Posti Group profits up, but sales slide 7.3% in first quarter
Finland’s national postal service Posti Group said its earnings improved in the first quarter of the year even if sales dropped 7.3% year-on-year. The company in the process of a restructuring and cost-cutting campaign, in the light of declining mail volumes, said its underlying operating profit rose 17% in the three months to the end of March 2015.
Net profit jumped from EUR 4m this time last year to EUR 15.9m, partly because the company incurred no major transformation costs in the quarter.
However, the company’s sales slid to EUR 435.9m in the quarter as mail volumes continued to drop “substantially”, and high levels of competition impacted on the Group’s logistics business.
Posti Group said its sales fell by 0.8% year-on-year in its postal services segment, and fell 10.6% in its transport and logistics division. Itella Russia’s sales fell by 33.2%, though currency movement had a big impact, sales decreased only 1.2% year-on-year in local currency. IT services arm OpusCapita grew its sales 0.5% year-on-year.
The first quarter operating under the Posti Group brand, having changed from its Itella name at the start of the year, was “very challenging” because of the continuing recession in the region, said Group president Heikki Malinen.
“In spite of the decline in net sales, Posti Group achieved a substantial improvement in its result,” Malinen said.
Performance was helped by the presence of Finnish parliamentary elections and an early Easter, the Posti president said, adding that he was pleased at the profitability of the parcel and logistics business.
Parcels volumes rose 5% year-on-year, as the company stepped up its investment in parcel locker terminals, which have seen a 45% volume increase compared to the same period last year.
However, Malinen warned that tough times lie ahead this year.
“While our result for the first quarter was positive, there is a lot of uncertainty regarding the outlook for the rest of the year,” he said.
“Unfortunately, it does not appear that the Finnish economy will give a boost to the logistics sector. In Russia, the decreased purchasing power of consumers is also leading to lower demand for logistics services.”
Posti Group launched a new two-year EUR 75m cost-cutting campaign in January, but Malinen said the programme launched in 2013 was now producing results.
“We have successfully reduced our costs and improved the efficiency of operations across all business groups, in production and in administrative functions,” he said.
Malinen said Posti Group would face “significant” challenges from the digitisation of society in the coming years.
While he said that Posti would find growth in the transformation of society away from paper-based communications, he also spoke of his hopes for the Finnish government to bring in reforms to help postal services adapt to the digital era.
“I am very pleased to note that Netposti, Posti’s electronic mailbox service, is steadily growing in popularity. It now has 600,000 users. The cloud services and e-invoicing services of our IT services company OpusCapita also continued to see strong growth,” he said.