PostNord reports improved profits but a need for “increased streamlining”
Message from Håkan Ericsson, President and CEO
PostNord reported improved results for 2013. Net sales increased 3 percent excluding currency effects. Operating profit was strengthened. We are going through a phase of significant change. The major structural changes we are implementing are aimed at securing profitability within Mail, developing our logistics business and capitalizing on opportunities in markets undergoing dramatic changes.
PostNord Group reported a 1 percent increase in year-on-year net sales during the fourth quarter and a 2 percent increase for full-year 2013. The increase is attributable mainly to acquisitions and organic growth within the logistics business due to the strong development of e-commerce. Sales growth slackened due to the continued decline in mail volumes.
We continue to grow within logistics. During the year we acquired additional businesses that strengthen our position in the Nordic region, including within thermal transports. Organic growth was driven mainly by the e-commerce trend, with strong volume growth for B2C parcels. Growth was also impacted by increased demand for outsourcing services. We will counter increasing price pressure and falling margins with continued and increased streamlining efforts to strengthen the business area’s profitability..
Digitization and the substitution of alternative communication methods continued to put pressure on results for the Mail business areas. We have implemented extensive efficiency measures to meet the development. Although business area Mail Denmark did report profitability during the fourth quarter, the business is still challenged by the comprehensive digitization in the market. We welcome the new postal legislation enacted by the Danish Parliament on February 18th. It will enable the business to make additional market adjustments. Business area Mail Sweden reported increased e-commerce-related volumes and a stable underlying operating profit for both periods, despite declining overall mail volumes. Strålfors reported improved operating profit for both the quarter and the full year.
As expected, the PostNord Group reported improved full-year operating profit. The operating margin improved to 1.7 percent for both periods due to increased net sales, continued streamlining efforts in the businesses and lower restructuring costs. Nevertheless, results are not satisfactory. Profitability is too weak in all business areas and the group’s earnings are insufficient. We need to step up the pace of implementing our streamlining efforts and service development throughout the entire group. Additional structural measures are now being made to enable PostNord to meet the challenging market trend and create greater financial value.
During late 2013 and early 2014 we further developed the group’s strategy and direction going forward. We are continuing to implement key conversion efforts with production development, streamlining our communication solutions offer for our Mail customers, to secure profitability in this area despite declining mail volumes. The logistics business will continue to grow and profitability will be improved. Growth will mainly occur organically, based on our goal of becoming the leading logistics partner in the Nordic region. Profitability for Strålfors will be improved.
We already hold a strong position as the leading e-commerce partner in the Nordic region, and we will be focusing on developing our service offer in this area. We can capitalize more on our unique structure and regional scope. This structure also enables us to further develop attractive offers for different types of home deliveries and other service logistics.
We are continuing to work to strengthen our competitiveness by reducing expenses and increasing the share of variable costs. We are also making changes to our organization to provide greater uniformity for our customers, increase our focus on e-commerce and create potential for greater synergies in the business. In addition, we are making a change to the brand structure that will clarify the PostNord brand and give us greater uniformity in meeting our customers.
