Company acquisitions and steady volume growth contribute to net turnover for Finland Post
02.03.2005
Net turnover: EUR 1,235.2 million (+8%)
Operating profit: EUR 95.2 million (+29%)
Profit: EUR 69.6 million (+49%)
Significant growth in direct-mail deliveries
Information Logistics strengthens expertise and position in Northern Europe
Transport and warehousing services’ volumes on the rise
Finland Post Group’s consolidated net turnover for 2004 rose to EUR 1,235.2 million, or by 8 per cent on a year earlier, stemming from company acquisitions in 2003 and 2004 and growth in delivery volumes.
Consolidated operating profit climbed to EUR 95.2 million, up 29 per cent year on year, accounting for 7.7 per cent (6.4 per cent) of consolidated net turnover. Operating profit rose by EUR 15.6 million, or 22.1 per cent, if non-recurring items are taken into account. This improvement was a result of cost-efficiency gains achieved in production and Group functions. Profit for the financial year totalled EUR 69.6 million (EUR 46.8 million).
The year-end equity ratio stood at 65.6 per cent (65.8 per cent). Almost half of our capital expenditure of EUR 78.3 million (EUR 71.6 million) came from company acquisitions. R&D costs came to EUR 19.5 million (EUR 22.4 million), accounting for 1.6 per cent (2.0 per cent) of net turnover.
With customer satisfaction making good progress, both consumers and companies regarded Finland Post’s postal services and mail deliveries as being of a high standard, according to a survey commissioned by the Ministry of Transport and Communications, this survey showing an improvement in overall satisfaction with Finland Post services, compared with a similar survey conducted in 2002.
Expansion in All Business Areas
The Messaging business group improved its net turnover to EUR 808.0 million, or 8 per cent, due to growth in newspaper deliveries as a result of a company acquisition (Leijonajakelu Oy) in the autumn of 2003, and expansion in direct-mail volumes, with unaddressed direct mail showing an increase of up to 33 per cent.
On 23 February 2005, the Finnish parliament made a legislative amendment governing the domestic mail delivery standard, enabling earlier mail deliveries in rural districts.
The Information Logistics business group posted net turnover growth of EUR 176.0 million, or 32 per cent, due mainly to company acquisitions and major outsourcing agreements.
Since January 2005, the business group’s subsidiaries based in eight countries (Finland, Sweden, Denmark, Norway, Estonia, Latvia, Lithuania and Germany) have operated under the corporate name of Itella, this group of integrated companies providing digital printing services, e-commerce and e-transaction services, data management and direct-marketing services.
In Finland, Itella’s net turnover growth was due to company acquisitions. The business group strengthened its position in e-commerce and e-transaction services by buying Elma Electronic Trading shares in the spring of 2004. Sales of eLetter and Multi Letter services – hybrid services combining electronic and printed communications – developed favourably in Finland.
Due to lower-than-expected digital printing volumes, the Scandinavian companies’ net turnover remained at the previous year’s level, whereas the German companies improved their net turnover due to major outsourcing agreements concluded at the end of 2003.
In the spring of 2004, Itella strengthened its position in neighbouring regions by closing deals for the acquisition of the Baltic countries’ leading information logistics companies. These companies’ sales have made good progress since the region’s robust economic growth contributes, for example, to digital printing volumes.
The Logistics business group increased its net turnover to EUR 254.1 million, or 5 per cent year on year, this figure including company acquisitions.
Despite fierce competition in the industry, Finland Post succeeded in increasing its transport volumes markedly, with the volume of parcels showing an almost 5 per cent increase from the previous year’s level, B2B transport services recording the greatest growth.
Since companies seem to be continuing to outsource their logistics operations, Finland Post will have good prospects of expanding its service warehouse business. At the end of the year, Finland Post increased its 60 per cent holding in Poske Logistiikka Oy, a Finland Post and Rautakesko joint venture, to 100 per cent.
Finland Post also continues to invest in services related to shipments to Russia, as evidenced by its purchase of the remaining holding of 40 per cent in North Euroway Ltd, a provider of transport, warehousing and transit services for companies transporting goods via Finland to Russia.
Third Largest Employer and Largest Employee Fund
As Finland’s third largest employer after the City of Helsinki and Nokia Corporation, Finland Post Group had a year-end staff of 23,740 (23,297), 7,975 (8,341) of whom worked on a part-time basis. 2004 saw the conclusion of 820 employment contracts, 182 working on a full-time basis and 638 on a part-time basis. The number of employees working abroad rose to 728 (531), due to company acquisitions.
On 25 February 2005, Finland Post Corporation set up an employee fund covering all of the parent company’s and its wholly owned subsidiaries’ employees, totalling around 23,000. Finland Post allocates annually profit-sharing bonuses to the fund, the amount of which is determined by profit reported beyond the targeted level. The amount of such bonuses for 2004 transferred to the fund totalled EUR 2 million.
Prospects for 2005
Demand for logistics and information logistics services is expected grow as a result of companies continuing to outsource their operations. Information-flow digitisation will probably intensify during 2005. Finland Post has every prospect of net turnover growth and favourable developments in profit performance.
In order to safeguard its dynamics and expansion, Finland Post will make investments in production network modernisation, business expansion in the Baltic countries and Russia, and new information and materials logistics technologies.
With the aim of improving its competitiveness in printed communications delivery, Finland Post launched an upgraded range of letter, direct-marketing and publication services for its contract customers. As a result, customers can now choose between the ease of services and, based on pre-processing tasks they perform, low costs. This upgrade provides a wider range of options within direct marketing.
On 1 March 2005, Finland Post introduced upgraded domestic parcel services enabling considerably easier parcel posting. As a result, customers can now choose between door-to-door parcels and self-collected parcels, with the applicable postal rates being based on the parcel’s weight or a fixed price including packing and delivery. The ultimate goal of this service upgrade is to increase the volume of home delivery parcels.
Based on its spring 2004 re-definition of future corporate policies with respect to postal outlets, Finland Post will maintain its nationwide network of 1,300 postal outlets and will turn over some 100 of its post offices to independent entrepreneurs by the end of 2006. This transformation process is already under way, and some 60 new agency post offices (sub post offices) will start operating in 2005.
Statement by Jukka Alho, President and CEO:
Competitiveness Makes Steady Progress
Jukka Alho, President and CEO, describes the 2004 corporate performance as follows: ‘The overall economic optimism was reflected in growth in demand for all our key business areas’ services for corporate customers. Having experienced steady improvements in competitiveness in recent years, Finland Post Group faces stiff international competition, especially for corporate solutions provided by its Logistics business group, and in all fields of information logistics. Our competitiveness in traditional postal operations has made steady progress, which is particularly reflected in the strong expansion of unaddressed direct-mail deliveries. All in all, Finland Post Group posted good financial results thanks to favourable developments in demand for services, and efficiency gains.’
Finland Post Group’s full financial statements for 2004 are available at www.posti.fi/english/finlandpostgroup/financialinfo/
FURTHER INFORMATION
President and CEO Jukka Alho, tel. 020 451 5600
CFO Vesa Vertanen, tel. 020 451 5073
ATTACHMENTS
Financial Statements for 2004 -presentation
