Restructuring and cost-cutting help Norway Post boost earnings by 20%

Norway Post has said its performance in the first quarter of the year has justified its recent restructuring and cost-cutting efforts. The state-owned postal service said its revenue grew 3.6% year-on-year in the first three months of the year, to NOK 6.29bn. [1 NOK = 0.21 EUR]

Underlying earnings were 20.9% up on the same period in 2014, to NOK 231m.

Norway Post said it did benefit from the sale of its stake in IT firm Evry ASA, which was completed during the quarter to bring in NOK 219m.

But, the company said both its mail and logistics segments contributed to the improved results, with its logistics business expanding “strongly” in Norway and the rest of the Nordic region, while the mail segment improved its performance despite the continuing drop in addressed and unaddressed mail.

Dag Mejdell, the Norway Post chief executive, said his company was now looking forward to reforms being brought in by the government in the next few months.

“This shows that Norway Post has made the right moves and restructured in time,” he said.

“Norway Post needs new framework conditions to be able to continue its restructuring work and adapt to new user needs in the future too. So we’re looking forward to parliament dealing with the new Postal Act Bill before the summer.”

Divisions

Norway Post has seen its addressed letter volumes fall by 6.2% in the last 12 months. Nevertheless, the first quarter saw its mail segment achieving underlying earnings of NOK 325m, up 20.4% year-on-year.

Profitability improved thanks to the transition from owned post offices to postal counters being hosted by external retailers, like supermarkets. The division also benefited from lower IT costs under the modernising IT contracts in place since 2013.

The logistics segment saw earnings up by almost a quarter to NOK 51m thanks to growth in parcel volumes, with online shopping pushing e-commerce volumes up by 5% in the quarter.

Mejdell said: “Norway Post is one of the Nordic region’s leading e-commerce players. We see that our customers value a high-quality logistics partner with good solutions. As one of the world’s most innovative mail and logistics companies, we will continue to help develop e-commerce for both online shops and consumers.”