Loss-making Itella plans 1,200 job losses in mail delivery
Finland’s national postal operator Itella made a EUR 2.4m loss last year according to latest results, with 1,200 mail delivery jobs now in line to be cut. The company saw its sales decline in the fourth quarter, but while there was slight revenue growth in the 2013 as a whole, before taxes the Group made a loss, turning around a EUR 30.8m pre-tax profit achieved in 2012.
Heikki Malinen, the Itella president and chief executive, said the year had been “very challenging” for the company.
“The result was weakened by the drastic transformation of the postal industry, which was reflected in the strong decline in the delivery volumes of traditional letters, newspapers and magazines in Itella Mail Communications,” he said.
“The volumes of Itella Logistics were impacted by the economic recession and the tight competition in the transport industry.”
Itella’s revenue reached EUR 1.97bn in the 2013 year as a whole, EUR 528,8m in the fourth quarter.
The Mail Communications business saw its full year revenue down by 0.6%, but the fourth quarter showed growth from last year during peak season.
Itella’s Logistics unit grew revenues by 7.8% in 2013, but made a more substantial loss than in 2012, which Malinen described as a “disappointment”. The CEO said Russian operations recorded a satisfactory result, and stated his belief that Logistics would improve its result “markedly” in 2014.
One positive within Itella’s results was the improved performance of its OpusCapita unit, the division renamed from Itella Information back in November.
“Challenging”
Malinen said the overall context for Itella was a major shift to electronic communications.
“These developments are strongly affecting Finland, among many other countries, as the rapid and extensive increase in electronic communications is substantially decreasing the volume of letter, newspaper and magazine deliveries,” he said. “The situation is particularly challenging in early-morning newspaper deliveries, where a significant increase in unit costs creates profitability pressures for Itella and publishers.”
Overall, Malinen said Itella was not looking to expand, but to strengthen its core businesses – and secure funding support for the universal postal service. The company is looking to expand its e-commerce business, however, particularly in Russia, which will increasingly be seen as the company’s “main market” alongside Finland itself.
Itella is responding to the trends in periodical deliveries by forming joint delivery companies with publishers.
Itella is working to be “closer to the customer” with more postal service points – the network growing by 200 in 2013 to 1,310 total, with plans to reach 1,700 by 2020. But, jobs have been cut to save on costs, as part of its EUR 100m cost-cutting programme, which is now halfway through.
Last month, Itella began negotiations that could see 1,200 jobs lost in basic delivery, Malinen said.
