Operating revenue up at Norway Post
Norway Post saw group operating revenue increase during Q1 this year, as the company benefited from a growth in volumes across its logistics division. Operating revenue jumped 3% to NOK 5.7bn, compared to the same period last year, despite continued strong decline in letter volumes. Earnings before non-recurring items and write-downs for continued operations came to NOK 233m during Q1 2011 – a rise of NOK 9m compared to 2010.
EBIT for the mail segment during Q1 stood at NOK 304m, down NOK 15m on 2010.
Meanwhile, EBIT for the logistics segment came to NOK 48m, compared with NOK 66m for the previous year. Profit developments were negatively affected by strong competition and pressure on margins. The division’s operating revenue for the period stood at NOK 3.483bn, up from NOK 3.288bn last year (5.9%).
A statement said: “The rise in revenues since 2010 can be attributed to an increase in volumes within most logistics activities and particularly due to the growth in the Swedish market.
“Total parcel volume was 7.8% higher than in the corresponding period last year. Cross-border parcel volumes showed the biggest growth. In the domestic market, B2B parcels had a more positive development in volume than B2C parcels in the first quarter compared with the same period last year.”
CEO Dag Mejdell said: “The increased activity in the logistics market indicates an economic turnaround. We can see that growth started and is strongest in Sweden, but it is now taking place in Norway too.”
During Q1, Norway Post recorded a drop in mail volumes by 9.4% compared to the 2010. The company blamed continuing e-substitution for the decline, highlighting a noticeable decline in volumes from banking/finance, telecoms and insurance sectors.
In order to take part in the electronic development, Norway Post launched a new digital postal system, Digipost, in the first quarter. This means that postal recipients now have a digital mailbox in addition to their physical mailbox.
“It is natural and necessary for Norway Post to take part in electronic developments. With our experience and the trust that the market has in us, we have the best prerequisites for succeeding with a digital mailbox,” said Mejdell.
The logistics segment’s earnings are affected by strong competition and higher costs related to leased equipment. Norway Post has implemented additional improvement measures to utilise economies of scale and extract synergies that exist between the production of mail, packages and goods.
Norway Post added that despite the European postal market being liberalised on 1 January in accordance with the EU’s Third Postal Directive, it “seems clear that the Norwegian government does not wish to implement this directive”.
“Irrespective of whether or not Norway says no to the EU’s Third Postal Directive, Norway Post must continue to adapt to the declining letter volumes and thus continue to reorganise its operations and adapt its service level,” concluded Mejdell.
The Group’s profitability programme, Spinnaker, was started in 2008 and has had an accumulated effect of just over NOK 2bn at the end of the first quarter 2011, Norway Post confirmed.
(1 NOK = 0.127 EUR, xe.com, May 13)
