A good year for Norway Post

2006 was a good year for Norway Post. The Group’s preliminary accounts show earnings before tax of NOK 1.2 billion and a growth in revenues of 18.4 per cent compared to 2005.
Norway Post’s growth came from acquisitions and a high level of activity in the postal, logistics and ICT-services markets. The earnings before tax were the second-best since Norway Post was established as a company ten years ago. The withdrawal of government procurements and decline in income from banking services led to lower earnings than the record earnings in 2005.

”The 2006 result shows that Norway Post has succeeded in its strategy of achieving profitable growth in the Nordic region. Acquisitions and the further development of our operations have strengthened our market positions and services within all segments,” says Norway Post CEO Dag Mejdell.

GROWTH IN REVENUE
Norway Post’s revenue rose by 18.4 per cent to NOK 23.7 billion in 2006. The Logistics Segment experienced the most growth of all the segments with 70.5 per cent, following the acquisition of Frigoscandia, HSD Transport AS and the Johs Lunde Group’s refrigerated transport operations. The ICT segment’s revenues increased by 29.3 per cent after the acquisition of Allianse ASA. The Post Segment saw a 3.8 per cent drop in its revenues but positioned itself in 2006 for future growth by establishing CityMail in Denmark and expanding CityMail in Sweden.

The share of Norway Post’s revenues that came from foreign operations was 17.5 per cent in 2006, compared to 8.6 per cent in 2005.

GOOD PROFITABILITY AND EFFICIENCY
The Group’s operating income (EBITDA) came to NOK 2,024 million in 2006, compared to NOK 2,694 million the year before. The decline compared to 2005 must be seen in light of the withdrawal of government procurements and lower revenues from banking services, totalling NOK 571 million. EBIT for 2006 came to NOK 1,313 million, compared to NOK 1,250 million in 2005. The EBIT margin for 2006 was 5.5 per cent, compared to 6.3 per cent in 2005. The return on invested capital (ROIC) was 21.5 per cent in 2006, compared to 29.7 per cent in 2005. The return on equity was 16.6 per cent in 2006, compared to 21.5 per cent in 2005.

As of 31 December 2006, Norway Post’s workforce consisted of 22,272 full-time equivalents, compared to 20,541 full-time equivalents at the year-end 2005. Adjusted for acquired operations, the workforce was reduced by 281 full-time equivalents in 2006. The operating revenue per full-time equivalent surpassed NOK 1 million for the first time in 2006 and was NOK 1,028 million per full-time equivalent at the year-end.

THE POST SEGMENT
The Post Segment’s revenue fell by 3.8 per cent in 2006 compared to 2005. This was mainly due to the withdrawal of government procurements and decline in revenues from banking services, totalling NOK 571 million. The Post Segment achieved an operating income (EBITDA) of NOK 1,321 million, compared to NOK 2,135 million in 2005.

The total letter volume rose by 4.1 per cent in 2006. The volume of addressed mail declined by 1.6 per cent, while unaddressed direct mail advertising increased by 8.8 per cent. The number of banking transactions via Norway Post’s sales network dropped by 7.9 per cent in 2006. The decline in banking services has led to the number of post office customers falling by 3.6 per cent.

The delivery quality for mail in Norway, measured as the percentage of A-priority mail delivered overnight, was 82.4 per cent in 2006. This is lower than the licence requirement of 85 per cent and is due to delivery problems in the fourth quarter, when the delivery quality was 74.4 per cent. The decline in quality was due to major changes to Norway Post’s distribution network as well as workforce challenges in the larger cities. A number of measures have been implemented with the aim of meeting the licence requirement by the end of the first quarter 2007.

THE EXPRESS SEGMENT
The Express Segment’s revenue rose by 12.1 per cent to NOK 4,245 million in 2006. The total parcel volume was 1.1 per cent less than in 2005, while the international parcel volume delivered by the PNL subsidiary rose by 15.2 per cent. The Express Segment’s operating income (EBITDA) came to NOK 392 million in 2006, compared to NOK 269 million in 2005.

THE LOGISTICS SEGMENT
The Logistics Segment’s operating revenue increased by 70.5 per cent to NOK 6,925 million in 2006. The growth mainly came from the acquisitions of Frigoscandia, HSD Transport AS and the Johs Lunde Group’s refrigerated transport companies. The Logistics Segment’s operating income (EBITDA) came to NOK 239 million, compared to NOK 219 million in 2005.

THE ICT SEGMENT
ErgoGroup’s operating revenue rose by 29.3 per cent to NOK 3,620 million in 2006. This growth was due to a large number of new contracts as well as the acquisition of companies, including Allianse ASA and AddIQ AB. In December 2006, ErgoGroup entered into a contract to buy Systeam AB, which had revenues in 2006 of SEK 1,400 million. ErgoGroup’s operating income (EBITDA) came to NOK 412 million, compared to NOK 384 million in 2005. The earnings before interest and tax (EBIT) for 2006 were NOK 253 million, compared to NOK 84 million in 2005. The increase was a result of the successful integration of acquired companies, high demand for ICT services and continuous efficiency enhancement work.

For further information, please contact:
– Senior Vice President Corporate Communication Elisabeth H. Gjølme, tel: +47 901 40 449
– Acting Chief Press Officer Merete Jebsen, tel: +47 932 56 552
– or Norway Post’s 24-hour press telephone: +47 951 48 000