PostNord profits fall 39% in Q1, amid restructuring

Swedish-Danish postal operator PostNord said its first quarter of 2012 proved “satisfactory” considering the difficult situation it is in. The company is expecting this year to see a 12% decline in Danish mail volumes and 5% decline in Swedish mail volumes as more customers move online.

Chief executive Lars Idermark said 2012 was a “year of change” as his company and its Post Danmark and Posten units continue repositioning themselves towards better profitability in the mail segment and seeking growth in areas like logistics.

During the first quarter of 2012, PostNord saw its net sales fall less than a percentage point to SEK 9,993m ($1,439m USD), while net profit fell 39% to SEK 293m ($42.2m).

However, these results were impacted by SEK 354m ($51m) of restructuring costs charged during the quarter.

Adjusting for the restructuring costs, PostNord said its operating margin was actually better, up more than a point compared to the same quarter last year, to 6.4%.

Also taking the restructuring costs out of the equation, PostNord said its underlying operating profit was improved for the quarter, up 25% to SEK 642m ($92.5m).

“Satisfactory”

Idermark said of the Q1 results: “PostNord is reporting satisfactory results for the first quarter of 2012 given the circumstances. Net sales for the group developed on par with last year, and underlying profitability improved.”

The PostNord CEO said global economic uncertainty was affecting business in all the Nordic countries,

“Our mail businesses are also impacted by continued high levels of digital alternative substitution,” he said. “The drop in mail volumes continued during the first quarter of the year and was, considering calendar effects, on par with last quarter. Our assessment of volume decreases for full-year 2012 remains around 12 percent in Denmark and 5 percent in Sweden.”

Despite the challenges, Idermark said the group’s mail businesses had reported “acceptable” results, with profitability not counting restructuring costs “improved markedly”.

Meanwhile, PostNord will continue to develop its logistics business, with the market growing steadily in Norway, while the business is also “developing well” in Sweden, though the Danish market is proving tough competition with a weak economy.

PostNord announced two major acquisitions during the first quarter in the logistics business, Sweden’s largest third party logistics firm Green Cargo Logistics, and the operations of Swedish newspaper distribution firm Svensk Morgondistribution.

PostNord is 40% owned by the Danish state and 60% owned by the Swedish state, and last year saw its net profits up 19%, though sales declined 5% compared to 2010, to SEK 39.5bn ($5.9bn USD).