PostNord: although the uncertainty remains high, we handled the difficult situation well in the second quarter

PostNord has released its interim report for the second quarter and first half of 2020 which reveal a strong improvement in income despite dramatically changed conditions.

Highlights from the second quarter 2020

• Net sales SEK 9,328 million (9,514), + 0.3 % at fixed exchange rates for comparable units
• Operating income (EBIT) SEK 517 million (-70)
• Net income for the period SEK 262 million (-171)

Highlights from the first half of 2020

• Net sales SEK 18,832 million (18,985), + 0.2 % at fixed exchange rates for comparable units
• Operating income (EBIT) SEK 831 million (92)
• Net income for the period SEK 525m (-115)

Overview

Annemarie Gardshol, President and Group CEO said: “Nothing was really the same in the second quarter of the year, neither for society at large nor for us at PostNord. The ongoing coronavirus pandemic affected our customers, our partners, our suppliers and ourselves in a very real way. Although the uncertainty remains high, we as a company handled the difficult situation well in the second quarter. We have shown an ability to handle major changes in volume at a high level of delivery quality, while continuously focusing on our improvement programs.

“Overall, sales for the quarter were in line with the corresponding period last year, at SEK 9,328 million. On the other hand, the relative shares of our various businesses changed substantially. Parcel volumes rose by all of 15 percent and a total of 49 million parcels were handled during the quarter, on par with the record set in the seasonally strong fourth quarter 2019. The number of home deliveries and similar delivery arrangements increased sharply in all markets, although this was partly offset by falling demand for deliveries to stores. Letter volumes fell due to digitalization and reduced import volumes due to the pandemic. On the other hand, sales of stamps, pre-stamped parcels and postcards (Real Postcards) showed an increase. This is probably because in the pandemic, it has been more difficult for people to meet their loved ones, and therefore a physical greeting in the form of a letter or postcard has become particularly important. All in all, this shows that PostNord plays an important role in society, not least in troubled times.

Operating income improved sharply to SEK 517 million (-70). The improvement programs progressed successfully. At the same time, price increases had a positive effect on income. Additional costs arising from the pandemic were offset by corresponding government compensation.

During the quarter, several strategically important steps were taken. Deliveries to corporate customers via DigitalLOCK was introduced in Sweden. An agreement was concluded regarding the sale of properties in Norrköping, Sweden, and a decision made on a new terminal in the Tampere area, Finland. Major agreements were signed with, for example, Nordic Nest, Varner, Internetstores and Coop Danmark.

Preparations are ongoing for transition to two-day distribution of letters in Sweden. In Sweden and Denmark, dialogue with politicians concerning a long-term financially sustainable letter business continues. The current agreement between PostNord Danmark and the Danish government was extended for another six months, until the turn of the year. PostNord Danmark receives compensation for the extra costs involved in the universal service obligation. However, it is assessed that the compensation does not offset the costs we incur in Denmark.

Despite the many challenges that ensued from the coronavirus pandemic, we maintained high delivery quality. In both Sweden and Denmark, we are clearly at a level above the legal requirements for letters. Delivery quality for parcels declined slightly, but still amounted to 94.7 percent for the Group as a whole.

I am proud of our employees and how well they handled a turbulent second quarter. Despite increased sick leave and a sharp change in demand, we have delivered on our mission with commitment, high delivery quality and good efficiency. At the same time, the future is unusually uncertain, both in the short and long term, so it is with both humility and confidence that we approach the second half of the year.