Posti CEO: Our start of the year was strong, and we continued on the growth path

Posti Group has released its interim report for  January–March 2023 revealing net sales and profitability grew

January-March

Financial highlights

• Net sales grew by 1.7% to EUR 397.6 (391.1) million.
• Adjusted EBITDA increased to EUR 42.5 (36.5) million, or 10.7% (9.3%) of net sales.
• EBITDA increased to EUR 41.6 (34.4) million, or 10.5% (8.8%) of net sales.
• Adjusted operating result increased to EUR 9.6 (6.6) million, representing 2.4% (1.7%) of net sales.
• Operating result increased to EUR 8.8 (4.4) million, representing 2.2% (1.1%) of net sales.
• Net debt to adjusted EBITDA was 1.2x (1.4x).

Operational highlights in Q1

• Group profitability and net sales improved in a volatile and challenging market environment.
• The number of addressed letters sent by the public sector in Finland affected Posti’s letter volumes exceptionally resulting in the volumes remaining at the same level as in the comparison period (decreased 7%). This consequently improved Postal Services net sales.
  • The share of mail items covered by the universal service obligation accounted for 2.8% (2.5%) of all Posti’s mail items delivered.
• The amended Postal Act and the new State Aid for newspaper delivery were ratified in the beginning of 2023, coming into effect later in the year.
• Finnish Transport Workers’ Union AKT’s strike and the Finnish Post and Logistics Union PAU support strike in February affected especially eCommerce and Delivery Services net sales and profitability negatively. Posti was not a negotiating party in the collective agreement negotiations.
• Posti published its first eCommerce Index, which is based on Posti’s eCommerce deliveries, external research data, and Posti’s analysis. The report shares information about the current and future state of online shopping in Finland.

 

Outlook for 2023

Posti’s outlook for 2023 remains unchanged. In 2023, Posti is expecting its net sales to increase from the previous year. The Group’s adjusted EBITDA in 2023 is expected to decrease from the previous year. In 2022, Posti’s net sales were EUR 1,651.6 million and adjusted EBITDA was EUR 183.8 million.

The continuing inflation and the increase in interest rates may impact consumer demand. The changes in consumer behavior affect Posti’s business and could impact our actual results.

The Group’s business is characterized by seasonality. The net sales and adjusted EBITDA in the segments

are not accrued evenly over the year. In consumer parcels and Postal Services, the first and fourth quarters are typically strong, while the second and third quarters are weaker. The postal volume decline is expected to continue.

Turkka Kuusisto, President and CEO commented: “Our start of the year was strong, and we continued on the growth path. I am pleased that we, once again, delivered strong profitability in the market which continued to be challenging and volatile. Thank you Posti team for a good start. The dedication and efforts you have shown in the first quarter are essential throughout the year.

Our net sales grew by 1.7% to EUR 397.6 (391.1) million. In 2022 the acquired Mediatalo Keskisuomalainen early-morning operations and Veddestagruppen in Sweden added net sales in Q1, compared to the comparison period. The Group’s adjusted EBITDA increased to EUR 42.5 (36.5) million. Increased net sales and profitability as well as improved operational efficiency in Postal Services had a positive impact on the entire Group’s result, whereas eCommerce and Delivery Services results suffered from the effects of the Finnish union strikes in the first quarter.

On the segment level, eCommerce and Delivery Services net sales and profitability decreased. The Finnish Transport Workers’ Union AKT’s strike and the Finnish Post and Logistics Union PAU’s support strike in February had an adverse effect on the parcel and freight volumes, affecting the segment’s quarterly result negatively. Posti was not a negotiating party in the collective agreement negotiations, and our teams were quick to bring operations back to normal levels after the strikes ended. Also, Fulfillment and Logistics Services’ net sales decreased, although, the segment’s profitability increased due to the significant improvements in operational efficiency. The addressed mail volumes exceptionally remained on the last year’s level as the Finnish public sector mailed a larger number of letters, for example in connection with the Finnish parliamentary elections. This partly contributed to Postal Services increased net sales and profitability in the first quarter.

The high inflation and interest rates will continue to impact consumer confidence in economy bringing down the purchasing power. However, the long-term market potential for parcels is positive. In Posti’s eCommerce Index Report, published in February, we estimate that parcel volumes in Finland will double by 2030 due to eCommerce growth. It also shows that the COVID-19 pandemic pushed eCommerce to grow, and the trend has become permanent. We firmly see our growth sector to continue to lie in eCommerce and in online delivery services.

In January, the Smart Freight Centre, and the World Business Council for Sustainable Development (WBCSD) released a new guidance for reporting emissions of transport chains ,support the logistics industry on its’ journey to net-zero emissions. I am proud that Posti was one of the 30+ global development partners who made this possible. Also, in the first quarter we entered into a three-year collaboration with WWF to advance the work in biodiversity. We should work together to stop biodiversity loss and assess our own harmful effects on nature and minimize them.

While we expect the market volatility to continue in the second quarter, we have to ensure efficiency in everything we do and keep our eyes on the future. We will focus on staying on the growth path, and together as one Posti team we are committed to continue our journey towards our long-term goals.