Finland’s Itella Posti is to increase prices for business mail delivery by 2% from September in response to increased operating costs and declining mail volumes.
The company said this week that the price change would affect rates for letter, periodical and direct marketing services paid via invoice and letter services paid through franking machines.
Early-morning newspaper delivery, large letter batches and post office box services will not be affected, neither will parcel and transport services.
Itella said postal rates for consumers will remain unchanged.
As well as an increase in business mail prices, Itella is now considering a “forceful” approach to cutbacks after this year saw a sharp decline in profitability.
This could include job losses and consolidation.
Last week, the company recorded a EUR 3.4m operating loss for the first half of the 2011 year, turning around a EUR 12.1m profit seen in the same period last year.
Despite a 3% increase in overall revenues (to EUR 932.6m for the six months up to June 30) – with sales increases in Itella’s Logistics and Information divisions – the company saw flat growth in its Mail division, while profitability declined “considerably” across the board even in the divisions where revenues had increased.
Unsatisfactory
Jukka Alho, Itella’s president and CEO, said the January to June performance was “clearly unsatisfactory”, blaming in particular the sharp reduction in profitability of Itella’s Mail Communications division resulting from the digitisation of communications in Finland.
He said the impact of the internet on periodical volumes had been faster than expected, while use of letter mail was shifting towards second class services.
Alho said: “Compared with many other countries, letter volumes are still high in Finland, but the increased popularity of second class letters has considerably reduced income and profitability. On a positive note, the continuous growth of distance selling has increased the delivery volumes of parcels.”
The Itella president said his company’s postal operations would go through structural changes requiring “forceful cost control measures”.
“We must view all operations with a critical eye and also consider divesting. In order to guarantee efficient postal services throughout Finland, we must adjust the number of personnel to match customer demand,” he said.
Questions remain regarding the impact of Finland’s postal liberalisation legislation, adopted in June through the Postal Services Act, but Alho suggested that if cutting back postal services to match mail volumes proves unpopular, Finland could be forced to support postal services through taxation.
“Even faster than expected, we are approaching the day when today’s level of nationwide postal services can no longer be maintained solely with fees paid by customers,” Alho said.
Source: Post&Parcel/Itella Group
Tags: business mail, financial results, Finland, Itella Group, Postal rates
