Posti Group reports drop in net sales – but growth in parcels

Posti Group reports drop in net sales – but growth in parcels

Finland’s Posti Group has reported that its net sales for the first half of 2015 decreased by 3.0% in Postal Services, by 14.5% in Parcel and Logistics Services and by 30.1% in Itella Russia, and increased by 0.5% in OpusCapita. For the latest quarter (April to June), Posti’s net sales decreased by 12.0% and amounted to EUR 406.3 (461.9) million. Breaking this down further, net sales decreased by 5.3% in Postal Services, by 18.5% in Parcel and Logistics Services and by 27.1% in Itella Russia, and increased by 0.5% in OpusCapita.

The figures for Itella Russia showed a net sales decrease of 5.9% for the full six months and 10.4% for the last quarter when measured in the local currency.

Commenting on the results, Heikki Malinen, Posti Group’s President and CEO, said: “Posti Group faced a very difficult business environment at the start of the year, and the second quarter failed to bring the hoped-for improvement in the market situation. Economic growth in Finland has been non-existent, which has been reflected in a continued decline in the market for logistics services. The development of consumer purchasing power has been subdued and the digitization of communication has reduced mail volumes, particularly with respect to 1st class letters. The development of the Group’s net sales and result was unsatisfactory under difficult circumstances in the second quarter.

“However, there were also some positives during the period. In Postal Services and Parcel and Logistics Services, the operating result before non-recurring items for January–June improved year-on-year. Another positive signal was the substantial growth in the volume of parcel services.

“The situation in the Group’s Russian operations weakened significantly in the second quarter as a result of the Russian economic crisis and a decrease in consumer purchasing power. After the sharp peak in end consumption at the end of last year, volumes in warehouse logistics decreased during the spring. In our estimate, a recovery in demand may not be seen in 2015. ”

As previously reported, Posti Group sold its Scandinavian road transport business to Nordic Transport Group (NTG) this year and this – as Malinen pointed out in today’s announcement – account for the fall in net sales for the Parcel and Logistics Services division.

Malinen continued: “Posti Group’s operating result in January–June improved significantly from the corresponding period in 2014 and amounted to EUR 48.4 million. The result includes a non-recurring profit on a transaction concluded by Posti on the sale and leaseback of five properties.

“Posti is currently undergoing a significant multi-year structural transformation. Restructuring measures implemented in summer 2015 included rearranging the domestic terminal network and launching the renewal of Posti’s retail network. It will take some time before the impacts of these changes and other restructuring measures are reflected in the result.

“In June, we announced our new strategy, with the primary objectives of renewing Posti to make it a customer-oriented first-class service company and pursuing profitable growth in new services. As society becomes increasingly digital and traditional mail delivery diminishes, Posti faces a turning point at which the Finnish Postal Act must be amended to ensure the availability of postal services throughout the country.

“We have systematically improved the efficiency of our operations. We are improving the customer experience, productivity and our competitiveness by taking advantage of new technology. The growth of e-commerce and digitization also offer Posti new growth opportunities. We will pursue synergies by focusing on home services, meal deliveries and food logistics, which allow us to leverage Posti’s nationwide distribution network.”

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