Earnings up at Norway Post

Norway Post’s earnings are continuing to rise after cost-cutting initiatives were implemented, the company said after releasing is Q1 results for 2010. The first quarter earnings before non-recurring items and write-downs increased to MNOK 284 in 2010 – up MNOK 194 compared to in 2009.

Operating revenues declined by 3.9% compared to last year. The lower level of growth in the Norwegian and international economy is the main reason for the reduction in revenue. The first quarter operating revenues came to MNOK 6 663 in 2010, MNOK 269 less than in 2009.

The earnings before non-recurring items and write-downs increased noticeably, mainly due to effects resulting from the Spinnaker profitability programme. Since its start in November 2008, Spinnaker has had a total effect of around NOK 1.4bn.

“We implemented cost-cutting measures early on and now see that they are helping to strengthen the Group’s ability to compete in the Nordic market,” said Norway Post’s president and CEO Dag Mejdell.

Additional measures will be implemented in the Mail, Logistics and IT segments in order to adapt the costs to the declining level of activity.

First quarter highlights for the three divisions:

• The Mail Segment’s first quarter revenues came to MNOK 3 126 in 2010, MNOK 90 less than in 2009. This segment’s earnings (EBIT) amounted to MNOK 308, up from MNOK 119 in the same period last year.
• The Logistics Segment’s total revenues came to MNOK 3 055 in the first quarter of 2010, 4.2% less than in the same period in 2009.  This segment’s first quarter earnings (EBIT) amounted to MNOK 69 in 2010, compared to MNOK 59 in 2009.
• The IT segment’s first quarter revenues came to MNOK 1 282 in 2010, MNOK 96 less than in 2009. This segment’s earnings (EBIT) amounted to MNOK 59, MNOK 9 more than in the same period last year.

Norway Post is restructuring its divisions to adapt its organisational structure to the Group’s revised strategy and developments in the market.

“The new, future-oriented organisation strengthens our parcels, goods and logistics solutions. The Mail Division will be revitalised and equipped to face the challenges of a declining letters market,” said Mejdell.

The present Group structure has been the same since 2006. During this period, the Group has grown strongly in the logistics and IT sectors while its mail volumes have declined. At the end of 2009, the Group had three strong corporate legs to stand on, with Logistics accounting for 45% of the revenues, Mail for 38%and IT for 17%.

The Group will now have two new logistics divisions and a fresh, stronger mail division.

• The existing Logistics Division will be divided into two – the Logistics Solutions Division and the Parcels and Goods Division.
• The Distribution Network Division and Mail Division will be merged to form a new Mail Division.

When the new Group structure is implemented in June, Pål Amundsen will become the executive vice president of the Logistics Solutions Division.  He is currently the marketing director of the old Logistics Division. Arne Bjørndahl will become the executive vice president of the Parcels and Goods Division, while Tore K. Nilsen will become the executive vice president of the new Mail Division.