PostNord buys logistics firm as Danish digitisation hits profits
PostNord has made its first acquisition under its new name, agreeing to buy Norwegian logistics business Eek Transport AS. The Posten Norden Group formally changed its name to PostNord yesterday, although its brands Posten, Post Danmark and Strålfors remain unchanged.
Today, as it reported its latest financial results, the company revealed it is buying one of Norway’s 10 largest suppliers of transport and logistics services to strengthen its position in Norway’s growing logistics market.
Hjuksebø-based Eek Transport runs nationwide operations in Norway, with its own 110-strong fleet as well as through agency collaborations.
With about 200 staff, the company had sales of about NOK 265m in 2010 (about USD 47.5m), with its major customers in the automotive parts and heating/ventilation industries.
The acquisition of Eek Transport comes as PostNord looked for ways to counter its reduced sales and lower earnings.
PostNord’s results for the three months up to March 31 showed a 3% decline in sales compared to the same period in 2010, not including currency adjustments, to NOK 10,032m (USD 1,798m).
Net profit for the quarter was down a sizeable 18% from NOK 422m (USD 75.6m) to 344m (USD 61.7m) year-on-year.
Subject to the approval of the Norwegian Competition Authority, the deal is expected to see Eek Transport linking up with PostNord’s wholly-owned transport subsidiary, Tollpost Globe. Tollpost Globe is Norway’s third-largest transport company with 900 employees, 800 drivers and sales of NOK 2.4bn (USD 429m) last year.
PostNord said there would be potential synergies in the sales, production and administration that would strengthen the group’s logistics as a whole, throughout the Nordic region.
Lars Idermark, president and CEO of PostNord, said taking on Eek Transport was part of an overall strategy to build a position as a leading communication and logistics operator in Northern Europe through partnerships and acquisitions.
“With the acquisition of Eek Transport, we are complementing our operations in Norway and strengthening our position and our opportunities in the country,” he said.
Morten Eek, managing director of Eek Transport, confirmed that the Eek family have agreed to sell 100% of its shares in Eek Transport, along with its 70% stake of Mereco Transport, based in Sandnes. Arild Refsland has agreed to sell the remaining 30% stake in Mereco, but Eek said the Mereco unit would continue operating as a standalone unit.
Eek said the deal with PostNord should strengthen both companies and secure jobs in an “increasingly tough market”.
“It has been a difficult decision, but we are confident that this is a good solution for all our customers. Customers will still be serviced in good Eek spirit,” he said.
PostNord said its results for the first quarter of 2011 reflected a continuing weakness in the Danish economy and a strong Swedish krona, as well as the growing competition in the mail market from both the digital sphere and other mail companies in Sweden and Denmark.
PostNord’s volumes from non-priority mail grew with the strong Swedish economy, but Danish mail operations saw a “significant and accelerated” drop in volumes reflecting digitisation in the country’s governmental authorities and large businesses.
The company said it had reduced costs during the quarter, but this had not entirely compensated for the downward trend in sales.
Along with its strategy to build its logistics operations through northern Europe, PostNord said it would work to develop its underlying business and services to meet the market changes.
“Continued, sweeping cost adjustments” will also be carried out to counter the major changes in the market and improve profitability, the company said in its results statement.