Norway Post feels pinch from digitisation, but e-commerce brings growth

Norway Post is beginning to feel the impact of the public sector switching its customer communications to digital channels. But, the company said on Friday that it has nevertheless had a good first half of the year, with e-commerce bringing financial growth.

The company grew its turnover by 4.7% year-on-year, to NOK 12.04bn, in the first six months of the year, with pre-tax profit (EBIT) up 39.6% to NOK 312m on the back of acquisitions, package growth and currency movements.

The first half saw addressed mail volumes falling by 6.7% compared to the same period last year, with a record 8% drop in public sector communications. In the second quarter, the drop in public sector physical letters was 11%.

However, revenue from e-commerce products grew by 9%, and Norway Post said it is also responding to the digital shift with its own digital mail offering, Digipost.

Dag Mejdell, the Norway Post chief executive, said: “We are beginning to see the effects of the public to switch to sending mail digital citizens. Again Norway Post will be ahead. By focusing on secure digital mail, Digipost, we will be simplifying and renew the Norwegian society.”

Digital

The Norwegian government decided in February that the public sector must move to communicate digitally with citizens and businesses. The decision also obliges all Norwegians to obtain a digital mailbox.

Norway Post won a significant coup in March when the government decided that its Digipost platform should be the official digital mail service for the public sector, following a public tender process.

The company already had 300,000 people registered as Digipost users when it was awarded the public sector contract.

Logistics

Meanwhile, much of the financial improvement for Norway Post this year came from its logistics division.

The company has been building on the potential for growth in parcels, cross-border shipping and freight in the Nordic region through acquisitions. This year it took over West Cargo Vågårda AB, Smartpak AB and Kirkestuen Transport AS. It also established a separate package delivery network in Denmark through its Bring subsidiary, which includes 663 delivery points.

“Norway Post has already become the leading Nordic-based logistics company by building strong market positions in Sweden and Denmark,” claimed Mejdell.

Norway Post is to build a new package sorting centre in Oslo to keep up with future growth, investing NOK 1.5bn in the project in the industrial Alnabru area of the capital.

The Alnabru facility should have the technical capacity to sort 23,500 packages per hour, and will be the key hub for Norway Post’s domestic logistics network, handling about half of all packages collected in Norway.

The new facility is expected to be fully operational in 2017, with Dutch manufacturer Vanderlande providing the package sorting technology.

Tore K Nilsen, the Norway Post executive vice president, said the new logistics centre will help the company meet customers’ future needs and reinforce the company’s position in the logistics sector.

“We see that online shopping is growing,” he explained. “When the new logistics centre brings together all the package, freight and temperature-sensitive shipping operations in the Oslo area, customers will get an even better deal than they do today.”

Separately, Norway Post’s stake in IT company EVRY could be up for sale. Directors of the Oslo-based firm have been reviewing the business, and as a result have launched a “structured process to explore various strategic opportunities, including a sale of the company”.

Norway Post, which owns a 40% stake, is supporting the move. EVRY lost out on a major contract last year to modernise Norway Post’s IT systems.