“Difficult year” for Itella Group
Itella Group said it had been a “difficult year” for the company, upon publishing its financial results for 2010. Net sales totaled EUR 1.84bn (EUR 1.82bn in 2009), showing an increase of 1.2% from the previous year.
In local currencies, the decline in net sales was 0.4%. International operations accounted for 32% (30%) of net sales.
Operating profit including non-recurring items was EUR 38.1m (EUR 46.7m), or 2.1% (2.6%) of net sales.
Operating profit before non-recurring items amounted to EUR 55.3m (EUR 86.3m), representing 3% (4.7%) of net sales.
The equity ratio was on healthy level and improved further.
Financial performance was taxed by non-recurring costs of EUR 17.3m relating to personnel restructuring (personnel restructuring EUR 29m and write-down of goodwill EUR 10.6m).
Itella Mail Communication saw its letter volumes decrease but no major slump was experienced yet. Net sales and profitability declined.
Itella Information was able to grow its net sales. The non-recurring business efficiency enhancement costs excluding, profitability remained stable.
In Itella Logistics, volume took an upward turn at the end of the year. Net sales were up and operating loss decreased.
Upon publishing the results, the Board of Directors proposed a dividend of EUR 4.4m.
For performance between October and December 2010, the company recorded net sales of EUR 508.9m (EUR 491.0m).
Operating profit before non-recurring items amounted to EUR 23.4m (EUR 39.4m), or 4.6% (8%) of net sales.
The Group’s operating profit including non-recurring items was EUR 21.6m (EUR 24.6m), or 4.2% (5.0%) of net sales. Profit before taxes was EUR 17.1m (EUR 22.2m).
Jukka Alho, president and CEO at Itella Group, said: “The upturn in the economy affected Itella’s business with a delay and only in certain areas of our business. Although our financial performance did not meet the targeted level, our already healthy solvency strengthened further.
“Itella Mail Communication’s profitability declined due to falling volumes and rising production costs, as well as extremely moderate price development.
“Personnel reductions and other efficiency improvement measures were not sufficient to compensate for these. Considering the decline in net sales from postal operations and the long-term volume development, the less than one per cent price increase in letter postage fees proved to be inadequate. Consequently, we begin a new year with strong price pressures.
“Itella Information developed as outlined in our strategy. Progress was made in the solutions business and major deals were closed.
‘Itella Logistics performed well in the second half, leading to overall net sales growth. This strengthened the business group’s profitability even though its result was still in the red.
“Financial performance in the logistics business will continue to be materially affected by not only the development of Finnish and Scandinavian operations, but Russian operations as well. Demand for ItellaNLC’s services has been growing; and particularly in Moscow, the service warehouse utilisation rate reached a promising level in view of 2011.
“The new EU Postal Services Directive compliant Postal Services Act is scheduled to enter into force in Finland in spring 2011. Its objective is to promote competition. From Itella’s perspective, it is vitally important that the scope of universal service (USO) is clearly and unambiguously defined. However, issues that continue to be unresolved in Finland include the financing of postal services in sparsely populated areas, which is included in the universal service obligation but does not permit operations on a market basis.
“Itella and the Finnish supervisory authority have had very dissimilar views on the rules to be applied to cost accounting in postal services, and thereby to pricing. Inconsistencies between the interpretation of the Finnish authorities and the mainstream interpretation in other EU countries will have detrimental repercussions.
“Clarity is needed on several fundamental issues, for instance on ways of covering the costs of the postal outlet network. Otherwise, we may have to trim the costs arising from the postal outlet network in a way that does not meet the expectations of Finnish citizens.
“Another potential risk is that we may have to allocate costs to the press and other users of the delivery network in a way that might eventually cause problems to the financing of the universal service.”
