Posti sees continuing decline in sales

Posti Group has reported that its net sales for the third quarter (Q3) of 2015 were €373.5m, down 14.2% on the same period last year. In an official statement issued yesterday (2 November), Posti reported that net sales for the July-September period decreased by 4.2% in Postal Services, by 21.4% in Parcel and Logistics Services and by 37.8% in Itella Russia, and increased by 0.6% in OpusCapita. Measured in local currency, Itella Russia’s net sales decreased by 8.6%. The comparable net sales of Parcel and Logistics Services decreased by 4.3%.

However, the operating result before non-recurring items improved to €9.6m, up from €6.8m.

Taking the first three quarters of 2015 together (January – September), the group’s net sales decreased by 11.1% to €1,215.6m. Parcel services volume grew by 4%, and mail delivery volumes continued to decline as expected.

This has been a trying week for Posti. On Monday, hundreds of postal employees stopped work in Helsinki, Vantaa, Turku, Oulu, Jyvaskyla, Kemi and Seinajoki, to protest against Posti’s use of temporary workers. According to local reports, Posti’s collective agreement with its employees expired last week and negotiations on a new one have hit a stalemate.

Commenting on the latest quarterly results, Heikki Malinen, Posti’s President and CEO: said: “Posti Group Corporation’s operating result in July-September improved to €9.6 m from €6.8m in the corresponding period last year. The improved result is a fairly good achievement under the circumstances, as the Group’s net sales continued to decline and the market situation remained very difficult.

“The most significant factor behind the better result is the improved result of the Parcel and Logistics Services business group. The operating result before non-recurring items returned to profitable territory in July-September and through the first three quarters of the year in spite of the decline in net sales. This gives us confidence that we are moving in the right direction.

“We have made determined efforts in the logistics business to improve the efficiency of our loss-making operations. As part of these efficiency improvement measures, the Group has divested its international freight business and scaled back its network of terminals in Finland. The business group’s result was also affected favorably by the increased demand for parcel services.

With regard to logistics, we can now say that all of the major restructuring measures have been completed. Logistics will remain a core business for Posti, and one of the objectives of our new strategy is to seek synergies and new growth in local logistics, food logistics and warehouse logistics services.

“We are continuing to implement efficiency improvement measures throughout the Group under the €75m program that is currently underway. Efficiency improvement measures are necessary for compensating for the decline in net sales. In postal services, the operating result showed a seasonal decline in July-September. Cost adaptation measures have not been sufficient to compensate for the loss of net sales resulting from the decline in volume.

“As competition in the postal services market increases and new players enter the industry, we must maintain Posti’s competitiveness and cost-effectiveness as a service provider. Our current collective agreement is too inflexible to respond to the new needs that today’s customers expect us to satisfy with regard to the services we provide. The new collective agreement must facilitate greater flexibility in shift planning to allow us to better react to changes in customer demand, avoid delivery disruptions, and develop new service business.

“In spite of the entry of new delivery service providers in the postal industry, our greatest challenge remains the trend of digitization, which will move letters, invoices and publications to the online realm at a tremendous rate in the coming years. The new strategy we announced in the summer is Posti’s roadmap for operating in a digital Finland. Rather than simply adapting to these changes, Posti aims to actively take advantage of digitization in its services, production operations and operating methods.”