Posti Group issues three-year strategy to boost profitability
Finland’s Posti Group has unveiled a new three-year strategy aiming to boost profitability given the “sharp” decline in mail volumes. The national postal operator has pledged to defend its letter, magazine and direct mail delivery business despite the trend towards digital alternatives.
At the same time, Posti will look to reinforce its position as one of the largest package and logistics players in Finland, while also pushing to be a major logistics operator in Russia.
The new strategy for 2015-2017 places an important emphasis on financial management services arm Opus Capita to achieve growth, pushing its software and processes into cloud computing.
And, Posti said it aims to push into new and growing markets building on its existing strengths, targeting areas like catering and food logistics among new domestic services, while developing new data and analytics offerings.
Posti chief executive Heikki Malinen said his new strategy was focused on postal and logistics operations in Finland, the Baltic states and Russia.
“We are Finland’s largest mail and logistics company, which has the widest range of services and networks,” he said. “Opus Capita, in turn, aims to be a strategically strong provider of financial management software and processes in Northern Europe.”
Reforms
Along with its business goals, Posti’s new strategy looks to improve its operational efficiency, develop the skills of staff to meet “increasingly digitalised business opportunities”, and improve the overall customer experience in a multi-channel digital era.
The company said it is facing the pressure of increasing competition as well as the ongoing problem with mail volumes declining.
It said it needs to accelerate reforms, take advantage of new technology and increasing automation to make its logistics and domestic freight operations “clearly profitable”.
The firm aims to be the “first choice” for e-commerce merchants through the quality and speed of its package delivery services, improving supply chain efficiency through new IT technology to accelerate e-commerce growth as the sector grows internationally at a rapid pace.
“Profitability is why we have to be one step ahead of the transition in the postal sector in order to succeed,” Malinen said. “Our transformation will ensure an acceptable financial performance.”
Financial targets for the overall Posti business include an operating profit margin of more than 5%, return on capital of at least 10% and by 2018 having more than 10% of group revenue generated by new business sectors.
Posti launched a new cost-cutting programme back in January after losses almost doubled last year, but the first quarter of this year saw its sales drop 7.3% year-on-year despite a 17% jump in earnings from a relatively low level.
The firm said the cornerstone of its new strategy will be in finding synergies with its existing networks, such as in the plan to expand into food deliveries — something the company believes will be a particular growth area as the Finnish population ages.
Chief strategy officer Sanna Ahonen said: “Posti can provide a key role in developing new domestic services because the Posti brand is trusted and we visit every Finnish home five times per week.
“During this strategy period Posti will expand its operations including its temperature-controlled food transport capabilities. Food logistics is a logical growth target which complements the company’s logistics service portfolio and will contribute to our company’s growth targets.”
