Itella sees drop in net profit for nine month period

The Itella Group has recorded a net profit of EUR 16.5m for the first nine months of the year – a drop of EUR 5.6m compared to 2009 levels. Overall, the Group announced net sales of EUR 1.33bn for January-September, which exceeded last year’s EUR 1.328bn total.

The company said international operations accounted for 32% of net sales – compared to last year’s 29%.

Jukka Alho, president and CEO: “The economic upswing affected the demand for Itella’s services relatively late, but there was a very noticeable change in the third quarter. We have seen growth especially in domestic parcel services and in logistics volumes across the board. Our business in Russia is also experiencing similar positive development.”

Financial performance was taxed by the non-recurring items of EUR 15.5m (EUR 24.8m – 2009).

Operating profit decreased in Itella Mail Communication and Itella Information, while Itella Logistics was able to decrease its operating loss “considerably”.

Despite the economic upswing, letter volumes failed to return to normal. Meanwhile parcel volumes are showing marked growth after the summer season.

The Group’s personnel costs decreased by EUR 5.5m during the period, down by 0.8% year-on-year. Excluding the cost provision for restructuring arrangements, personnel expenses fell by EUR 6.8m, or 1.1%.

This year, Itella Mail Communication acquired the Estonian SmartPOST company’s self-service parcel business. Itella Corporation acquired a non-controlling interest in Itella Information AS from Norway Post.

Preparations to renew the legal structure of Finnish operations proceeded as planned.

Postal services will transfer to the new subsidiary, Itella Posti Oy, on 1 January 2011.  Similarly, all real estate owned by Itella in Finland will be transferred to a single company, Itella Real Estate Oy, at the turn of the year.

For the last quarter (July-September), the Group recorded net sales of EUR 428.1m (EUR 412.5m in July-September 2009).

Towards the end of the quarter, logistics volumes, both in Finland and internationally, showed marked growth. Parcel services offered for distance selling also strengthened.

Operating profit totaled EUR 4.4m (EUR -5.6m), representing 1.0% (-1.4%) of net sales.

Alho added: “Itella Information has continued to perform consistently. In Itella Mail Communication, the demand for postal services and profitability continue to face tremendous pressure.

“Our price level has not followed the general cost trend, partly due to regulatory supervision. We have taken steps to improve profitability, for instance by adjusting the number of personnel, but these measures have proven inadequate.

“The healthy near-term development of postal operations will be determined in the labour market negotiations currently under way, and in the legislative work concerning postal services.”