Posten in strong position despite economic downturn

Posten president and CEO, Lars G Nordström, has announced that the Swedish company remains in a strong position despite the economic turbulence gripping the world.

Posten president and CEO, Lars G Nordström, has announced that the Swedish company remains in a strong position despite the economic turbulence gripping the world.

Nordström, said: “Posten reported good financial results for 2008. Net sales increased by 3% to SEK 30,836m. Operating earnings totaled SEK 1,885m, which was SEK 110m less than Posten’s extremely strong 2007 earnings.

“The equity-assets ratio totaled 42%, and with a return on equity of 20%, we exceeded the shareholders’ yield requirements. The group’s operating earnings for the fourth quarter were positively affected by lower restructuring and pensions provisions. The completion of the planned closure of the Cashier Service meant that previous provisions of SEK 350m could be reversed during 2008. Posten’s net cash position continue to be strong, an important message of strength while we prepare for the challenges we will face during 2009.

“The group’s development during the past year has been characterised by an expanded logistics operation, chiefly through the acquisition of Tollpost Globe, but also by organic growth of 7%. By focusing strongly on costs, the logistics operation has improved its operating margin and increased its operating earnings by 68%. Sales within Posten Messaging decreased by 2% due to substitution and to increased competition from other market players. Profitability was also squeezed by the high share of fixed costs. Stralfors’ information logistics business grew, both through acquisition and organically. The restructuring costs taken during the fourth quarter encumbered mainly Posten Messaging and Stralfors.

“The prevailing economic situation brings with it reduced demand and less income. At the same time, wage trends mean increased costs. The previously adopted action program for 2008-10 has therefore been updated. Actions already planned and underway will produce more rapid results, and new actions have been identified, mainly on the cost side. It is estimated that the action program will have an overall positive impact on operating earnings of approximately SEK 1bn during 2009. Our objective is to meet a changeable market with increased speed and flexibility. We are also prepared to take additional steps if the recession deepens.

“The shareholders’ final go-ahead for the merger of Posten and Post Danmark is very welcome news. This is an historic merger between two national postal companies. The new company provides us with increased competitiveness to meet increasing challenges on the messaging and logistics markets. It also ensures conditions favorable to maintaining first-class and competitive messaging and parcel services in both countries. The regulatory authorities will now begin their examination, and we will begin our work with structuring the new company to bring home the synergy effects and other strategic advantages of the merger.”