Digitisation affecting Posti Group “more profoundly than ever before”
Posti Group, the Finnish national postal operator, has had a challenging year according to its latest financial results, with digitisation affecting the market more than ever before. The company that rebranded from Itella Group at the start of this year saw its sales drop 6% year-on-year in the 12 months up to the end of December, to EUR 1.86bn.
The Group’s operating result (EBIT) slumped by 40% to EUR 5.8m, while pre-tax losses almost doubled to EUR 4.6m.
The year’s result was not helped much by the final quarter’s 7% year-on-year drop in sales and 11% drop in EBIT.
The customer switch to digital communications has seen addressed letter volumes slip 10% in the past year and newspaper volumes down 13%.
“During the past year, accelerating digitization affected the Group’s operations more profoundly than ever before,” said Heikki Malinen, the Posti Group chief executive.
“In the next few years, the transformation of communications and the postal industry will continue and be at least as challenging as it is at the moment. If letter and publication delivery volumes decrease at the pace of 10% per year, it will mean at least EUR 60m of lost net sales for Posti annually.”
Digitisation
Digitisation did bring some benefits, including a record number of parcels delivered last year — 33m — and a 10% rise in the number of people using electronic mailbox Netposti, up to 600,000 people. Posti also sees its accounting services through the OpusCapita business, which include digital offerings like cloud services and electronic invoices, as an “important cornerstone” of its strategy up to 2020.
Along with the impact of digitisation on the year’s results, Posti has suffered somewhat from the weakening economy in Russia, one of Finland’s biggest trading partners and a key market for Posti itself, particularly in its logistics business.
However, Malinen took a positive view on Itella Russia during 2014, stating that while sales declined because of the “substantial” depreciation of the Russian ruble, Itella Russia itself remained profitable.
Posti implemented a new transformation strategy in 2014, which included the withdrawal from the air and sea freight business in Scandinavia, and the outsourcing of distribution logistics in the region.
With the company now aiming to improve its operating results by EUR 75m a year through further cost-cutting measures, Posti cut 2,588 jobs during 2014, leaving a work force of 24,617 people.
Malinen said changes to the logistics business have improved performance and cut “highly unprofitable” operations.
“Logistics managed to improve its result, although the operating result still showed a clear loss. Continued economic recession has made a fast turnaround more difficult. Efficiency improvement measures will be continued with a new program aiming to ensure the Group’s profitability through the recession. We are focusing on our core business operations instead of expansion,” he said.
