Ukrainian crisis and mail volume declines hit Itella results

Ukrainian crisis and mail volume declines hit Itella results

Finland’s national postal operator has seen its sales down 4.8% in its latest quarter, as it deals with a faltering economy and the “alarming” decline in mail volumes. The company said “intense” competition in the logistics market, the impact of Russia’s sanctions-related economic recession and currency movements helped bring its revenue down to EUR 435.1m for the quarter.

The dip helped bring the year-to-date revenue for state-owned Itella down 5.6% year-on-year to EUR 1.37bn.

Itella is in the process of transforming its business to respond to the market trends, but costs associated with the changes took a toll on its profitability in the third quarter. The company recorded a loss of EUR 7.4m on the back of EUR 14.1m in one-off expenses in the quarter, more than double the loss recorded this time last year.

It means that for the first nine months of the year Stella has made a loss of EUR 5.1m, compared to a EUR 2.4m loss the same period last year. This year’s one-off expenses have totaled 32.4m.

Heikki Malinen, the Itella President and CEO said the financial performance came at a time of “major changes” at his company as it sought to adapt to a “profound” transformation of the industry.

“Unfortunately, the overall economic situation has not helped in driving growth,” he explained. “On the contrary, the economy in Finland and neighboring regions, including Russia, has declined further. The logistics market and retail have suffered from the economic recession.”

Malinen said that discounting transformation costs, the Group’s operating result improved by more than 13% to EUR 27.3m.

Divisions

Itella’s core mail division saw its sales only slightly down on last year in the third quarter, at EUR 254.5m, but the Logistics division saw sales fall 8% year-on-year to EUR 145.9m. Itella Russia’s revenue was down 11% to EUR 47.2m, pushed in part by currency movement — in rubles it was down only 1.2%.

Operating results, not including transformation costs, actually improved for the mail division in the third quarter, by 50% to EUR 3.6m, but slipped to a EUR 2.7m loss in Logistics, while Itella Russia’s result dropped 10% to EUR 3m.

In the year to date, the mail division has seen sales fall 1.6% year-on-year, Italla Logistics has seen a 8.5% decline in sales, and Itella Russia a 12.5% decline in sales (0.8% decline when measured in rubles).

Operating results, not including transformation costs, in the first nine months declined by just over EUR 1m in the mail division, to EUR 31.6m, but the Logistics division improved its result from a EUR 15.6m loss this time last year to a EUR 11.7m loss this year. Itella Russia saw most of last year’s EUR 2.8m operating income wiped out in this year’s first three quarters.

Malinen said: “The Group’s net sales and operating result took a downward turn in the difficult market situation. In Russia, we achieved a profitable result and the third quarter was good there. The Ukrainian crisis has influenced Itella’s business in Russia indirectly through the weakening of the ruble and consumer purchasing power. The market situation in Russia is expected to decline in 2015.

“As the amount of traditional mail decreases, it is important to seek growth in other logistics services, such as the delivery of parcels. We have invested significantly in our service network that already consists of more than 1,400 service points,” added the Itella president.

Relevant Directory Listings

Listing image

SwipBox

Focus on the user experience SwipBox is focused on creating the world’s best user experience for delivering and picking up parcels using parcel lockers. Through a combination of intuitive network management software and hassle-free, app-operated parcel lockers, SwipBox delivers maximum convenience to logistics providers, retailers […]

Find out more

Other Directory Listings

Advertisement

Advertisement

Advertisement

P&P Poll

Loading

What’s the future of the postal USO?

Thank you for voting
You have already voted on this poll!
Please select an option!



MER Magazine


The Mail & Express Review (MER) Magazine is our quarterly print publication. Packed with original content and thought-provoking features, MER is a must-read for those who want the inside track on the industry.

 

News Archive

Pin It on Pinterest

Share This