Norway Post notes record profits for 2005

The Norway Post Group’s preliminary results for 2005 show earnings before tax of NOK 1,424 million, up NOK 172 million from 2004. This record-breaking profit is the result of positive market development, acquisitions, and product and service developments, in addition to efficient operations
The Group’s earnings before tax were the best recorded since Norway Post became a limited company in 1996. Earnings before interest and tax (EBIT) were NOK 1,377 million in 2005, an improvement of NOK 140 million from 2004. Non-recurring items totalling NOK 518 million relating to final settlement with the Norwegian Public Service Pension Fund and restructuring costs were charged against EBIT. The net operating margin in 2005 was 6.9 per cent, on a par with the level achieved in 2004.

“Norway Post’s record-breaking result for 2005 shows that we have succeeded in our growth strategy, and that our successful restructuring efforts have yielded results,” says Dag Mejdell, Norway Post’s Chief Executive Officer.

“In the future Norway Post will focus on continued growth and the development of Nordic solutions. These results will be challenged, however, by a decline in the volumes of A and B mail and banking transactions, at the same time as the potential for additional efficiency gains is less now than it was before. Competition in the market is growing even though liberalisation of Norway Post’s remaining licence area has been postponed to bring it in line with the EU,” says Dag Mejdell.

GROWING REVENUES
Norway Post’s revenues for 2005 increased by 11.3 per cent, or NOK 2,027 million, to NOK 19,986 million.

The largest growth has been in the Logistics segment, where the acquisition of Nor-Cargo in 2004 has had the greatest impact. Logistics now accounts for 20 per cent of Norway Post’s revenues. Acquisitions of entities such as HSD Transport AS, EuroDynamic AS, Frigoscandia AB and the Johs Lunde Group will contribute to further growth in 2006.

Turnover from the Express segment increased as a result of growth in e-commerce and mail order transactions. Express now accounts for 18 per cent of Norway Post’s revenues. Parcel volumes increased by 3.2 per cent in 2005.

The total volume of letter mail in Norway increased by 2.7 per cent in 2005. While volumes of A and B mail declined by 5.5 per cent following a shift to electronic solutions, unaddressed direct mail advertising has risen by 11.6 per cent, and addressed direct mail advertising by 3.2 per cent compared with 2004. In CityMail Sweden, letter volumes rose by 4.9 per cent in 2005. CityMail will establish separate operations in Denmark in 2006. The Post segment accounts for 52 per cent of Norway Post’s revenues.

Basic banking services offered through Norway Post’s sales network declined by 10.5 per cent in 2005. Revenues from the sale of savings and loan products show a reduction of 2.3 per cent compared with the previous year. The decline in banking services has resulted in a five per cent reduction in the number of customers in post offices in 2005. The reduction in banking transactions is primarily due to a transition to internet banking services and the use of payment terminals.

Revenues in ErgoGroup were NOK 2,799 million in 2005, up NOK 177 million, or 6.8 per cent, from 2004. This increase is due to major new outsourcing and consultancy contracts, as well as the acquisition of, among other things, Ementor’s outsourcing operations in Norway and Sweden, Serve ASA, and Løsningsarkitektene AS, which took place in the fourth quarter of 2005. Operating profits before depreciation (EBITDA) amounted to NOK 391 million, compared with NOK 412 million in 2004. The Electronic services segment accounts for 9 per cent of Norway Post’s revenues.

GOOD PROFITABILITY AND IMPROVED EFFICIENCY
Return on capital employed (ROCE) was 26 per cent compared with 23.2 per cent in 2004. Return on equity in 2005 was 22,4 per cent compared with 21,0 per cent in 2004.

Norway Post’s workforce totalled 20 541 man-years at the end of 2004, a reduction of 681 from the previous year. Sickness absence was 8.7 per cent in 2005, down from 9.1 per cent in 2004.

For further information, please contact:
– Elisabeth H. Gjølme, Senior Vice President Information, phone: +47 901 40 449
– Eva Bratholm, Press Officer, phone: +47 970 02 468
– Or Norway Post’s 24-hour media contact: +47 951 48 000