The week that was: 24 February 2012
Rounding up the biggest stories of the week from the mail and express industry, including the latest financial results from around the sector…
US Postal Service reveals 223 mail plants set to close
USPS came to the end of its five-month review of 461 mail processing plants, revealing that it has decided to consolidate nearly half of them, pending a regulatory review of service standards.
The Postal Service believes shutting the plants will mean a more efficient processing network after the 25% reduction in mail volumes since 2006, but would need to slow First Class Mail by up to a day to achieve the network restructuring.
The plant closures brought predictable anger from Congress, despite its complete failure to help the struggling Postal Service in the past few years, having set prohibitive requirements for USPS to fund 40 years of future healthcare benefit liabilities within a shortened 10-year period, at the height of the global recession.
UK’s postal regulator defends price deregulation
The UK’s new postal regulator, Ofcom, was in Parliament this week to defend its proposal to remove price controls from Royal Mail.
Ofcom group director of competition Stuart McIntosh told MPs on the Commons Business, Innovation and Skills Committee that the postal operator had a better knowledge of the market than a regulator could ever have, and that Royal Mail knew if it set prices too high, it would lose mail volumes to the Internet.
As if making some kind of reply, Royal Mail revealed only the next day that it will raise business mail rates by on average 11% from April. CEO Moya Greene faces the Parliamentary committee next week.
Sector companies hunting for growth
A number of companies in the sector outlined their latest financial results this week, including:
– New Zealand Post saw its profits jump for the six months up to the end of December, from NZD $15.8m in 2010 to NZD $35.4m in 2011 (USD $13.2m to $29.6m). But with growth propped up by Kiwibank’s financial services, CEO Brian Roche said there was still some way to go to face up to the ongoing 7% decline in mail volumes.
– PostNord saw profits up 19% to SEK 1.03bn ($155m USD) for the full 2011 year on the back of cost-cutting efforts, but a 5% decrease in revenues came largely from a difficult Danish market. CEO Lars Idemark said restructuring had to continue as the company prepares for a possible IPO.
– Russian Post saw its operating income up 14% to 120 rubles in preliminary results for the full 2011 year, but for the first time in a few years was unable to achieve growth in its letter business. The company wants the government to either dip into its pockets to support its modernisation, or decide on some form of privatisation.
– TNT Express recorded a EUR 272m loss for the full 2011 year, compared to a EUR 4m net profit made in 2010. CEO Marie-Christine Lombard laid out the company’s new strategy to refocus its efforts on its European activities, looking towards more partnerships to run operations outside Europe, while also aiming to cut back its intercontinental air fleet.
– Itella Group revealed it made a EUR 16.4m loss during the full 2011 year, on a EUR 1.9bn turnover that was growing by 3.2%. The Finnish postal operator said it was now reviewing its “risky” growth strategy, looking at which parts were succeeding and which should be jettisoned. CEO Jukka Alho said if the Finnish government wants to define universal service obligation quality targets, it might have to back up the move with funding.
– Norway Post said it achieved its best financial performance for five years during 2011, with group turnover up 2.4% and underlying profits up 10.4% from the year before. But this was only if its figures were adjusted for non-recurring costs – otherwise, its profit before tax for continuing operations down from NOK 1.5bn ($263m) in 2010 to NOK 799m ($140m) in 2011. Nevertheless, CEO Dag Mejdell said restructuring efforts were paying off.
And finally…
Is your company or organisation making news affecting the mail or express sector anywhere in the world? Let us know by emailing: [email protected] or by calling editor James Cartledge on +1 717 779 1981.
