“Auspicious” start to 2012 for Itella, but funding question remains
Finland’s postal operator Itella Group has seen its profitability markedly improve so far this year, but said yesterday that current government plans are not sufficient to maintain the universal service long-term. Itella issued an interim statement for the three months to the end of March 2012 showing that net sales have grown 4.8% compared to the same period last year, to EUR 485.3m.
Growth has been seen across the business, with operating profit not including one-off costs jumping from EUR 600,000 last year to EUR 22.8m in the latest three months.
During the quarter, Itella grew its Mail Communications operating income more than three-fold from EUR 5.5m to EUR 25.3m, and also reduced the operational losses in its Itella Logistics division from EUR 5.1m in the same period last year to EUR 1.7m this quarter.
The Itella Information unit saw its operating income decline, however, from EUR 4.7m last year’s first quarter to EUR 3.2m in the latest quarter.
Itella said generally, costing-cutting efforts started last summer have born fruit, although more is yet to come to improve operational efficiency, with the mail market continuing to change. The company has seen its workforce cut by 1,088 over the past 12 months, or by nearly 4%, to 27,202.
Jukka Alho, the Itella president and CEO, described the quarter’s results as an “auspicious start” to the year, but while he was satisfied with the result, he said changes in the letter mail and print media business meant “we should be prepared for further measures aiming to increase efficiency on this front”.
Alho noted that January saw the beginning of operations at Itella Bank, but “intense” development of its financial services are ongoing.
And, he pointed to confidence in Itella’s activities in the ecommerce parcels market as an area of good growth potential. Post&Parcel reported yesterday on Itella’s expansion into Estonia and the related development of its parcel terminals network.
“We believe that solutions that support postal operations and distance selling will make our services increasingly competitive,” Alho said yesterday. “We now have a unique capacity and service offering for the production and development of the services of the new generation.”
Funding the USO
“Funding is a big question if letter volumes decline steeply”
Commenting on recent developments in government policy, Alho noted that a new postal operating license was approved in March that should allow Itella to review services it provides at its postal outlets, to retain the most popular services “as close to customers as possible” while cutting costs in the network.
But he reserved a warning regarding the government’s current laissez-faire approach to funding the universal service in the newly liberalised Finnish postal market.
Commenting on proposals issued by a Ministry of Transport and Communications working party in March, Alho said: “The report’s essential starting point is that Itella should secure funding itself with the profit included in the prices subject to the postal operations license.
“It is Itella’s view that the report cannot serve as a basis for plans pertaining to the maintenance of the universal service in years to come.
“Funding is a big question if letter volumes decline steeply due to the influence of the Internet,” said Alho, adding that the Ministry report is currently in consultation, and that the “ultimate solution is difficult to predict”.
