Norway Post achieves growth in H1 2010

Norway Post achieved earnings of NOK 511m ($80.9m) in the first half of 2010 – an increase of NOK 130m ($20.6m) compared to the same period last year. The improvement in earnings was achieved despite the half year being affected by declining volumes in the mail and logistics segments, a lower level of activity in the IT market and a strike in the transport sector.

The first half-year operating revenues came to NOK 13.4bn, a reduction of NOK 421m, or 3.1%, compared to the first half of 2009. The decline in sales was offset by the effect of the Spinnaker profitability improvement programme.  This programme, which started in 2008, had produced an accumulated effect of NOK 1.6bn at the end of the first half of this year.

“The Spinnaker efficiency programme is contributing to an improvement in the results during a period of continued low demand in a hesitant market. Norway Post will go on with the Spinnaker programme in order to adapt its operations to the structural changes in the market and the lower level of activity,” said Norway Post’s president and CEO Dag Mejdell.

One positive effect of Spinnaker is that the need for government procurements for 2009 has proven to be less than previously estimated. Last year, the Norwegian state granted NOK 518m for government procurements of unprofitable mandatory mail and banking services. Preliminary subsequent calculations show that Norway Post has managed to reduce its costs by more than expected so that the actual amount required has fallen to NOK 211m. Norway Post is therefore repaying NOK 307m.

“This shows that the government procurement model and the practice of making subsequent calculations work,” said Mejdell.

The total volume of A-mail and B-mail fell by 7.4% compared to the same period in 2009, while unaddressed mail advertising grew by 7%. The Mail Segment’s operating revenues came to NOK 6.2bn, a reduction of NOK 251m.

The Logistics Segment was affected by the strike in the transport sector in the spring and its operating revenues fell by NOK 159m to NOK 6.1bn. The total volume of parcels rose by 4.7% due to an increase in international parcels and positive developments in the online shopping sector.

ErgoGroup AS has entered into a merger agreement with EDB Business Partner ASA. The merger has been agreed to by the companies’ general meetings and is now awaiting approval by the competition authorities. Norway Post will own 47% of the shares in the new company and has committed to reducing its stake to 40% over the next two years.

In the first half year, the Group opened two new high-tech terminals just outside of Oslo. The South-East Norway terminal in Lørenskog municipality sorts around 60% of all the volume transported in Norway, while Bring’s new logistics centre at Berger in Skedsmo replaces five smaller storage facilities in Oslo.

The first half year was demanding with respect to the overnight delivery quality of A-mail. The move from the Letter Centre in Oslo, the closure of airspace due to ash clouds and the night-time closure of Bergen, Trondheim and Tromsø airports led to the result being worse than the licence requirement and ending at 82.2% for the second quarter and 81.8% for the first half year. The other five licence requirements were met by a good margin in the first and second quarters.