Norway Post backs reforms to help with mail volume declines
Norway Post hoping for postal reforms to go through Parliament this spring to help it contend with declining letter volumes. The state-owned company achieved growth according to new figures out for 2013, even the profitability of its mail segment thanks to increased prices and a retroactive payment of government procurements, along with cost-cutting measures.
But addressed mail volume was down 5.7% in 2013, with unaddressed mail volume down 7.3%, leaving mail volumes down 40% since the peak in 1999.
The situation is expected to worsen going forward as Norwegians switch to digital communications, including a new national public digital mailbox that Norway Post is hoping to run when contracts are announced later this month.
Reforms
The Spring session of Parliament is expected to see proposals debated to end Saturday letter delivery in Norway in order to help Norway Post bring its costs down in the light of the falling mail volumes. Other proposals supported by Norway Post include the scrapping of legally-required service levels and further re-developments in its distribution network.
Norway Post said lawmakers could also consider the idea of scrapping the two-tier letter delivery services in favour of a single class.
Proposals for a change to the nation’s customs clearance threshold, raising the bar for simple clearance eligibility from NOK 1,000 (EUR 121) to NOK 5,000 (EUR 605) could also happen to help e-commerce.
Norway Post is potentially set to lose its last remaining mail monopoly, on letters under 50g in weight, as Norway continues to adopt European Union-style postal rules.
According to its latest financial results, Norway Post has almost returned its revenues to 2008 levels, with the 2.7% annual growth in 2013, to NOK 23.5bn (EUR 2.84bn), representing a fifth consecutive year of improvement. A 5% growth in sales in the fourth quarter helped the picture.
Net profit was NOK 602m (EUR 73m) in 2013, up 51% on 2012.
Norway Post chief executive Dag Mejdell said the improvements in underlying results in 2013 came because of cost reductions and successes in the Nordic market.
“The growth in the fourth quarter and the large number of new contracts entered into at the end of last year mean we have a high momentum at the start of 2014,” said Mejdell.
During 2013 Norway Post saw its mail segment revenues stable, on NOK 10.5bn (EUR 1.3bn), but the mail operating results grew 10.7% year-on-year thanks to an increase in letter prices and the government procurements payment. The operating result also benefited from the reorganisation of the distribution and production network, and the conversion of 79 post offices into retail agency-based outlets, Post in Shops.
Parcels revenue grew 4.5% on 2013, to NOK 14.9bn (EUR 1.8bn), with volumes up 1.6% year-on-year. Growth came from acquisitions and increased energy sector work under the new Statoil contract.
Norway Post continued its growth in international business during 2013. Operating income from foreign companies up 2.4% to NOK 7.2bn (EUR 870m), now accounts for 30.5% of Group operating income.
Digital mail
Looking ahead, Norway Post is hoping to secure a major contract running the country’s public digital mailbox, making use of its existing Digipost service. Contacts are set to be announced later this month.
About 300,000 Norwegians are already using Digipost, with about 3m letters sent digitally through the mailbox in 2013.
“For the first time, we can report on the distribution of digital letters. We have a digital mail solution that functions well in Norway. Here, users can receive and file all their digital mail in one mailbox,” said Mejdell.
