Greatly improved profitability and record-breaking quality level for Norway Post

Norway Post Group’s earnings before taxes for the first six months of 2004 were NOK 450 million, an improvement of NOK 449 million compared with the same period last year. The improvement is the result of growth in revenues and of cost savings. Norway Post, in other words, meets its owner’s requirements for return on investments. At the same time, the delivery quality is higher than ever.

“The results show that we have succeeded in improving profitability and developing competitive products and services. Thanks to hard work on service improvements and streamlining, Norway Post is on schedule when it comes to facing full competition in the postal market from 1 January 2007,” says Norway Post's Chief Executive Kaare Frydenberg.

Growth in revenues
Norway Post’s revenues for the first half of 2004 were NOK 8 341 million, an increase of 7.5 per cent from the same period of last year. Adjusted for acquisition and sale of activities, the increase in revenues was 4.9 per cent. The development in revenues from both letter and logistics products is positive. Revenues from IT activities declined compared with last year, as a consequence of sales of certain units. ErgoGroup signed a number of new contracts during the six month period.

Letter volumes declined by 2.7 per cent, with the volume of A and B letters being 5.2 per cent lower than in the first half of 2003. Logistics volumes continue to grow, and were 3 per cent higher than during the same period a year ago. The number of bank transactions was 3.4 per cent lower than in the first half of 2003, whereas revenues from sales of Postbanken’s savings and loan products increased by 19 per cent.

Good returns
Earnings before interest and tax (EBIT) for the first six months of 2004 were NOK 476 million, compared with NOK 24 million for the corresponding period of last year.

"It is the best six-month result ever achieved, and for the seventh quarter in a row results are better than in the corresponding quarters of the preceding years," Frydenberg says.

EBIT before non-recurring items were NOK 533 million higher than a year ago. Adjusted for sale of activities and changes in the accounting principles for restructuring costs, the underlying improvement in operating revenues was NOK 560 million. Earnings before tax were NOK 450 million for the first six months of 2004, compared with NOK 1 million for the corresponding period last year.

The return on equity for the last 12 months was 12.4 per cent. This satisfies the owner requirement of 10.8 per cent.

Cost reductions according to plan
The cost reduction programmes proceed according to schedule, and impact results.

Norway Post’s workforce amounted to 22 198 full-time positions at the end of the first half of 2004, down 873 positions from the first half of 2003. The parent company workforce was reduced by 1 266 full-time positions. The increase in the workforce of the subsidiaries reflects the acquisition of Nor-Cargo.

Record-breaking quality
Norway Post’s delivery quality for the second quarter of 2004 was record-high, with 89.2 per cent of all A-priority mail being delivered the next day. This is up from 88.4 per cent in the corresponding period of last year. It is the best single quarter result ever achieved since measurements began in January 1997, and well above the licence requirement of 85 per cent. The A-priority mail quality for the first six months was 88.7 per cent.

For additional information, please contact:

– Elisabeth H. Gjølme, Senior Vice President Information, phone: + 47 901 40 449, [email protected]

– Birgitte Lund Nakken, Press Officer, phone. + 47 908 88 284, [email protected]

– Norway Post’s 24-hour media contact, + 47 23 14 80 00