Profitable growth for Norway Post

Norway Post’s operating revenues have grown by 19 per cent to NOK 17,009 million as of 30 September 2006. The earnings before income and taxes (EBIT) came to NOK 839 million, NOK 156 million less than at the same time last year as a result of the termination of government procurements and a reduction in revenues from banking services.
”The results show that we are following our strategy of achieving profitable growth in the Nordic region. Norway Post is further developing its operations in the fields of mail, logistics and ICT in the Nordic region in order to compensate for the decline in A-priority and B-economy post and banking transactions,” says Group CEO Dag Mejdell of Posten Norge AS.

19 PER CENT GROWTH

The growth in operating revenues was due to acquisitions and positive market developments in the fields of direct mail advertising, logistics and ICT. Norway Post’s operating revenues for the first three quarters of the year amounted to NOK 17,009 million, an increase of NOK 2,705 million, or 19 per cent, compared to the same period last year.

The share of Norway Post’s revenues for the first three quarters from foreign operations was 17.2 per cent, compared to 8.8 per cent for the corresponding period last year. Norway Post’s operations in Sweden, Denmark and Finland achieved total operating revenues of NOK 2,923 million for the first three quarters of the year, an increase of 131 per cent compared to the same period last year. This is mainly due to acquisitions and growth in the markets for mail, logistics and ICT.

THE POST SEGMENT

The Post Segment’s operating revenues were 4.5 per cent lower than for the corresponding period last year. This reduction was mainly due to the termination of government procurements worth NOK 245 million and a NOK 177 million decline in revenues from banking services. Earnings before income and taxes (EBIT) for the Post Segment came to NOK 693 million as of the third quarter, compared to NOK 1,144 million for the corresponding period last year.

The total letter volume handled by the parent company as of 30 September 2006 increased by 4.2 per cent compared to 30 September 2005. The volume of A-priority and B-economy mail declined by 1.8 per cent, while unaddressed direct mail advertising increased by 10.9 per cent.

The number of customers visiting post offices fell by 4.4 per cent compared to the same period last year. This was mainly due to the reduction in the number of banking transactions, which declined by 8 per cent during the first nine months of the year.

THE EXPRESS SEGMENT

The Express Segment’s operating revenues rose by 10 per cent to NOK 2,981 million as of 30 September 2006. The parent company’s total parcel volume was 3.4 per cent less than at 30 September 2005, while the international parcel volume, via the subsidiary PNL, increased by 12.1 per cent. Earnings before income and taxes (EBIT) for the Express Segment came to NOK 192 million as of the third quarter, compared to NOK 92 million for the corresponding period last year.

THE LOGISTICS SEGMENT

The Logistics Segment’s operating revenues rose to NOK 5,062 million, an increase of 78 per cent compared to the same period last year. This growth is mainly due to the acquisition of Frigoscandia, HSD Transport AS and the Johs Lunde Group’s refrigerated transport operations. Norway Post bought Holmskau Transport AS, Blomquist Transport og Spedisjon AS and the Dutch company Scanex B.V. in the 3rd quarter. Earnings before income and taxes (EBIT) for the Logistics Segment came to NOK 96 million as of the third quarter, compared to NOK 140 million for the corresponding period last year.

THE ICT SEGMENT

ErgoGroup’s external revenues increased by 30 per cent – to NOK 2,545 million – during the first three quarters of 2006 compared to the corresponding period in 2005. This growth was due to a good volume of new contracts and to the acquisition of operations, including the purchase of Allianse ASA in the 2nd quarter. In the 3rd quarter, ErgoGroup acquired AddlQ AB and Nor-Cargo Data in Tromsø.

ErgoGroup’s earnings before interest and taxes (EBIT) as of 30 September 2006 were NOK 195 million, or NOK 127 million more than at the same time last year. This increase was a result of the successful integration of acquired operations, solid demand for ICT services and a continuous focus on efficiency enhancement.

GOOD PROFITABILITY AND RETURNS

The Group’s operating income (EBITDA) amounted to NOK 1,380 million as of 30 September 2006, compared to NOK 1,805 as of 30 September 2005. The reduction compared to last year must be seen in light of the termination of government procurements worth NOK 245 million and the NOK 177 million decline in revenues from banking services.

The net EBIT margin for the 12-month period ending on 30 September 2006 was 4.9 per cent, compared to 7.0 per cent as of 30 September 2005.

The return on invested capital (ROIC) for the 12-month period ending on 30 September 2006 was 19.6 per cent, compared to 34.2 per cent as of 30 September 2005. The return on equity for the 12-month period ending on 30 September 2006 was 15.7 per cent.

REVENUES OF NOK 1 MILLION PER FULL-TIME EQUIVALENT

As of 30 September 2006, Norway Post’s workforce consisted of 21,451 full-time equivalents. After adjusting for 1,719 full-time equivalents in acquired companies, the workforce has been reduced by 282 full-time equivalents. Revenues per full-time equivalent have passed NOK 1 million for the first time.

The delivery quality, measured as the percentage of A-priority mail that is delivered overnight, was 85.2 per cent in the third quarter 2006, compared to 88.2 per cent in the third quarter 2005. The licence requirement is 85 per cent. The creation of a new air-freight solution on 29 October is intended to improve the quality and predictability of the postal services.

For further information on Norway Post, please contact:

– Corporate Communications Director Elisabeth H. Gjølme, tel: +47 901 40 449, or
– Chief Press Officer Eva Bratholm, tel: +47 97 00 24 68 or
– Norway Post’s 24-hour press telephone: tel: +47 95 14 80 00

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