This transaction between two strong industry operators meant that Itella’scustomers now have access to the widest network of terminals and the most comprehensivetransportation capacity in Finland, he said.
“Volumes and warehouse fill rates in Russia have also developed positively – a fact that isevident in the solid increase of net sales. The year-round performance of Logistics willnevertheless lag clearly behind targets due to both the change process underway in Scandinavia anda loss occurrence in St. Petersburg.”
Itella explained that the profitability in Scandinavia hasn’t been on a sufficient level andneeds improvement, with measures already taken regarding personnel restructuring, and furtherongoing actions.
As for the loss occurrence in St. Petersburg, there was an accident in July damaging theshelf system at the Itella Logistics warehouse in Shushary, St. Petersburg. The accident damagedcustomer products, in addition to resulting in a need to carry out protection and cleaningmeasures. Freight operations, the office, and customers’ logistics services were transferred to atemporary office in Utkina Zavod. Itella told CEP-Research that the final outcome was as yetunclear, “but the third-quarter performance of the logistics division decreased due to thisaccident, including costs of restoring the operations”.
