Post Norge reveals positive results but challenges ahead
Posten Norge’s revenue in the second quarter was NOK 5 975 million, representing a decrease of 1.4 per cent compared with the second quarter of 2017. Adjusted operating profit in the second quarter amounted to NOK 214 million. The increase of NOK 158 million compared with the same quarter in 2017 was due to improved profit in both the logistics and mail segments.
The improved profit in the logistics segment results from the higher number of working days in the second quarter due to Easter falling in the first quarter.
“The financial performance in the second quarter was, as forecast, somewhat better than the first. However, challenges remain in both segments. Investments in industrialisation and streamlining of the Norwegian logistics network generate short-term additional costs, which means that we have not been able to convert the healthy revenue growth into higher profits in the logistics segment. In the mail segment, the fall in mail volume was higher than expected at the start of 2018. This has meant that the measures implemented are no longer sufficient to maintain satisfactory profitability,” says CEO Tone Wille.
Adjusted operating profit in the second quarter for the logistics segment was NOK 51 million, representing an improvement of NOK 53 million on the same quarter in 2017. There was solid growth in piece goods, business packages and e-commerce to consumers, as well as in domestic and international freight forwarding and transport. A steady influx of new customers resulted in increased revenue for express services across the Nordic region. Revenue in offshore operations was still affected by low project activity in the oil sector.
“Posten Norge is meeting increased demand by investing in expanded capacity and higher efficiency in the logistics network. At the same time, we are increasing service levels and getting closer to our customers with new services and wider choice. We see that customers are responding positively and that large online stores in the Nordic countries are choosing us,” says Wille.
In the second quarter, adjusted operating profit for the mail segment was NOK 206 million, an increase of NOK 100 million compared to 2017. The increase is partly due to the fact that the Storting (the Norwegian parliament) approved a supplementary allowance of NOK 342 million, for the public procurement of universal service obligations that are commercially unprofitable. Half of the supplementary allowance was recognized in income in the first half of the year.
“It is positive that the Storting has granted additional funds which means that the state fully covers the additional costs associated with maintaining mail distribution five days a week,” says CEO Tone Wille.
In the first half of 2018, addressed mail volume in Norway fell by 11.2 per cent compared with the same period in 2017. Compared with last year, e-commerce from China decreased in the first half of the year by around nine per cent. Imports from China are estimated to make up about 30 per cent of letters and small packages from abroad.
In the second quarter of 2018 sickness absence for the Group was 5.6 per cent, representing an increase of 0.1 percentage points compared with the second quarter of 2017. Sickness absence for the last 12 months was 5.9 per cent, representing a decrease of 0.2 percentage points compared with a year ago.
The total number of occupational injuries per million hours worked (H2) for the last 12 months increased from 8.5 as of June last year to 9.1 as of June this year. A snowy winter with slippery roads is a major reason for this increase over the past 12 months.