Norway Post: Continued growth, but lower earnings
Norway Post’s half year results show continued growth in revenue for the Group. The results are lower compared to the same period last year as a result of higher personnel and transportation costs. Norway Post is implementing initiatives to strengthen the profitability of the Post segment.
The Group has experienced positive development in operating revenues, which is in line with the Group’s Nordic growth strategy. Total operating revenues after the first six months were NOK 13.4 billion, an increase of 17.8 per cent from the same period last year. The ICT and Logistics segments contributed to revenue growth following acquisitions and high activity in the marketplace. Second quarter earnings in the Post segment were at the same level as last year.
Earnings before taxes for the first six months were NOK 879 million, compared to NOK 565 million for the same period last year. Earnings were high due to a profit of NOK 625 million from the sale of Norway Post’s distribution center building in Oslo during the first quarter. The Group’s earnings before taxes (EBIT) prior to adjustments for special items were NOK 268 million, compared to NOK 625 million after the second quarter last year.
The Post segment is the reason for the decrease in earnings, mainly due to increased personnel and transportation costs, and the establishment of CityMail in Denmark. The Logistics and ICT segments show positive growth prior to adjustments for special items. The EBIT for the ICT segment showed the same results as last year.
“Although the Group shows healthy growth and earnings development in the Logistics and the ICT segments, we are disappointed with the lower results in the Post segment. Increased personnel and transportation costs, especially related to the delivery of A-priority mail overnight, require the implementation of new initiatives to improve profitability,” states Norway Post CEO Dag Mejdell.
DELIVERS AS PROMISED
The improvement initiatives implemented in mail distribution this past winter have provided significantly higher quality and will be continued. An independent study conducted during the second quarter shows that 86.3 per cent of A-priority mail was delivered overnight. The license requirement is set at 85 per cent.
“The positive development in the delivery quality of A-priority mail has continued, and we are well above the license requirement. The new initiatives that will be implemented in order to reduce costs and make operations more effective will not negatively affect Norway Post’s delivery quality,” states Mejdell.
New initiatives have been customized to meet the challenges facing each segment. A reduction in the use of consultants and marketing are included among other general efforts to reduce costs in Norway Post.
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